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CETA: Assessment and fecommendations.National Academy of Sciences - National ResearchCouncil, Washington, D.C. Committee cn Evaluation ofEmployment and Training Programs.Employment .and Training Administration (ECI).,Washington, Ford foundation, NAM lctke N.T.78 ,

72p.:,For a related document see CE 018 819Committee on Evaluation of Employment and .TrainingPrograms, National Academy cf Sciences, ;101,Constitution Avenue, N,b,* iashington, E.C. 20418

EDRS PRICE mr-1"t.8'.1 HC-33.50 Plus Postage,DESCRIPTORS Adsinintrative Problems; Economic Factors; Employment

Problems; *Employment Programs; 'Federal, legislation;*Federal Programs; Federal State Relaticrship;

_Institutional Characteristics; *Job Training.;*Objectives: Policy; Political Issues; rogramAdministration; Program Content; ProgramCoordination; *Program Effectiveness; *ProgramEvaluation'; Resource All cations; Sccial Factors

IDENTIFIERS *Comprehensive Employment and Training Act0

ABSTRACT e

) This docum ent presents the principal findings andrecommendations of a study.conducted ky the Committee cn Evaluationof Employment and /raining Prograi'l\assess the impact of CETA(Comprehensive Employment and Traini Act) on manpower programs.This report is divided into two parts. Fart 1 provides at ove;yiew ofCETA's history* summarizes CETA's objectivese'atd/-presents a summaryof the committee's conclusions in relation to.accomplishsents,:.Problems and recommendations* and policy issues. (A more"comprehensive staff report, CE 018 819* is also, available..) Part 2presents the major findings and recommendations cf the cossittee-under the following categories: allocation of resources:: substantiveaspetts of CETA programs; administrative processes; and institutionalrelationships. A brief.discussion of the related social, economic, orinqtitutional issues are included with each topic, Finally, theredommendations of the committee are summarized ender tmc,c4egcries:(1) protesses and institutional aspects cf CETA; and' (2) programsubstance and outcomes, 'The appendix contains,. grosaary cf manpower

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acronyms. (RN)-1,

************************************************************************ Reproductions supplied by EDRS -are the best that can be made ** . , from the original doodment, . *,,.***********************************************************************

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THI DOCUMENT MRS REIN Ream).' DU ED EXACTLY AS RECEIVED FROM

T PERSON 01PERGAII 12 A TtON ORIGIN.A I NG IT ow scrpoa view egt oPoN loos

*Tao D6 NOT NECESSARILY as aim.-E NT OFFICIAL NATIONAL INSTITUTE OF , ,

EDUCATION POSITION OR ',Duca ,

' Committee on Evaluatioidf ..

Employment and Training Program! ''Assembly 6114havioral and Social awesNational Research Council.

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NATIONAL 'ACADibIY OF SCIENCESWashington, D.C. 1978 '.

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NOTICV The tproject that is the subject of this reportwad approved by the Governing Board of the National Re-search Council, whbse members are drawn from the Councilsof tWe National Academy of Sciences, phe National Academyof Engineering, and the Institute of Medicine.. The members

, of the Committee responsible for the report were chosen fortheir special competences and wii regard for appropriate

.. balance.

This report, has been reviewed by a group other thantht,,authors' according to rocedures approved by a- Report lie-~ view Co4rittes cons sting of members of Vhe.National:Achdemy bf Science the National Academy of Engineering,and the Institute of Medicine.

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The study reported on in this book was supported primarilyiby grants, from the Ford Foundation; supplementary funding'was provided by thd Emplgymeat and Training Administratiogof the U.S. Departmhnt of 1,4bor. Points of view or opinions '

stated in this document are those of 1.he authors and do notnecessarily represent the officEal poOtions of the U.S.allartmeht of Labor.

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Available from 1. cOmmOtee on Evaluation of Employment and Training Programs

National Academy of Sciences ,

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2101-tonatitlition Avenue, N.W., Washington, G.C. 20418

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This volume is fittingly dedicated to the memory of

Gerald G. Somers, a weber of the Commiree on Evaluatibn

of Employment and Training Programs, whose Untimely deatht 4 -

in December 1977 was a great loss to us all. Dr. Somers,

a profess' of'economics at'the University of Wisconsip,

brought to the'Committee not only skill ift human resources

research mid professional objectivity, but also a compas-

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sionate view of the-probleme of the disadvantaged. His

influence is reflected in the recommendations of the

COMmittee.

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COMMITTEE ON EVALUATION OFEMPLOYMENT AND TRAINING PROGRAMS

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'Philip J. Rutledge,' Chairman, President, NationalInstitute of Public Management

Curtis-C. Aller, President, Center for AppliedManpower Research

Samuel C. Bernstein, Assistiat to the Mayor forManpower, Mayor's Office of Manpower, City ofChicago

Dorothy M. Burns, Vice Chancellor,; EducationalServices, San Jose Community College District

Philip E. Converse, Program Director, Institutefor Social Research, University of Michigan

William L. Heartwell, ar., Executive Vice President,Interstate Conference of Employment SecurityAgencies

Gerald G, Somers*, Professor, Department ofEconomics, University of Wisconsin

*Deceased

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SURVE(AREAS AKIltFIELD RESEARCH ASSOCIATES

Arizona:

'Phoenix-Maricopa County ConsortiumBalance o? Arizona

Edmund V,. .Mich, Professor, School of. Social

Work, Arizona State ,University

California:

Long B ch444Oran County Consortium

P ul Bullock, Researdh Economist, Iristituteof Industrial Relations, UniversttofCalifornia, Loa Angeles

San Joaquin ConsortiumJohn J. Mitchell, Research Associate, CenterFor Applied Manpower Research

Stanislaus County,Richard R. Kropp, Research 'Assistant, Centerfor Applied ManpowerResearch

Florida;

Pasco CountyPiqellas County-St.'Petersburg Consortium

Emil Bie, former Deputy Director, Office of'Technical Support. Q.S. Employment Service

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Illinois:

Cook CountyDouglas Windham, Associate Professor, Depart-ment of Education, University of Chicago

Indiada:

GaryWilliam $. Griffith, Associate Profesior,Department of Education, University of Chicago

Kinsas:

Kansas City-Wyandotte County ConsdrtiumJoseph A. Pichler, Dean, Sphool of Busines ,

University of KansasTopeka-Shawnee County Consortium --.

Charles E. Krider4 Associate Professor,School of Business, University of Kansas

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Maine:' Balance of Maine

Roderick A. Forsgren, Professor and AssociateDean, Graduate Schoq*, OniVersity of Maine ,

Michigan:

Calhoun CountyE. Earl Wright, Director, W. E. Upjohn'Ihsti-tute for Employment Research

Lansing Tri-County Regional Manpower Consortiumeven M. Director, Assistant Professor, .

hool of Labor and Industrial RelatiOns,'chigan State University

Minnesota:St. PaulRamsey County

James E. Jernb'arg, Associate Directdi for

Administratign, School of Public Affairs,University of Minnesota s

New Jersey:-. .

Middlesex CountyUnion County

Jack Cheraak.-,- ProfessoryInstitute'of Manage-ind.Labor.Relations Rutgers UniversityI

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New York,New YorkCity

Lois Bluie, Professor, New Sch :for Soci$.Researdh-

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North Carolina: k ,

+ Raleigh Consortium -'

Robert M. rearn, Pro*.fessor;,North CarolinaState University

Balance of North CarolinaAlvin M. druze, Director, Center.for the

'`Study of Social Behavior, Research Triangle-7----

.et. InstituteNYY

Ohio:

Cleveland Area-Western Reserve CdniortiumLorain County .

. iJan P. Muczyk, Associate Professor,. Departmentof Management and Labor, Cleveland StateUnivetsitl ,' .."

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0Pennsylvania:

Cheitir.CountyPhiladelphia

David R.Zimmerman, Assistant Professor,°Department of Management, Temple University

Texas:'Capital Area ConsortiumBalance of Texas' - "

Robert W. Glover, htsociate Director, Centeifor the Study of Human Resources, Universityof Texai

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PREFACE

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The need for federal programs to assist persons who areat a disadvantage in the labor. market was recognized-earlyin th4 1960s with the passage of the Manpower Developmentsand Training Act (MDTA). A score of categorical programs,all.designed to deal with the problems of the disadvan-taged, wit launched during.the decade, each with its own#protective statute and institutions. By 1973, the federal

poovehment was spending $2 billion a year on employment andtraining programs, most of them administered directly byfederal officials. 1n that.year the Comprehensive Employ-

.,. -merit and Training Act (CETA),changed, in a very fundamental

way, responsibility for employment and training programs andthe status of the categorical programs. Control was en- '.

I. trusted tostate and. local officials; most separate, cate-'-gorical programs were eliminated as independent entities.

The Act's paisage was widely acclaimed. Department pfLabor officials, frustrated by a maze of uncoordinated pro-grams, welcomed the decategorization of overlapping pria--,grams as a major reform that prOMised to bring order into

' the manpower system. The Nixon Administration, philo-sophically committed to decentralization, sr CETA as con -'straining the federal role and placi-ng greatercontrol atthe grass root. Local elected officials,1Who for a decadehad been passiveobservers of the manpower scene, embracedthe opportunity to incorporate employment and training Pro-----grams into the structure of local government. Recentral-Ization, it was assumed, would enable them to establishcontrol over local manpower programs; decategorization'would permit the flexibility n2cessary to ppt togethercoMbinatidife of programs most Oesponsi4e to local needs.

To test the extent to which these expectations havebeen realized and to,assess the.economic, social, andpolitical impact of CETA, the National Research Council

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established the Committee on Evaluation of Employment and,Training Programs. in 19(74*

The evaluation study of the Committee wasconducted intwo phases. The first, competed in 1976, dealt mainly ,

with the implementation and operation of CETA in its first .

year. The focus was on CETA programs dealing with theproblems of structural unemployment (Title I), with partic-ular attention to changes in methods of allocating re -sOurces., planning, types of manpower programs, systemsfor delivering services, and the types of people served.Three reports were produced: The Comprehensive Employmentand Training] Act: Impact on People, Places, and Programs;a volume of case'studies, TransitIon to Decentralized Man-power Programs; and The Comprehensive employment and Train-ing Act; Abitracts of Selected Studies. .

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The second phase of the study was a follow -up on thesubsequelpt yeat's experinces under CETA. Soon after

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its enactment, CETA was engulfed by a recession. In re- .

sponse, a new title designed as.a countercyclical measurewas added. Title VI added a new public service employmentpogram.and radically changed the nature and objectives ofCETA. In ordet to explore the issues and effects. asso-

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ciated with this public service employment' title, theoriginal study design was broadined and the project ex-tended . ,

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pis volume presents the principal findings of the studyand the recommendations of the Committee on Evaluation ofEmployment and Trining,Programs. A comprehensive staffreport of the study, entitled CETA: Manpoker Programs .

Under Local Control, his being publithed separately. TheCommittee's recommendations.should be usfful in suggestinglegislative initiatives, developing Department of Laborpolicy, and impi8lag local opera4ons. ,

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-As.this report is issued, Congresfis considering bills .

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wto reauthorize CETA and:extend it for four years` Apo Sep-tember 1982. The reauthorization billi in the Hodbe and

differ in some retpectsobut have these f

1turespin

co n; the targeting of most programs to pens ix loWF.incofe families who meet unemployment eligibility criteria;a continuing public service employment program for thoieunemployed for structural reasons; a countercyclical publicservice employment program; limitation on the duration/4patticipation in anyiCETA progreme.limitation on suip14--..-

mehtation of wages above the limits set or public serviceemployment; incorporationof new youth programs includingthe Young Adult Conservation Corps; a separate title to .

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encourage private sector initiatives; anti simplificationof the .grant, application process. '

The information for 'the study was obtained from 28 primesponsors, the designated unit of government responsible forETA programs. The study covers -the range of. CETA programsadministered by local officials, but not those adminis- "bared directly by the national office of CETA,.sucli asthe Job Cor9s (Title IV) or special programs for'Indiansand migrants. The sample of 28 prime sponsors, stratifiedby type of sponsor, (six cities, nine counties, nine con-sortia and four states), and by variations in populationand degree of unemployment, was drawn from the universe of

. more than 400 prime sponsors. In each.of the 28 sites,resident field research associates interviewed key offi-cials as well as other knowledgeable persons. The infor-mation they collected was supplemented by data. from thenational reporting system of'the Employment and Training,Administration of the Department of Labor and by othersources.

This study is part of the program of the Assembly,Behav -iorkl and Social Sciences of the National Reseakch Council.Witliam Mirengoff, who originated the project, was thestudy director. He assisted by Lester Rindler, seniorresearch associate. Dr. Claire K. Lipsman, on loan fromthe Department of Labor, made an invaluable contributionto the design of the second phase of the surveil*/ and informulating recommendations for consideration by. the Com -iittee. The Committee is indebted to the resident fieldresearch associates, whose diligence and expertise madethis study possible. The Committee is especially grate- .ful to the prime sponsors and local respondent who pa-tiently responded to lengthy questionnaires and providedstatistical information.above and beyond normal reportingrequirements. .Research assistance for the project wasprovided by Richard C. Piper and Scott S.. Seablom. Mark

Kendall was a consultant for the econometric model in thepublic service employment chapter. Phyllis Groom McCreary

;4 was the editor. Marian D. Miller, Rose Gunn, Diane Goldman,and Ingrid C. Larsen furnished the support services.

I am grateful to the members of the Committee on Evalua-tion of.Employment and Training Programs, who providedadvice and guidance throughout the prgject and revieweda succession of drafts of this report.

The study was prepared under a grant from the FordFoundation. Supplementatlydnding was provided by theDepartment of Labor; Robert Schrank of the Ford Founda-.tion contributed te*the formulation of the study objec-tives and to the case study design. Stanley Brezenoff,

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. .4also of the Ford Foundation, has been a constant source of.encouragement and support. The authors wish to acknowledgethe cooperation, of the many persons in the national an.d

° regional offices of the Employment and Training Administra-tion who provide4 data and commented on the drafts of thestaff reRort and to Howard Rosen, Director, Office Of Re-search and Development and SeAkur Brandwein, Director,Office of Program Evaluation for helpful technical adviceand encouragement.

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Philip J. Jiutledge, ChairmanCommittee on tvaluation of -Employment and Training-Programs

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CONTENT'S..

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Part 1 OVERVIEW--

BackgroundCETA ObjectivessZlnain9

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Part 2 FINDINGS AND RECOMMENDATIONS 44Allocation ofrResources

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Substantive Aspects of cgTA programs `22

AdministrativeProcesses 35

Inseitutional Relationships 45

Summary .54. .

APP8NDIXManpower Acronyms 58

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Part 1 OVERVIEW.

BACKGROUND ..,

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The Comprehensive Employment and Training Act of 19731 7can be viewed against the backdropof changes in inanpawerpolicy over several decades. There has been growing ac- iceptapce of government intervention in the processes ofthe labor market to minimize dislocations and to protectindividuals from hazards Over which they have little con-trol. Legislation to set up a network of public employ-ment offices, to establish minimum standards of wages andhours of work, and to provide income support during periodsof joblessness date back to the 1930s. Federal subsidiesfor vocational education to help prepare youth for the jobmarket were authorized even earlier. The Employment Actof 1946, wi.i-b acknowledged federal +responsibility to '

promote maximum employment, is landmaik legislItion.In the 1960s manpower policy entered a new phase. Em-

phasis was on development of human resources, equal oppor-tunity for minority groups and others who faced specialbarriers to employment, and the elimination of poverty.There was recognition that even in periods of rapid eco-nomic growth, there are perons who, because of inadequateeducation, lack of skills, or structural impediments inthe labor market haie a particularly hard time in enter-ing and competing in the labor market.

The specific design of manpower programs has, from thebeginning, been shaped by the prevailing economic, social,and political climate. In the 1960s, the climate was con-ducive to manpower programs focused on the problems ofthose in need of assistance in obtaining employment. Thedisaiipptaged were "discovered"; the civil rights movement

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.was at a peak; the administration was cOmmitted to a "at.:

on poverty"; and the economy was in a pesition to absorb

"additional workers, even thpse at the margin of the labor

market.

In this propitiou's setting, a host'of manpower programs

for speci41 groups and places was initiated.

The primary,

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legislative, vehicles were the Manpower Development and

Training.Act of 1962 and the Economic Opportunity Act of

1964.

Their major components were work experience for

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disadvantaged.youth and skill training for adults. -Smalrer

programs were designed fort older workers and other special

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groups and for inner cites..

These programs were designed

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and controlled at the federal level and operated locally

by the employment services,: vocational education agencies,

and. various community ,organizations.that were usually Out-

side the local governmental unit.

Dissatisfaction with the tangle of separate programs

that evolved, plus the drive of the Nixon Administration

towards decentralization of federarprogrami, laid the

foundation for a basic reform of the nation's manpower

system.

In December 1973, after several years of legislative

.gestation, the Comprehensive Employment and Training Act

(CETA) was passed.,

Program control shifted from the fed-.

eral level to more thailb0 state and local units of gov=t`

.ernmen;:, and programs lost their separate identities and

funding,

These changes were expected to permit greater

flexibklity in fashioning programs to local circumstances.

.This reform of the manpower system appealed to pragmatic

administrators seeking a more rationa/ way to conduct em-

ployment and training activities, 't' tho e attracted by

4the features of grass roots participation, and to those

committed to a reduction of the federal role.

The 1970s were marked by sluggish economic growth and

diminished social activism,

The number of people seeking

help as a result of the recession increased sharply as job

opportunities grew more scarce." Rising unemployment stim-

ulated interest "in job creation programs that had been do...

mant since the 1930s and changed the size, objectives, and

designs of manpower programs.

The Emergency Employment

Act of 1971, known as PEP, authorized $2.25 billTbn over

a 2-year period to employ jobless persons in essential

public service activities.

By 1973, when CETA was enacted,

the)AFonomy had improved significantly except in lingering

pockets of high unemployment.

These were addressed by a

modest public service employment program under Title II of

CETA,

Before this program could be fairly launched however,

unemployment rose precipitously, and in lite 1974.CongresS

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.1 passed the Emergency Jobs and Unemployment Assistance Act,' adding a new pubis's service employment component (Title VI)to CETA and authorizirig $2.5 billion for it for one year.

) As the recession persisted, the Title VI pplic serviceemployment program grew and soon overshadowed the Title Iprograhs, that were designed to deal essentially with Per-

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sons at a disadvantage in seeking employment. In 1976,

Congress extended Title VI and in 1977 authorized'itsOansion from 300,000 to 600,000 jobs. By 1978, Titles IIand VI, the public service employment programs, accountedfor 58 percent of the CETA appropriation, compared with 34percent in 1975. CETA was now addressing two major dys-functions of the labor market--structural and cyclical.

CETA .OBJECTIVES

. The najor objective of CETA is to provide training andimprove femplovment opportunities for the economically dis-advantaiped and for the unemployed and underemployed. Themeans fOr accomplishing this end, the strategic objective,is to place the administration of manpower prOgrans withlocal a thorities and permit them to select programs ap-

;propria e to their needs.

Stratpg10.c Objectives

The first and central strategic objective of CETA, de-centralization, has been achieved. Now, for the firstus*, manpower programs in each cckamtinity are built intothe 1001 government structure' under=the authority ofelected officials. But the shi t from federal to local,'control occurred without abdica ion of federal oversightresponfibilities and the degree of federal presence con-tinues to be a controversial iss e. Although 90 percentof theifiscal 1978 CETA funds. art in programsunder localcontrol., there are increasing federal constraints oh pro-grams arising out of new legislation end from emphasis onlepartsient of Labor accountability that limits local au-Tohomy. Moreover, after the NixoryAdministration therewas less of an ideological commitment to decentralization.

CETA's second strategic objectivt was to discontinue17 separate and independent programa to give prime sponsorsthe flexibility to put together a mi of manpower servicessuitable to their localities. Bowev r, in response to new Idevelopments, Congress added new cat gories of service.

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SUMMARY DiF THE COMPREHENSIVEEMPLOYMENII AND TRAINING ACT (CETA)

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The Comprehensive Employment and Training Act of 1973 (PL 93-203i, asamended by the Emergency Jobs emit Unemployment Assistance Act of 1974.(PI, 93-567), by the Emergency Jobs Programs Extension Act of 1976 "(PL 94-444), by the Comprehensiv*mployment and Training Act Amendmentsof 1977 IPL 95-44)% and by the YoUth Employment and Demonstration Proj-ects Act of 1977 (PL 95-9)1 has eight titles

Tttle 1 authorizes comprekensive manpowservices for the unemployed,underemployed, and economically disadvantaged. Programs are.administeredby ptime sponsors,, which are cities and countieerf 100,000 or more, andconsortia. Xhe state government is prime sponsor for the balance of state.Funds are allocated according to each area's prior year's apportiongent,number of unemployed, and adults in low-income families. Prime sponsorsmust submit an acceptable plan to the Secretory of Labor, prep red in con-sultation with local advisory councils. A state manpower sere es council

reviews focal plans and arranges for the cooperation of state a flexes.

Title II provides ,,funds to prime sponsors and Indian teservat ons to hire

the unemployed in areas of substantial unemployment fok public service jobs.

Funds are allotted on the basis of the number of unemployed.

Title III provides for nationally administered programs for Indians,migrant and seasonal farm workers, youth, and other groups that are in par-ticular need of such services. This title also gives the Secretazy of Labor

1.1m0 responsibility for research, evaluation, experimental and demonstration proj-acts, labor market information, and job banks.

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Title IV authorizes the Department of Labor to operate, the Job CoTps,residential training centers for disadvantaged young men and women,

Title V establishes a National Commission fdr Manpower Policy to identifygoals, evaluate manpower development program* and make recommendations tothe President and to Congress. The Emergency Jobs Programs Extension Actof 1976 establishes a separate National Commission on Employment and %employ-.ment Statistics.),

Title VI authorizes public service jobs for the unemployed. Funds are al-located co prime sponsors and Indian tribes, based on the number of unemployed,the unemployed in excess of a 4.5 percent rate, and the unemployed in areasof substantial unemployment. Under 1976 amendments, funds for the expandedTitle VI programrare in new short-duration projects and most new participantsmust be long-term, low- income unemployed or welfare recipients,

Title VI/ contains provisions applicable to all2rogrima such as prohibi-tions against discrimination and political activillr

Title VIII establishes a Young Adult Conservation Corps to carry out proj-ects on public lands.

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Categorical programs, which amounted to more than orielhalf of all CETA resources in 1975, accounted for threefourths of appropriations in 1978. Indeed, all of theprogram titles in CETA, except Title I, authorize cate-gorical programs. Proposals now before Congress wouldcontinue tbe trend to address discrete problems withspecifically targeted programs. As'federal programs ex-pand in response to the needs of particular groups, theirpurposes are more narrowly defined,, the conditions areincreased, the federal presence is extended, and the scopeof state and local discretion diiinished. Underlthe im-PaCt of these developments, CETA has become a "hybrid"program: not entirely dedentraliz , nor completely de-categorized.

There are a number of subsidiaiy bjectives that Congresssought to achieve through the-manpower reform: imOrqvingthe system fOr allocating resources, eliminating duplica-tion and fragmentation in the delivery of manpower ser-vices, assuring diatservice deliverers of proven abilityare given consideration by local sponsOrs,.and providingfor wider consultation in planning for manpower services.

Program Objectives

CETA has two major'program objectives. The original leg2islation continued the structural objectives of earliermanpower programs - -to improve, throughoremedial training.and employment strategies, the employability of personslacking knowledge,_ preparation, and connections with theworld of work and to expand employment opportunities inareas-6f chronic and substantial unemployment. Amendmentsadded a counbercydlical objective -- creation of temporaryjobs in the public sector to coupter rising unemployment..

Meeting Structural Objectives ,The extent to which thestructural objectives of CETA are net depends upon who,isserved, the services they receive, and the outcomes ofthese services. The original act expressed concern forthe poor, youth, minorities, older workers, migrant farmworkers, Indians, and others who are at a disadvantage inthe labor market. However, the specific eligibility re-quirements of CETA were much broader. Not only were thedisadvantaged eligible, but also the unemployed and theunderemployed generally. Moreover, rising joblessness inthe 1970s expanded the constituency of regular manpowerprograms to include persons not ordinarily in need of man-power services. In the first 2 years of CETA,Ithe c6mbined

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effectlFrthese conditions-enlarged the pool of programapplicants, and Title I enrollees were older, better edu-cated, and less disidvantaged than their predecessors insimilar pre-CETA program.

The idsumption that employment and training grogramwill assist in the development of human capital is stillthe fundamental premaseof the structurally. oriented pro-

Igrams of Title I. In the main, the nature of the servicesprovided under Title I is much the same as before CETA.Local sponsors have not used their newly acquired flex-ibility to undertake radicarly.different programs. De-

centralization and decatenazAtion do not necessarily' produce abrupt changes frqm past patiernS, especially ifthe sponsor is-unfamiliar / with manpower issues and pro-

. grans. There has been however, a relative movement awayfrokt preparation for economic splf-sufficiency towardsubsidized jobs. Relative. expenditures for the majorTitle I development programs, classroom and on-the-jobtraining, declined between 1974 and 1976, while the pro-portion xpenditures for work experience and other in-come intenance programs roses Some increase in skilltrai g programs occurred in 1977. The shift towardsinco maintenance reflected the softening of the economyduring these years and sponsors' uncertainty of the use-fulness of skill training in a loose labor market. Evenwhere classroom training is prevalent, local sponsors seemto opt for low-cost, short-duratiQp courses.

The National Research Council (NRC) study limited itsexamination of the outcomes of CETA programs to the ex-

.'''. tent to which paIticipmnts obtained unsubsidioa employ-ment, Placementwoutcodes, the ratiosof perioris who enterjobs to those who terminate from CETA, are lower an before

C$TA for similar programs, whp.e the annual per person. costs of Titles I and VI are line with the pre-CETA

costs. The ratio of Peopli whe"entered employment fradult-oriented Title I programs was 42.percent in 197that is for every 100 who terminated, 42 wer.e either placedin jobs or obtained jobs on their own. The pre-CETA

estimate for comparable programs was 57 percent. Theplacement record for the CETA public service jobs programsis also lower than that of the'earlier PEP program. Place-ment rates for both Title I and public service employdentrose in 1977, but were still below rates far corresponding.pre-CETA programs. The.dilenna of manpower policy is its 4seemingly paradoxical emphasis on job placement while.iturges the enrollment of the least employable"

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Netting Countercyciical Objectives Central to thecountarcyclical objective of CETA is the creation of.public service jobs in addition to what. state and localgovernments would fund in the absence of federal support:units of government are required to Vaint4i9 their regularlevel of effort and may not substitute federal for stateand local funds. ,However, local officials, especiallythbse struggling withliscal crises; tend to view federal

,,funds as a source of fiebal relief, and substitution as

- been a thorny issue.This study estimates-that the direct job creation ef-

fect of CE,TA's public service employment (PEE).programsin the public sector averaged about 65 percent betweenquid -1974 and the end of 1976.. That is, out of every 100positions funded, 65 would not otherwise have existed.(These estimates apply to the period priory to the 1976amendments to Title VI that attempted to restrict sub-stitution.) Moreover, CETA salaries generate additionaljobs in the economy through the indirect multiplltr effect.No attempt has been mate to estimate the job creaNkon rateof positions allocated to nonprofit organizations, but itis presumed to be greater than thrate achieved in thepublic sector.

To hard-pressed officials, all dollars, whatever heirprogram labels, are green, an the difficulties of track -

ing,federal dollars thiough the mazes of local budget Aproceises make sube%Aution difficukkto identify, measure,and control. When Congress extended and expanded Title VIin 1976, it also attempted' to deal with substitution. The

Emergency Jobs Programs Extension Act ,(EJPEA) requiredthat all Title VI funds above the aunt'necessary tosustain existing levels of Title VX

mpemploymentybe used

to fund positions in short-term "projects" thatare notto be part of regular ongoing activities. They weeeto

4,be specific tasks conducted by`nonprofit compunity organ-izations or by prime sponsors. The, limited duration ofprojects, their separation from regular government activ-ities, and the encouragement of PSE funding to nonprofitorganizations were all intended to constrain substitution.'However, in the interests of rapid implementation of theexpanded PSE program, the original concept of a projectwas diluted. It remains to be seen whether the new pro-,visions of EJPEA will reduce job seepage and whether use-ful public service jobs were created as a result of thisamendment.

Balancing Multiple Objectives As CETA evolved it ;

became a bifurcated program. Titles I, -III, and IV were

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4 serving predominantly persons with' structural handicaps,- eTitles II and VI, the job creation:titles, were enrollingthe job-ready unemployed, generally persons higher on the'socio-econopicladder, They were not unlike these in theearlier PEP pFogram, but considerebly less.disadvantagedthan participants in Title I.. The existencelof two typesoprograms-tended to divide CETA 'Clientele into separatepopulations and reinforce the distinction between them..The programs were compartmentalized, and'this discouraged'both the,transfer of manpower training plients to PSE"programs jobs under Titles II and VI and the fide of Tith

PI resources to train PSE impicipanta. .the' 1976 amend-ments to Title. VI (EJPEA),Mhat emphasized creating jobs -'

' for the long-term, low - income unemploled; introduced athird manpower design: one that embodies both structuraland countercyclical objectives. In effe'ct, 'title VI, ih-

tendea as an economic response to.cyclical unemployment, s,..

was, because of tociaconsiderations, enliated.tostkvestructural purposes as wefl. Early indicati ns are that' '

.

!.;

'the desired changes in. Clientele are occurri ; g.'

The enactment of Title VI and,ite subsequent expinsionbrought a large volume of dollars and jobs to prime sOon-sor jurisdictions. .And with these came heightened -interestand 'fittention of.local elected officials in CETA, especial-.

ly in the PSE programs. In the face of the urgently&politically attractive jOb,g4Eation programs, the assN

1

development programs,of Titlert, although larger thanbefore, were relegated to the back burner.

The two PSE progiams had different objectives. Title

II was enacted as a continuing program targeted at selectedareas experiencing substantial and perdistent unemployment.Title VI, on the other, hand, was viewed as a general doun-tercyclical tool, directed to what was beldevedio be a 4temporary downturn in the economy. it was,authorized ini-tially for one,year and was applicable to all,areas. De-

spite the original differences bZtWeen Titles II and VI,they,became virtually indistinguishable soon after the -.-

programs were implemented. This was due in part to therite in the national unemployment rate that made,almostall localities eligible under Title II.- i

, I.

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SUMMING UP

. s (k 91.

The Committee's conclusions are based on the detailedfindings of the study which are presented in'the compre-

"hensive'staff report,, CETA; Manpower Programs Under LocalCtotro2. 'That report covers 8 subjects:;Resources and Allocations Developments in .funding

.0. manpower programi;.distributionaleffect4 of formula,used to.allocate resources; policy implications of hebalance of funds among the CETA titles.;

,Manpower Planning Evolution of the Manpower planning :ft

'system; role ef planning in the ,CETA decisi(fn mak g pro-cess; shortcomings in the art of planningfo LoyMen

. and training) programs. -

Administ4ation Implementation of ecentralizedemployment and training systesMevelopientoof the insti-tutional infrastructure to administer CETA progkams; roleof. elpcted officials; inierorganizationaI"relationshipsand )urisdictionalproblems.

Delivery of Services Effect of CETA on'tbe roles ofth4 organizations that have traditionally provided man-

ypower tervices, i,a, employment service,educatiOne.1agenci s, andtcommunity based Organizations;*changesin local systems for delivering manpowertservices.

Program Mix Effect of CETA on the kinds of emploand training programs provided underVitle compari nswith'pre-CETA pro4ramsr,shifts in program emphasis andquality of services.

Public Service Employment drowth and character ofpublic service employment programs; extent to which PSE

_ funds created new jobs or substituted federal for localresources; implications of PSE programs for manpowerpolicy. .

Clientele Eligibility criteria'for admission,to CETAprpgramsl.changes in the characteristics,of'CETA partic-ipants compared with prp-CETA manpower programs And rea-sons for the changessextent to which the CETA clienteleconforms to Congressional expectations. '

Program Outcomes Results and costs of CITA pfograms;comparisons with pre-CETA programs.

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Accomplishments

On the whole, the44study finds that CETA, in termsiRrw organization, delivery of service, and %cal participation,,

is a more effective way,pf handling the nation's employ-meet and training programs than earlier centralized andcategorical arra geMents. The expansion of the PSE pro-gram from a 300, 00- to a 700,000-job level in 1977 might

snot have been po e without localiblitht the ll administrativemechanisms in pla6e. .

Resources The allocation!of resources through formulasis a more' predictable way of distributing funds than the

,pre -CETA methOds. However, some refineAents are necessary,to target funds more precisely o people and areas ofgreatest need and to.measure the unemployment and .3.fi.come

of areas more accurately.Planning The process and,substace,of local planning

for man er programs has improved, although it is stilllargely a r ine for obtaining funding. A large majority

' of the local p ning councils are passive. But h'sig7nificant number ar uite active and there is substantiallymore local participation in decision making than there wasin the pre-rETA period. .

. P. AdmintStration The administration of programs by local

governments, after a sh1Whil start, is improving._ There iscloser atanagpnent -and accountability. Local staffs are.ina better position, to keep track of program operations thanhht ielativery'small number of Department of Labor regionaloffice"personnel operating from distant. locations. Thesedevelopments have been accompanied by a substantial growthin the number of administrative personnel among primesponsors: - .

..-

.Delivery Systems The trend towards the consolidation- --of systems to deliver manpowgr services is noteworthy;about half of the local prime sponsors studied were blitin140,

steps to streamline intake and placement operations forTitle I programs to avoid duplication.

1

Problems and Recommandatipna

r. These achievements must be weighed against five major,problems that impair the, effectiveness of CETA. These prob-lems and proposals to correct them are summarized below.The fall recommendations of the Committee gn'Evaluation ofEmployment and Training Programs appehr in Part 2.

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ieClientele- Th4re has been J.weakening of the Commitment

to the disadvantaged in Title I programs. The principal

reasbns for this change include: the breAder eligibilitycriteria under CETA legislation as comparpd with pre-CETArequirements; the spread of resources into suburban Areaswith-lower 'proportions of disadvantaged persons; and the_inclination of program operators to select applicants mostlikely to succeed. The proportion of disadvantaged per-sons in the PSE programs (Titles II and VI) has beenmarkedly lower than in the Title I programs to developemployability. However, the ratio of disadvantaged per- .

sons in Title VI hasbegun to increase /as a result of thetighter eligibility requirements in the 1976 amendments

A to Title VI. The Committee recommends that eligibility'under all titles be restricted to the low-income popula-tion (mcept for some openings in public service employ-ment programs), allocation formulas be revised to reflectthe'shift in eligibility, Public service employment pro-grams be redesigned to include a continuing program limitedto the economically disadvantaged, and prime sponsorssupervise the client selection process more carefully. -

Quality of Service The program emphasis of\Title thas shifted from activities that enhance human capital tothose that basically provide income maintenance. Thereare also serious questions about the quality of skill train-ing and work experience programs. Recint efforts to con-duct experimental and demonstration projects to. improve

...the quality of skill training and youth programs are astep in the right direction, but not enough. The'Committeerecommends more thorough and systematic assessmeiit of thecontent and duration of training programs, experimentationwith enriched work experience models, and closer links withthe private sector in developing programs that are relevantto the job market. Combinations 'of public service employ-ment 'and'skill training activities should be encouragedand more resources devoted to programs to enhance employ-abi ity under Title I.

ogram Outcomes There are various ways of evaluatingthe a cess 'of a training and employability program--in-

4 cluding increasing proficiency of skills and enhancementof ability to compete independently in the labor market.In the final analysis, however, the-primary criterion ofsuccess:is the extent to which enrollees are eblp to obTtain suitable long-term employment as a result of theirCETA experience. The Department' of Labor reporting systemdoes not provide information on the duration of employment.

'However, placement ratios--the percentage of terminees who

24

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trid jobs either through the sponsor's efforts or on theirownhave been lower in the first three years of CETA thanfor comparable pre-CETA'programs. The Committee recognizesthe special difficulties of placement in a'period of highunemployment. There are, however, some steps that Congressand program administrators can take to improve the oppor-tunities for enrollees to obtain unsubsidized employment.The Committee recommends greater emphasis on job develop-ment and placement activities and restoration by Congressof thi. placement objective in public service employment .

programs.

SubstitutiOh One of the major shortcomings of the PSEprogram is the(degreeto which its job creation objectiveis subverted 1* the siibstitution,of federal for loca5. funds..Recent amendments to Title VI, limiting most newly hiredparticipants to special projects, may tend to constrainsUbstktution. Tire Committee recommends renewal of counter-cyclical revenue sharing to help hard-pressed comerunitiesmaintain public services, limiting participants' tenure in .

- CETA to one year, strengthening the auditing an itoringcapabilities Of the Department of Labor, and amendin the

definition of projects to preclude activities that a in-cremental to regular ongoing services.

Institutional Networks Rekations between prime sponsorsand other government ana nongovernment agencies continueto be unsettled. This is particularly true of the associa- ,tion between the Employment Service and prime sponsors. In

its desire to reform the fragmented manpoger structure and

o reduce duplication, Congress fashioned'a federal -local,system"that parallelSoin several respects the eltistingfederal-etate employment service network. The Committee

. recommends that studies be conducted of the roles and per-formance of the Employment Service and OOTA systems, of theexisting relationships between them, and of the advantagesand disadvantagesiof alternative coordination arrangements.

Policy Issues

Several policy issues are evident in the CETA-programand, in one form or another4,.touch its major problems: the

Felationship between national policy and local practice;multiple objectives; ambiguous legislatibn; the balanceamong program components; and the place ofilblib serviceemployment in the overall design of manpower programs.

One of th4 most pervasive issues is the degree to whichlocal priorities and practices are consistent with national

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objectives. The issue is apparent in,thidetructural aswell as. the countercyclical components orCETA: Its both

there. is divergence betweerf,the national emphasis,upon en-

rolling those most in need iand the tendency of local pro-gram oPerators to select pakticipants likely to succeed.'In the public service-em*OYment programs, national at-.tentioh is riveted on creating jobs to reduce unemploymentwhile some local officials'view.the fedeeal funds as an--'opportunity to support their regular local budgets or asa way to avoid higher taxes.' The congressional responseto situations in which there are significant local de -parturs from national policy has been to legislate ad-ditional provisions which, in turn; timitthe degree oflocal autonomy.

Multiple objectives is another issue that pe'rmeatesCETA operations and generates organizational and program-matic problems. CETA has becomes program all seasons,but in the pursuit of one'set of objectives others arsacrificed, particularly if.Oey appear competitive. For

example: emphasis on thejob creation program of Title VIresults jai a de-emphasis of the employability developmentprograms of Title I. CETA strives for a high rate of jobplacement, yet encourages enrolling those , most difficult

to plIce, many target groUps ars.singled out for considera'tion, but injocusing On some, others are neglected - -it isunrealistic to expect prime sponsors to give simultaneouspriority tovveterans, women, the'long -term Unemployed,persons'on inemployment insurance (UT) rolls, those not

;70Peligible for UT, ,and welfarcjecipients.A third isue-that significantly affects CETA operations,

is the ambiguity of the legislation.. The political ne-cessity for some ambivalence to ensure the enactment oflegislation is understandable.: Nevertheless, the ambiguity '

-"of some CETA provisions results in confusion and bureau:.*

cratic conflicts. For example, the line between.primesponsor and federal authority is not clear. The Secretary'of Labor is admonished not to "second guess the good faith.judgment of the pkiie sponsor" but is also directed "to,addpt administrativeprocedures for looking behind.thecertification of compliance including...spot checking:.."Tireffect, the legislative historx leaves a large gray areain which,the'reach of the local authorities contends withthe grasp of the federal establishment.

The intent of CETA is also uncertain with respect tothe choice of agencies to provide manpower...services. Ac-

_knowledging the primacy of prime sponsors in a decentral-ized system, CETA places with them the responsibility for

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selecting program deliverers. However, prime sponsors are

also told to make full use of existing institutions ofdemonstrated effectiveness. Thus, having come down on

both sides of the issue, the legislation leaves it up tothe program addinistrators to sort things out as best they

can.The balancing of CETA objectives and the allocation of

resources among CETA programs-is another underlying issue.The question arises in several contexts. How should

manpower resources be allocated between structural andcountercyclical programs? Do the 1976 amendments to TitleVI bridge the structural and countercyclical objectiVes?Within the structural component of CETA, what proportionof funds should be directed to activities that enhancehuman capital and what proportion for programs that' es-sentially provide income maintenance ?'

CETA has demonstrated the effectiveness of publicservice employment as a temporary job creation program,but the tendency to Sbbstitute federal for local resourceslimits its usefulness in the long run. Congress has. takenseveral steps to address this problem: at issue is wheth-ez.those measures--short-term projects, increased use ofn6nprofit organizations as employing agencies, and enrel.1-ment of row-income persons--will be successful.

With respect to the broader issue of gove4eMentalstrategies to countem recessions, the question is hOW muchreliance should be placed on creating 4Dmin the publicsector compared with such alternatives as tax incentivesin the private sector, extended unemploymeht insurance,'accelerated public works programs, stepped-up governmentpurchases, tax cuts, or monetary policies? What consti-tutes an appropriate policy mix?

Seyond.CETA, Congress is considering the useof publicservice employment as a major elemedt,in welfare reformand full-employment legislatiOn. This raises such issuesas the extent to which Eh* public sector should be usedto create jobs, the limits of state and local governments'capability to absorb unemployed periBns; the degree towhich local governments have become dependentrotvIederallyfunded positions, and the consequences of jubsequent with-drawal'of these funds.

These are policy issues that need to be-resolved in 'thepolitical process leading to reauthorization of CETA. TAeCommittee fivors the reauthorization of CETA and hopes thefindings of the study*id recommendations in the pages ! thatfollow will provide a basis for discussion and decisions

6on some of the issues.

L27!

Part 2 FINDINGS AND RECOMMENDATIONS

i>4P

This chapter presents the recommendations of the Commit-tee on Evaluation of Employment and TrainingArograms, whichwas established to assess the impact of CETAon manpowerprograms. The Committee was concerned not only withlbeextent to which the congressional intent was fulfilled,but also with broader social, economic, and institutionalissues relating to manpower programs.

Government assistance in developing human resourcesthrough employment and training programs is an expressionof social policy directed to persons who lack skills orare otherwise at a disadvantage in the competitive jobmarket. Since funds are limited, the central social issue'is whether the CETA allocation formulas, eligibility re-quirements, and the practices of prime sponsors in select-ing participants are serving peciple and places with thegreatest needs.

The institutional issue that concerned the Committeewas the relationships among the federal, state, and locallevels of government in the administration of CETA. The

heart of the issue is the locus of decision making and ac-countability: Who -deckdes among alternative places, pro-grams, and people? *Inherent in this set of relationshipsis the cuettion of whether congruence can be achieved be-tween bational policies and local prime sponsor practices.The decentralization Of manpower programs has also affectednetworks u! ihst4tutions that traditionally have providedtraining and employment programs. The unsettled relation-ship between the Employment Service and prime sponsors isparticularly troublesome. The question is whether CETAhas indeed created a better organized system for adminis-tering manpower programs, one of the objectives that ledto manpower reform. Another issue is whether the CETAprograms are being used for local political Rorposesrather than for improving employability or creating job,.

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Finally, the Committee was interested in whether CETAwas achieving its basic economic objec.tives. Do the,structurally oriented programs provide the skills, ex-perience, and services that enable the disadvantaged tofunction more effectively in a complex and'imperfpct labormarket or have they become a disguised form of iicomemaintenance? Do the countercyclical public service em-ployment programs reduce unemployment or substitute fed-eral for local resources? The Committee was concernedwitp the kinds and quality"f services, the balance ofresources between structueal and countertyclical programs,and the placement outcomes,' A crucial question is how toprotect programs to enhance employability during periodsof high unemployment.

Although based on findings of the study, the redemmenda-tions also draw on the knowledge and experience of com-mittee members. In addition, the Committee examined othersources including material A from the National Council onEmployment Policy and the Rational Commission on ManpowerPolicy. The specific findings and recommendations thatfollow are grouped in four categories: allocation of re-sources; substantive aspects of CETA programs; administra-tive processes; and institutional relationships.

ALLOCATION OF RESOURCES

,Issues

Funds for manpower programs,4hich began as a tricklein the. etrly 1960s, have grown to be a sizable share offederal and local government budgets in recent years, The

amounts appropriated and the distribution pattern definethe scope of manpower programs and set limits on the kinds ,

/eof activities that can be undertaken. There are four prin- 'cipal issues associated with funding: the level of appro-priations necessary to deal with manpower problems; theappropriate balance between subsidized public employmentand other measures, particularly unemployment insurance,to alleviate countercyclidal joblessness; the proportionof CETA' funds that should be devoted to structural objec-tives vis-a-vis the proportion for countercycl4cal jobcreation; and the suitability of the allocation formulasfor the specific objectives of each title.

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Funds for CETA rose from $2.3 billion before CETA.to $5.7 billion in fiscal 1976 and to more than $8 billionin both 1977 and 1978, as the CETA public service jobsprogram became one of the chief cornerstones of economicstimulus policies. But CETA is only 9ne'of the measuresdealing with cyclical unemployment. Yn fiscal 1976, nearly4, times as much was"spent for unemployment insurance asfor CETA, and there were also special appropriations forlocal public works and for countercyclical revenue shar-ing. The amount of funds devoted to manpower training andemployment compared with alternative approaches for deal-ing with the economic downturn has been a controversialissue.'

CETA originally emphasized hwtan capital develop-mint (Titles I, III, and IV), with a minor job creationcomponen t for areas of substantial unemployment (Title II).Most of the increases in CETA funds, however, have beenfor public service employment (Title VI), signifying ashift to countercyclical job creation. Even Title I, whichwas intended.id address structural 'problems, has been used V.in some areas to support public service jobs for the un-employed. The enactment of the Emergency Jobs ProgramsExtension At and the economic stimulus appropriation of1977 greatly increased the scale of the PSE programs,putalso targeted them to the long-term, low-income unemployedand to welfare recipients. The increaserin funds for na-tional training programs and the passagd of a youth employ-ment act in 1977 also represent a return to emphasis onthose unemployed for structural reasons.

Although allocating funds by formula is more pre-dictable than methods used before CETA, the formulas them-selves have had unanticipated results. Under Title I, theamounts going to major cities, where problems of unemploy-ment and poverty are concentrated, have declined year byyear despite the mitigating effect of a "hold harmless"adjustment that. maintains funds for each area at 90 percentof the previous year's level. The hold harmless adjust-mehthas not been effective in preventing the erosion offunds for some areas at a time when inflation is chippingaway at the purchasing power of CETA allotments. More-

, over, there are serious questions about the formula elementsthat are supposed to measure economic hardship. Theformula is weighted by the unemployment factor and doesnot adequately reflect other labor market dysfunctions,

18p

such as low labor force participation rates or underem-ployment, that may also be important.

The NRC study found deficiencies in the Title IIformula, which is designed to channel funds for publicservice jobs to areas of substantial unemployment. Witha national rate hovering around 7 percent, the unemploy-ment rate criterion for Title II area (6.5 percent) hasbeen too low through 1977 to ,identify those areas suffer..ing the most. Using unemployment data for a 3-month 1period to qualify areas and to allocate fuilds resultsin inequities due to seasonal and temporary factors. The

allocation formula is based exclusively on the number ofunemployed people and does not give extra weight to areaswith the most severe' unemployment, as reflected in un-usually high unemployment rates.

All of the allocation formulas rely on unemploymentestimates for local areas. Unemployment is estimated froma combination of unemployment insurance data and the Cen-sus Bureau's monthly-survey of the labor force. The,otherelement in the Title I formula, the number of adults inlow- income lewdness is also a derived figure. There areserious measurement problems involved in estimating bothunemployment and poverty; both rely on derived techniquesthat are not sensitive enough to yield precise estimatesfor small geographic areas--in the case of unemploymentfigures, as small as neighborhoods with 10,000 population.Amore serious question is whether the conventional mea-sures of unemployment and poverty are appropriate foridentifying the kinds of economic hardship and labor mar-ket disadvantage that Title I of CETA was intended toaddress. This problem was recognized in CETA itself. The

act'directed the Secretary of Labor to develop an annualstatistical measure of economic hardship in the nation.Among the factors to be considered in addition to unemploy-ment, were! labor force participation, involuntary part-Same employment, and full-time employment at less thanpoverty wages. The Departmin't of Labor has not as yet

ifgreloped and refined the kind of hardship measure en-visioned by Congresst This subject is being studied bythe National Comnission on Employment and UnemploymentStatistics established under a 1976 amendment to CETA.

Another question raised by the study related to 5he.'timing of allocations. One of the most pervasive adminis-trative problems has been uncertainty of funding. Sincethe economic conditions addressed by Titles I and II tendto persist from year to year, it would be preferable to

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have a longer funding cycle toAliminate year-to-yearchanges.

Recommendations

1. While unemployment insurance should continue to bethe major means of dealing with short-term unemployment,the Committee recommends that emphasis be given to moreconstructive measures than income maintenance for thelong-term unemployed.

The Committee believes that training or public serviceemployment programs should be the primary vehicle for as-Sisting those who have exhausted their unemployment insur-ance and other long-term unemployed people. Unemploymentinsurance should be used primarily to provide short-termincome support. CETAand bore particularly its trainingprograms, are geared toward retraining and employabilitydevelopment. In that sense,, they may have more lastingbenefits for persons who have little prospect of return-ing to previous jobs or who require remedial services.

Congresa\should determine the appropriate balance be-tween the structural and countercyclical objectives of thdiffe/ent CETA titles. The Committee suggests that, forsignificant impact, the structural components of CETA(Titles I, III, IV, and VIII) should be supported at alevel equal to 2 percent of the labor force (exclusive ofsummer employment programs for youth) and countercyclicalpublic service employment programs should be supported ata level equivalent to 25 percent of. the average number ofpersons unemployed 15.weeks or longer. In 1975, at thetrough of the recession, the number of people unemployedfor 15 or more weeks averaged 2.5 million. By 1977, ithad fallen to 1.9 million. The structural and counter-cyclical programs of CETk would have provided 2.5 millionopportunities, oeabout one-fifth of the number in needof employment or training assistance.

2. The formulas for allocating Titles I, II, and VIand summer funds for youth should be revised.

(a) Congress should discOntinue the 90-percent hold*harmless adjustment under Title I. Instead the mipipumamount for each area should be pegged at the amouneie-ceived in 1978, with adjustments whenever the total amountof Title I funds is changed.

The hold harmless adlustment (90 percent)of prior yeaf'sfunds) was intended to prevent major disruptions in area

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fund levels', but it has only delayed them. Most of themajor cities have received less Title / funds year by yeardeSpite the 90-percent minimum. With more funds availablefor Title I, it is anomalous that any city or other CETAprime sponsor should now receive less money than it did in1974. A hold harmless adjustment based on 100 percent ofthk 1978 Title Itifillotment for each area would end thedoWnward spiral in funds for major cities and other spoil -izas.

(b) The Department of Labor should continqe to explorethe development of an index of economic hardship and labormarket disadvantage on a local basis to replaCe the unem-ployment and low-income factoreoin the Title I formulae

The Title I formulaielies.on unemployment estimates;it does not consider:Measures of other labor market dys-functions-- intermittent employment, low income, and dis-couraged jobseekers. An index reflecting a combination ofunemployment and low income may be aripbr4 appropriatemeasure of economic hardship, ifthe'data for smallargasican be derived from unemployment and poverty statis-tida.4 The index might alscibe designed to take,intoac--count other relevant factors, such as the duration ofunemployment and the educational attainment of,the unem-ployed. ..A..study_should be made not only of the feasibilityof an iefrex of economic hardship, but also of its distribu-tional effects. -If the present concept of "adults in-low-indome families" as a proxy forivarious labor marketproblems is'retained, the Department of Labor shouldadjust' the figures for regional and urban-rural differ-entials in.living costs.

(c) The 6.5 percent unemployment rate criterionlisedto identify, areas of substantial unemployment undei Titletr.should be changed to a rate which is j fixed percentageabove the national unemployment rate.

4 Thq 6.5 percent ditemployment rate to 'qualify for TitleI/ funds was adopted when the national unemployment ratewas about 5 percent. When the national raters more than7 percent and prictically all prime sponsor areas quali-fied for Title II funds, itiwas obviously inappropriate.A sliding "trigger" would mote effectively direct fundsto areas with the most severe unemployment. The localtriggear, for example, might be set at an unemployment rateof 351*rcePt aboye the .national unemployment ,rate, or 6Percent, whichevir is higher.

(d) Annual, rather than 3-month average, unemploymentfigures, should:-be used to qualify areas of substantialunemployment and to allocate Title II funds.

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A 3- month'' eligibility period, prescribed for identify-ing areas of substantial unemployment, is designed forquick response to suaden changes in unemployment levels.HoweveT, it is not appropriate for Title /I, which ismeant for areas with chronic unemployment problems. More-

.

over, the 3-month average creates inequities in distribu-tion of funds due to the influence of temporary and'seasonal factors. Areas with volatile unemployment farebetter than those where unemployment is high but seasonalflucdtations are less sharp.

(e) A uniform method of identifying sub-areas of sub-stantial unemployment should be adopted.

The geographic unit for Title /I eligibility - -an areaof substantial unemployment --may be a relatively small

section of a city or county. Sudh areas are sometimesgerrymandered: sections with relatively low unemploymentrates may become eligible for funds by being combined withadjoining high unemployment neighborhoods.3 The resultsare funding A uniform method should be adoptedfor delineation of areas, based'on standard and objectivedata, that are not subject to manipulation.

, (Os Congress should include a "severity" factor in the,Title II formula to give extra funds to areas of high do -;employment.

The Title II formula allocates,firds on the basis ofthe total number of unemployed per:Ohs. it does not Of-,ferentiate among eligible areas on the basis of severityof unemployment. For example, if two areas have the samenumber of unemployed but one has an unemployment rate/of10 percent while the other has a rate of 6.5 percent,;both receive the same allotment although the labor marketconditions are much worsein the first area. A two-/part

formula should be used for Title II, with the second partdistributing additional fund to areas of extremely highunemployment where prospects of obtaining jobs ar notfavorable. Part of the Title /I funds could be distributedon the basis of the number of unemployed in each eligiblearea and part on the basis of the number of unemployedabove 6.5 percent (or whatever rate is used es i criterionfor identifying areas of substantial

(g) Title VI should be a standby public vice employ-ment program that becomes operational when Ow nationalunemployment. rate reaches a level that 'signifies the on-set of a recession and remains at that level for at least3, nths.

avoid delay in getting a vountercyclical public- eery e employment program under way,rTit/e VI should be

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retained on a standby basis, actuated automatically by anational unemployment rate trigger. Ihe amount of fundsmight be graduated, based on the number or proportiontof unemployed people out of work 15 weeks or longer.order for Title VI to have greater effect, areas withunemployment rates (less thin 3 percent) should be excluded.

(h) The Title vr formul4 should be revised total7 intoaccount new eligibility criteria.

The Emergency Jobs Progratis Extension Act of 1976changed eligibility requiremtnts for Title. VI to reservenew openings. for low-incomes, long-term unemployedpersonsand for welfare recipients. The allocation formula shouldbe reviewed to see how it can be made more relevant inMr= of these new eligibility requireients. Factors basedon income and/or durationof,unemployment ;light be included.

(i) The Department of:,Lab& should revise the formulafor the summeremployment program for youth to includeyouth unemployment factors.

The formula for the summer program for economicallydisadvantaged youth is essentially the same as the TitleI formula. It should be made more responsive, subject tothe development of necessary data to the population tobe served, particularly minority youth in large cities.The Department of Labor should explore with the CensusBureau the possibility of deriving area estimates of dis-advantaged unemployed yOuth from special national familyincome surveys. The 1975 Survey of Income and-Educationprovides state data on the number of youth in povertyfamilies which may be used as a basis for deriving esti-mates, but the informatioqdoes not include age or un-employment status.

3. Biennial apportionmqnt should be used for Title, I'funding.

Since Title I addresses long-term, intractable pioblems,it may be unnecessary to recompute the proportional sharefor each area dvery year., The share could be establishedevery 2 years and the amount adjusted each year accordingto change's in the Title I appropriations. A longer cyclewould "make planning more meaningful and contribute tomore effective administration.

SUBSTANTIVE ASPECTS OF CETA PROGRAMS .

While CETA has shifted the locus of responsibility.foradministering manpower programs, the underlying policyremains the same--to improve opportunities for individuals

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23

faced with chronic barriers to employment, that is, th4eunemployed for structural reasonst During periods ofeconomic sluggishness, manpower policy objectives are ex-tended to those unemployed for cyclical reasons. ,Althoughthere is consensus as to these general goals, there is lessagreement on the specific questions of who Mould be served,what assistance shbuld be provided, and what results shouldbe expected. The Committee As reviewed these ,:ssuesagainst the backdrop of the recession, which enlarged thedemand for services and reduced ,the potential for success-ful outcomes.

4

Who Should Be Served

Issues

The competition foi limited resources between those whowere the focusoffederal assistance in the,1960s--thepoor and minorities - -and the rising numbers of less dis-advantaged, cyclically unemployed persons,in the 197*.has emerged as a basic,issue affectin3 manpower legip=lation and program operations.

Findings.

.4The preamble to CETA that identifies persons to be

served--the economically disadvantaged, unemployed, and= underemployed--is broad and ambiguous. The individual

titles are more specific. Under Title4, for example,prime sponsors are.to serve persons "most in need,rin7cluding ldw-income persons and those writ, hpve limitedEnglish-speaking ability. Title II requires priie spon--sons to give consideration to the long-term anempicyVietham veterans, former manpower trainees, and t e"significant segments" of the unemployed pop zon'thatiare in particular need of assistance. Und the' original

Title VI, enacted in 1974, preferred co ideration wasstobe given to persons who had exhausted employment insur-ance benefits or who were not eligibl for UI, but thosepreferences stopped short of being e her priorities oreligibility criteria for entrance,' to Title VI PSEprograms. Sponsors were free to choose target grodps,based upon their analysis of the local job markets.

In addition to the statutory language, other factor'shave contributed to broadening the client base: the

36

24

allocation formulas, which spread funds into relativelyaffluent suburban areas, decisions by'local officials inresponse to community pressures and.built-i4incentivesto select those most likely to succeed.

During the first 2 years of CETA, thereowas a largeincrease in the number of persons served, due to sub-stantially greater resources, and there were some sig-nificant changes in the types. of clients.

With a large proportion of CETA enrollees in publicsector employment, the characteristics of enrolleeschanged. CETA clients as a whole are relatively older,better educated, ankless disadvantaged than those incorresponding manpower programs in fiscal 1974.

Title I training and employability programs continueto be oriented primarily toward the young, minorities, andthe economically disadvantaged. However, the proportionsof youth, of persons who have not finished high school,and of poor persons are smaller than in correspondingpre-CETA programs. The decline in the proportion ofclients who have not completed high school is related tothe decline in the proportion of youth.

Participants in PSE programs (Titles II and VI), arebetter educated, less disadvantaged, and less likely tocinie from minority groups than those enrolled in Title Iactivities. The percentage of AFDC and other public wel-

. fare beneficiaries was much lower in PSE than in Title Iprograms: 13 percent under Title II and 18 percent underTitle VI in 1977 compared with 26 percent under Title I.The percentage of female's was also significantly lower:40 percent for Title II and 36 percent for Title VI cow-

red with 48 percent for Title I. While Titles II andVI were not meant specifically for the disadvantagedgrobps, the difference in the socioeconomic level between'their participants and those in Title I raises a questionof social psOicy

Id.blffl 1976 extension of Title VI, Congress directedadditional resouices to the low-income, long-term unem-ployed.. This change, when added td existing progragi,_mayresult in 'a three-part system: employability prRgramslargely for the disadvantaged under Title I; emiloyment_in regular public service activities under Title II andthe original Title VI for those h4gher on the socioeconomVladder; and a new typo of public service employment for thelow - income person in special projects in She public sec-tor/ the new Tile VI.. .

;

25

Recommendations'

1. Congress should reconcile the eligibility require-ments among the various titles of the act.

Under Title I, an enrollee may be any unemployed, under-employed, or economically disadvantaged person. Title IIstates that enrollees must have been unemployed for 30 daysor more and must live in an area of substantial unemploy-ment. Originally, Title VI required 30 days of unemploy-ment. The 1976 amendments to Title VI tightened eligibilitycriteria: most new participants under Title VI must belong --term (15 weeks or more), low-income unemployed peopleor welfare recipients.' Thus eligibility standards forTitle VI, a countercyclical measure, are more stringentthan for TitleI, which was intended to deal, with struc-tural unemployment., These anomalous requirements shouldbe reconciled so that the criteria for participatiOn in aCETA program are related to the type of client to beserved under each of the CETA titles.

The Committee recommends thit:- Titles I and II be restrilted either to the eco-

nomically disadvantaged or trisVp(-the low-inpoiegroup (including welfare rec Tents .

' - Title VI be limited to (a) economically disadvantagedor low-income individuals, or (b) the long-term unemployed,

moowith representation of the unemployed poor (*eluding wel-are recipients) in proportion totheir numbers among alleligible persons.

These eligibility restrictions would not only resultin more consistency but, more importantly, assurethatlimited resources are spent on those most in need. Alter-native (b) would maintain the countercyclical nature of thePSE program, permit some flexibility in selectirig appli-cants for PSE openings, but still ensure that the unemployedpoor participate in the program.

2. Congress should establish a limited number of vLientgroups to be given priority under Titles I, II, and VI.

The act at present identifies a number of groups forconsideration within eligible categories: those "most inneed," including low - income persons d persons of limitedEnglish-speaking ability kb Ti e Is Vietnam-era veterans,bonier manpower trainees, and t0,1 disadvantaged long-termunemployed (Titles II and VI), and unemployed persons whohave exhausted UI benefits, persons not eligible for UI,persons unemployed for 15 or more weeks; and welfare re-cipients (Title VI). Moreover, sponsors are to serveequitably the "significant segments" of the unemployed

. 38

26

population in PSE programs. This patchwork system ofpriorities needs to be reconciled. The attainment of oneobjective is often made at the expense of others. Theproblem arises in particular between Vietnam veterans,Andthe low-incone populition since veterans do not needsarily fall in the low-incobe,eategory: A similar prob-lem exists in'trying to reconcile the pfiorities betweenpersons who have exhausted UI or those not eligible forUI with the, income criterion. Thd Committee believesthat the family income criterion should take precedence.

3. Prime sponsors should exercise more control overthe client selection process to ensure.that prioritiesset forth'in the act are observed.

Selection of participants for public service employwent is typically left to employing agencies, which' tend

. I

to choose those whom they consider theinost qualifiedfrom among the applicant referrdd. rather than those most

Fin need. MOreover, spon) s exercise little control overthe selection process of itle t programs. Sponsors should

4'. tighten control over intake and selection systems eitherby direct operation of manpower centers or, where otheragencies do the selection, by requiring that applicantsbe vated by a point system related to the eligibility andpreference criteria in the act.

Title I Program Mix

Issues

Two major types o f program changes were anticipated withthe decategorization of Title I. The distribution of

-funds among .major progiams was expected to change as/ sponsors began to adapt,categorical programs tothe /*e-t.) ciao needs of their clients and their labor markets.

And it was expected that the elimination of categoric)restraints would generate ideas that would refashion pro-gram design. The issue is the extent to whit local pro-grai changes have been made and the implication,of suchchanges for clients.

Findings

Department of Labor (DOL) reports indicate a rela-'tive shift from programs that stress preparation foreconomic self-sufficiency to thoie providing temporary

'

3.9

27

emillooyment: Although the absolute amount spent for class-room and at-the-job training has risen under:CETA, ithe pro-portion of Title I funds spent for these activiticeAeclinedfrom 60 percent in fiscal 1974 to 42 percent in Ziscal 1976and 50 percent in 1977. There have been relative increasesin public sector employment and in manpower services to--partiqpants--including assessment, counseling, and sup-portive services. More than so:percent of combined expendi-tgres under Titles I, II, and VI in fiscal 1976 were forwork experience or public service jobsa.

Although the balance among programs has changed, therehas been little change in basic program design. Sponsor*were inclined to continue the kinds of programs they in-herited. Few of thesponsors had the necessary' expertiseto improve existing models. Moreover, during the first 2Years of CETA both the Department of Labor and the sponsorswere occupied with administrative matters and pressures,arising from the recession.

There are indications that thequality of Title I ser-vice has been dilued. Some sponsors pursued strategies'involving low-cost, short-duration courses, and began toemphasize direct placement of persons who are relp.for jobs.

Reconndations4,

1.

-

/The type and quality of training programs should beupgraded and mode more relevant to demands of the labormarket.

Approval of plans.foetraining should rest'upon evidenCeof specific'standards for skill acquisition that are Felevent to occupational requirements and that contribute to asignificant improvement in the emiloyability of enrollees.Insofar as practicable, training should be directed to oc-cupations thi't offer. atable employment.

pol. regional offices and primefr.sponpors.should emphasize

greater involvehent-of private employers in the trainingprocess in order to tailor skill training to the demand

groups to contribute to the design, implementation andfor_workers. - They should foster employer/union

evaluation of classroom training in specific occupations 4

as well as to aaist'in the placement of trainees. Greater t,

efforts should be made to develop on -the -joLtraining pro- .

grams and apprenticeship openings in the nate sector.2. The impartment ofImbor.should emphfsize more

Strongly substantive manpower programs that 'contributeto the enhancement of human capital. ti

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r28

Title I resources should be focused more heavily oneducation and skill' training for clients who need oasis...*tance to become. readily employable. A higher proportionof Title I funds should be devoted to classroom and on-the-job traing and a smaller proportion to WI* ex-perience (unless accompanied by substantive basic educationand skills training) and to ictl, market services that esultin short-term employment in secondary labor markets.

3. The Department of Labor should do more to encour4esponsors to develop creative program approaches. -

The Department recently set aside funds for skill train-ing and improvement projects and has encouraged experi-mentation with new approaches under the Youth Employmentand Training Act of 1977. Continued emphasis should begiven to such.experime#ts and to the development'of modelsfor bOth youth and adults that combine work experience

with training to improve the skills, and employability of .

clients. For example, work and training projects leadingto occupationalrbredentials should be developed in coopera-tion with community colleges. Combining work experiencein the public or privata7sectorwith,preal training mightbe considered as a means of enrichingieork experience andmaking it more relevant to the job Market. The Oepartmentshould also encourage innovation by offering incentive ,

funds or by subsidizing some of ihi, risk.. State manpowerservices funds might also be,used,to foster new approaOhes.

e..-

Prog2em Results

Issues/ 44S.

Thesprime measure of CETA's effectiveness is the e*tdntto which persons completing manpower programs are success-

ful,in obtaining and,,retaining jobs both in the short andlong term. The,NRC study considered 'only the short-rangeeffects, althoUgh it is recognized that enhancement ofemployability and long-term earnings potentiaI are im-portant objectives.5 The issue is whether CETA program*are effective in obtaining undubsidized employment forParticipants' after termination.

Findings ,

In fiscal 1976, 0.5 million of the 1.7 million permssons who-terminated from Title 't II, and VI programs

. found employment (see table below). And even despite some

.41di 44

gt

29

tendencp to enroll those most likely to Succ ed, the ratioof persons who obtained jobs to the number ho-terminatedwas lower than for corresponding pre -CETA training andpublic service employment programs: 'lower placement ratiosare partly due to generally looser labor market conditions,buotler factors, including placement strategy and de-

ft on transition of Title II and Title VI participantsto unsubsidizfd employment may be equally significant,Placement rates rose from 29 percent in 1976 to 35 percentin fiscal 1977.,

..., °

FY 1976 tY 1977

Number(in thousands)

NumberPercent (in thousands) Percent

'Enrolled m Tolls 1,11, and VI 2,482 2,361' Terminated 1,677 ' 100 1,471; s 100

- Entered employment 486 29 510 t 35Direct piacementsa 147 4 70 5

indirect plaiementsb 261 16 320 ,.22Obtained employment

Other points terrninahonsc109

, 648. 6

39120

' 533..8

36oey,

Nonpositwe terminationsd 543 : ' 32 428 29s

SOURCE. Computed from Employment and Training Adnuniftrattog, U.S. Departmentof Labor data.NOTE. Details may not add to totals due to roundingdIndovidifals placed after receiving only intake, assessment, and/or job teferral service

. bIndividuals placed after pat umpation in logging, employment. or supportive servIces.cEniered armed forces or enrolled in school or in other manpower provatnsdflsd not obtain employment. enter armed fotces. or enroll in school or in other menpower programs

i///Aboutwone -half of those who enip ed employment went.

through a CETA training course or o er substantive activ-ity (indirect pladements)s,the r t were placed dfrectly,

. without participating in wprogiam, or they found jobs on-thetr own. Job opporttnitie were better for white thanfor nonwhite persons. Per ns with a high'school or posthigh school eddcation those who Were not economicallydisadvahtaged appeare to have better job opportunities% 4

4 About one-thir of the terminations were "nonposi-. tive,r that is CETA participants who did not enterem-, ploymint or return to 'school' this high percentage is.

indicative of underlying problems either in'Aelectien'ofenrotlees or in program activities.

Little reliable information is 'avaiiable at thistime as ,to the quality of placements, ,joilduration, orlongterm earnings gains. Information on the noneconomicbe efAs of CETA in terms of th* huthan resource develop- ..

\/ nt is no better. Finally, little is know about possibletive effqcts of

..

the CETA'exierience.... 1

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3a'

Recommenaationi1. Placement of participants in unsubsidized em-

ployment should be recognized as the primary objectiveand should receive more attention at all leVels of CETAadministration.

Although the pbssibilities for enrollees to obtain jobsape limited in a loose labor market, the study finds thatthe decline in placement ratios compared with pre-CETAprograms is in part related to less effective job develop-ment efforts under CETA. Assignment of more resources tojot-development and staff training in dwis function shouldimprove the employment progpects of enrollees. However,increased job placement rates should not be accomplishedthrough placements in low-wage, temporfity jobs; the goalshould be placements in long -term, stable employment.

The.originalCETA legislation emphasized the need tofind openings for PSE program participants in regularuntubsidireee-iployment, but Congress explicitly downgradedthis objective in an effort toNhasten the implementation *

of the program. A 1974 CETA amendwnt stipulated thatplacement should not be,required as a condition for re-

- ceiving funds, but considered a goal, and that waiverseu would be permitted when the goal was,infeasible. It is

'recdmMended that Congiess restore the transition objective

for Titles I end VI. Quotas or other administratTvagka-sures should used to spur efforts to place participantsin mansubsidiz jobs. For example, employing agenciesshould be requi ed to fill a specified percentage of theirregular vacancies. with CETA employees.

Moreover, Congress should limit the durationof employ-ment of any participant to^one year. _Under the-EmergencyJobs Programs Extension Act, piojects are limited to ayear, but a participant may be kept on the rolls indefi-nitely. Limiting tenure would create pressure to find un-subsidized jobs. Sponsors should be urged to use eitherTitle II or TikleVI administrative funds or Title I fundsfor auxiliary training that will enable participants toqualify for'unsubsidized employment.'

2. Researab should be undertaken to assess the eco-nomic and noneconomic effects of CETA.

The national longitudinal study sponsdked by the De-partment of Labor is expected to provide insights into -

the effect of CETA on subsequent earnings of participants.

Howevei, sponsors should also conduct follow-u#0studieson terminated participants to ascertain the kinds of !ern -

'ployment'obtained, earningg, stability of eiplorment,and

7 41'3

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31

relationship of jobs to training or experience in CETAprograms. Special efforts should be made to determinethe reasons for terminations to obtazn clues on how toimprove program design and effectiveness.

Research should be undertaken to measure the off-setting savings of CETA'programs in welfare and unemploy-ment insurance payments and tax revenues from earnings,as well as the noneconomic effects of CETA in terms ofimproving morale, family stability, etc. Possible counter- .

productive aspects of CETA, such as disincentives to seeknonsubsidized employment, development of poor work habits

. in CETA programs, and any negative effects of CETA on thequality of public service should also be explored. Furtherresearch is needed on'the effect of targeting, project re-quirements, and limited duration of projects on the ef-fectiveness of PSE in meeting *comae objectives.

Public Service Employment

Issues

The objective of Title II in the original FTA.legisla-' tiOn was to provide federally subsidized Oa= sector jobs

inareas of substantial unemployment. With tkle Anset of

the recession, Congress enacted,Title I, which,¢rovidedfor public servickemployment programs in all areas and au-thorized,a 6-fold. increase in resource . Twoof the largeissues associated with public service:employment programsare substitution, the"Use of CETA hands-to support jobsthat would otherwise be financed.frariocal resources, andthe targeting of public service employment to specificclient groups. Other matters of concern are the relation-ship between the Title II and Title VI programs, the use-fulness of PSE activities, and tfie placement of partiCipantsin'unsubsidized jobs.

a0 ,tinfg0 ? 1 '

.

, With the authorization of Title VI, the focus as wellas the scale of PSE programs changediradically. AlthoughOgress intended that Titles II and VI have different ob-jectives, the differences between the two in terms of geo-graphic coverage, eltgibility, and target groups *hie soonbbsdured. Most areas qualified'for both programs, andparticipants were oft witched from one title to the other.

.--F--- - 44 I/ J1

1

32

Most PSI jobs were in public works, transportation,parks and recreation, law enforcement, education, and so-cial services. It was the opinion of most respondents thatPSE workers were engaged in useful public service activities.In fiscal 1976, Title II and Title VI employees rikresented2.3 percent of all state and local government employees.(By early 1978, with the expansion under the economic stim-ulus program, Title II and VI accounted for over 5 percentof all state and local employees.) In some areas the per-centage was much higher, and sponsors were becoming de-pendent on CETA employees to provide essential services.

The common objective of Titles II and VI is to re-duce unemployment by creating public sector jobs that wouldnot otherwise have existed. Experience under the EmergencyEmployment Act and other federal grant programs indicatedthat there is a strong incentive for local governments tosubstitute federal for local funds. Congress sought toprevent sub'stitution by requiring sponsors to maintain thelevel of public service employment they would have, hadwithout CETA.,

This study Classified prime sponsors according to theextent ofjob creation with Title II and Title VI fundsfrom July 1974 to October 1975. The classifications werebased on observations. of local field associates, trends.in local government employment, 9srfiscal position of theprincipal governmental units, perceptions of local off i-cials as to the objectives of CETA public service employ-ment programs, typei of positions held by participants,extent to which nonprofit agencies were the employing units,and overt instances of maintenance-of-effort violations.

Based on this information,. 14 of the PI local prime. sponsors were found to have had substantial job creation

in the first 6 quarters of CETA, 5 had moderate job gains,and 5 had little gain. Most of the areas with substantialgains were small- or medium - sized, areas with moderate or ,

little fiscal pressure. Larger urban aiaas were difficultto classify because they may have used some CETA positionsto prevent cutbacks in employment.

Based on an econometric model, the net job creationratio nationally was estimated to have ranged from 0.82 inthe second quartet after the program Agan to 0.54 after10 quarters, averaging 0.65. That is, for every 100 CETApositions, 65 represented positions that would not other-wise have existed,.and 35 may have been substituted forregular jobs. Economisti have noted, however, that evenwhere substitution occurs, federal grants for public serviceemployment, like other federal grants, are likely to have

45

33

stimulative effects on local economies either through publicor private spending. A selective PSE program has the addedadvantage of being able to address structural proWibms bytargeting assistance to specific groups.

Congress dressed substitution in the 1976 CETAamendments by equiring that new enrollees above the num-ber necessa to sustain existing levels of PSE employment

, must be .in limited duration projects and that most new PSEenrollees must have been unemployed for 15 weeks or moreand must be from low-income or welfare families. By limit-ing the expansion of PSE to special projects outside ofregular governmental functions, it was anticipated thatsubstitution would be held down. Indeed, the original DOL

, interpretation of the statute did preclude projects thatwere merely incremental to ongoing governmental activities.But in the face of prime sponsor opposition and in theinterest of speedy implementation of the enlarged PSE pro-gram, projects were defined very loosely in the final DOLregulations.

Recommendations

I. The Committee recommends a three-part public serviceemployment program aimed at both structural and counter-cyclical bbjectives.

Public, service employment programs can embrace severalobjectives: opening employment opPbrtunities for the dis-advantaged, providing additional assistance to chronicallydepressedassas, and combating cyclical unemployment. Adesign incorporating these objectives should include:,

- A Continuing PSE programreitricted to the low-income,long-term unemployed and welfare recipients. This programshould include a built-in training component to increasethe employability of participants whiff giving them an op-portunity 40 acquire usgfurexperience.

- Supplemental funds fqr areas of substantial unem-ployment, also limited to those unemployed for structuralreasons.

- Countercyclical funds that would trigger on automa-ticallyan -the national unemployment rate rises. Thecountercyclical component could either he targeted to thedisadvantaged or partially targeted, for example, bysetting aside an amount for the disadvantaged in propor-tion to their number among the eligible group in the primesponsor's area.

46

oot34

On all three of the above, areas with low unemploymentrates should be excluded on the grounds that the unemployedthere have a better opportunity to be absorbed in the pri-'vate sector in areas with a favorable labor market. Theadvantage of the above three-part formulation is that itestablishes the principle that the government has a re-sponsibility to create jobs in the public sector, as analternative to welfare, for the hard-to-employ. It also

retains the principle that special efforts are needed tostimulate th^economy in areas of high unemployment.6

2: Congress and the Department *of Labor should ensurethat, Title II and Title VI funds aroused for net jobcreation. . ,

Several methods are recommended:- Congress should continue to provide countercyclical

revenue sharing funds as needed to sustain the regularpublic service work force. Title II of the Public worksEmployment Act of 1976 authorized funds for state andlocal government to maintain public services and preventlayoffs despite fiscal diffic ies. Congress shouldextend this legislation in so oral beyond the present

termination date of September 1 'f the economy has notrecovered sufficiently by then. is will indirectly helpto avoid substitution by giving hard- pressed local govern--ments alternative support.

The likelihood of substiidtion would be reduced byestablishing useful projects outside the regular activitiesofnlocal government. But the Department of Labor shodldrevise its regulations to preclude projects that are mere-ly' an extension of existing services. The development ofsuch projects may be hindered by lack of equipment andsupplies,. particularly in jurisdictions that are hardpressed financially. Sponsors should, therefore, attemptto'develop projects linked with economic development orother subsidized programs to obtain the necessary capitalfrom other sources.

- The Department of Labor should continue to.requirethat a proportion of all Title VI project ftinds be usedfor jobs in the private nonprofit sector as an additionalmeans of creating new employment opportunities.

- Congress should amend CETA to permit the setting ofquotas on rehired staff. This would permit the Departmentof Labor to restrict the percentage of laid-off localpublic service employees rehired under CETA. It wouldtend to constrain overt substitution and would allow otherunemployed people to have the same opportunity as formerlocal government employees to fill CETA4openings.

47

35

amos. - The Department of Labor review and auditing capabil-ity should be strengthened to assure compliance withmaintenance-of-effort rules. General Accounting Officereports indicate that detailed studies of local governmenttax efforts and employment patterns are necessary to as- '

certain the extent of substitution. DOL auditing shouldbe intensified to make the systematic reviews that areneeded. A specific percentage of PSE funds should be ear-marked for auditing and monitoring.

- The DOL should set up a task force to review andestablish methods to deal with maintenance-of-effort prob-lems. The task.force shouldti develop methods for identi- 4r

(X\geying direct and indi ect substitution; devise means ofensuring compliance of rogram agents, ilonprofit insti-tutions, and subjurisdi tions of prime sponsor areas;examine the relationshii between the capacity of local 'governments to expand their work force in productiveactivities and the substitution problem; and explore therelationship between, length of stay of participants andsubstitution.

The task force should consi4er other administrativemeans of ensuring that local governments maintain normalhiring as a condition for obtaining PSE participants. One

proposal would be to establish a ratio of CETA employeesto regular employees for each prime spoemploying agency within a sponsor's juxquire the sponsor to maintain the samereplacements.

(or for eachion) and re-in hiring

ADMINISTRATIVE iDCESSES

When the management of manpower prograMs was decentral-ized, it was assumed that local officials would developa comprehensive plan in consultation with local advisorygroups and would-be able to put together a-program tailor-made for'the local labor mar Th.s section deals withthe planning, administration d organization of a localdelivery system. The centr question is how well didlocal officials, Most of om.had little or no experiencewith manpower activiti ssume and carry out these newresponsibilities dur e first 2 years of CETA:

48

opos 36

Planning

Issues

Decentralization was expected jo result in planning forthe distribution and use of federal resources that wouldbe more responsive to community needs than was the, caseunder the earlier centralized, gategorical manpower sys-tem. The issue is whether the ?oncepts of planning arebeing applied or whether planning is merely a ritual forobtaining federal grants.

Findings

In fiscal 1976, prime sponsor planning was in transi-tion from a purely mechanical exercise to a useful strate-gic process. On the whole, sponsors were better able toanalyze their needs and to prepare planning documentsthan in fisca1,1975, the first year of CETA, but weak-nesses remain. Some are rooted in federal practices, suchas preoccupation with procedure instead of program sub-stance. Other problems, such as perfunctormfattentioh tothe planning process, are local in charactel,

Decentralization has not yet resulted in a cleaiperception of the nature of local planning; few localsponsors have developed long-range goals as a framworkfor year-to-year planning. There is still a need ,to im-prove management informatidh systems to provide a basisfor analysis, to 'upgrade planning skills, and to developeffective, evaluation techniques.

Planning for Titles II and VI is not integrally re-lated to that for Title I; nor do plans adequately take ,

into consideration other related programs in the community.Few sponsors have involved private industry effec-

tively in the planning process. Yet links to the privatesector are vital to the central objective of CETA--employ-ment in nonsubsidized jobs.

Balance-of-state sponsors, consortia, and large .

counties that eAcompass smaller units of government tendto decentralize planning responsibility. When the sub-units are small, opportunities for job placement may belimited. Fragmented planning may also lead to unnecessaryduplication in training facilities and other manpowerservices.

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37

Recommendations

1. Local plans should be made more comprehensive byintegrating planning for TitlesI,-4T, and VI, and byinccrporating.infOrmation on related grog ms in thecommunity.

Department of Labor regional offices s uldrldissemidate

information on CETA national programs (Tit e III) and othermanpower programs to local sponsors so they have a morecomprehensive picture of activities in their areas. Spon-

sors should obtain information on other federal programsthat are available to local governments (community develop-ment, housing, health, law enforcement,' social services,etc.) to assist in linking'CETA with programs that- couldprovide related services or_employment opportunities.State and local elected officials should establish mech-anisms to coordinate planning for these related activities.The Department of Labor should provide planning grants.forexperimental models of coordinated planning.

Mqst planning undeOrCETA is for small geographicEven in consortia andrbalance of states, thbre is_a ten-.dency to decentralize and fragment plans. The Department.. .

of Labor should encourage planning on a labor market arebasis wherever it is feasible to do so. This would-'pro dea broader analysis of occupational demand and trainingopportunities within commuting range. In consortia and,balance of states, consideration should be given to multi .county planning to make the plans more comprehenifve.-o

2. The Department of Labor should requike evidence.ofparticipation of private employers in Title.I planning e.a condition for of Title I programs.

It is important that private employers be drawn intothe planning process at an early stage to ensure thattraining programs are relevant to occupational demand andto advise on specific -elements of skill training programs.Private employers can be particularly helpful in planningfor on-the-job training.-- Since almost all CETA partici-pants must eventually find employment in the private sec-tor, local planners should also consult private employersabOut job development.

Local Management

Issues

Decentralization conferred on state and local gOvern-manta the responsibility for managing a complex array of

50

ment, subelIntracting, and supervision are handled sepa-rately,

administrative problems inherent in joint ventures.

frag-mentation of administration. Balance-of-state sponsors

super-

vising contracts, reporting, and establishing fiscal con-

government were resolved. However, local staffs still

programs, a serious weakness that also applies to federal

ship between PSE programs and the employability develop-ment activities of Title I. Titles /I and VI require that

slots. The NRC study found that administrative unitshandlinglISE are indeed generally lodged in the same or-ganizational office that handles Title I, but functionalcoordination is usually minimal. Planning, grant manage-

and there is little interchange among clients.

Delegation of responsibilities to constituent jurisdic-,

administering programs overbroad geographic areas have

con-trol. Considerable progress was made in the second year;some expertise was developed and many of the problems ofintegrating manpower programs into the structure of'local

lack technical knowledge of the substance of manpower

staff assigned to supervise local programs.

Lions often, means less control by the sponsor and frag-

former manpower trainees be given consideration for PSE

The framers of CETA contemplated a close relation-ship

Consortia and balance-of-state areas must grapple

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manpower programs. The Capability of local governments';to handle these programs efficiently 4 a central elementn assessiap the CETA block-grant approach. Of particularcbncerntare management problems in counties, consortia,and balance of states, where sponsors must deal with othersubunits 9f government. The extent to which administrationof public service employment is integrated with Title Iprogrems presents another management issue.

Findings

prior to CETA, employment and training programs were-managed by the Manpower Administration directly or throughstate employment service and education agencies. One ofthe most notable achievements of CETA has been the success-ful transfer of this responsibility to state and local unitsof government, most of which had only minimal prior con-tact with manpower programs. Now, for the first time, theadministration of manpower'programs is an accepted respon-sibility of local government.

The first year of CETA was spent in setting up `theadministrative machinery bar planning, budgeting, super-

39

unique problems, especially where admiistrative sub-structtres are lacking. Councils of government and othermulti-county structures that are now administering CETAwere initialiy planning organizations without e rience

Irein program management. There is still a need or develoing administrative capability in subareas of b lancestates. .

j*Racqsmendations

1. The Department of Labor should encourage integrationof public service employment and training programs.

The planning, administration, and evaluation of TitleI, II, and VI,prograts should be coordinat&l. Bringingthese programs closer together should make it possible tointegrate the procedures for selecting participants, toexpose clients to a broad range of program options, toarrange combinations of training and employment, and toimprove the effectiveness bf job development and placement.

2. 'Management studies should beindertalcen to explore- administrative problems that occur mong overlapping% jurisdictions:

More information is needed on administrative relation-ships between sponsors hnd subunits in counties, consortia,and balance of states. The Department of Labor should ini-tiate studies of administrative problems such as the ef-fects of administrative layers on processes, dividedaccountability, and the trade-offs,between centralizedand decentralized contracting and supervision of opera-tions. Problems of.fragmented administration and theeffects of using planning organizations to administer pro-

.

grams in balance of states also need further exploration.

Management Data

Issues -

In implementing CETA, the Employment and Training Ad-ministration restructured its reporting system to unifythe data systems of nunerous separate' programs. Whilethis resulted in integrated reporting, it does raiseseveral questions: Does the new system serve the programand information needs at all levels of government--localas well as national? DOes it provide Congress and policymakers with information necessary to determine whether

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MA's objectives have been met? Is it responsive toinformation needs arising from the, Emergency Jobs ProgramsExtension Act? * .

Finding's

The study finds that the data system does not,provideadequate information for national policy purposes or forlocal management.

One'of the most serious gaps in the data systemthat limits its usefulness for program evaluation at thenational and local levels is the lack of an accurate countof individlials enrolled. A participant may be countedmore than dnce if he or she, is transferred among programsor terminates_and re-enrolls. Another problem resultsfrom aggregationpf data for youth and adults, which makesit difficult to assess provms.fesults since the expectedand actual outcomes for youth are quite differpnt fromthose for adults. In addition, the CETA data systep hasnot yet been expanded to cover the new target groups thathave been added by the CETA amendments.

These are also gaps in the information needed forplanning. Data On the number and characteristics of per-sons in need of assistance, occupations in demand, and alter-native services in the community are generally unavailablein sufficiaht geographic detail or on a current basis.

Some sponsors have gone beyond the DOL data require-ments and have established local management informationsystems flexible enough to generate"informatiOn for localprogram planning and evaluation. For the most part, how-ever, 'sponsors do not have satisfactory systems for evalu-ating the performance of subcontractors or for assessingthe relative costs and effectiveness of program activities.'As a consequence th4 data system cannot adequately servetine needs of the sponsori themselves.

Xnformation about public service employment programsis sparse, particularly with respebt to occupations andearnings, activity of the employing unit, duration of em-

,. ployment, and the number of former public service workersrehired under'CETA.

Rmmmendations4....

1. The Department of Labor should establish a taskforce of federal and local personnel to design amoreuseful data base for planning, management, and evalua ?Jon.

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4The task force should consider revisions in data ,

elements and prOcessing to:Differentiate data for youth and adults The high in-

cidence of youths in many CETA programs tends to obscure,information about services to adults, particularly theirplaceMent rates.

Relate data to the requirements of the act For pro-gram control and accountability to Congress, e reportingsystem should include service and outcome a on targetgroups listed in the act--those who have exhausted UIbenefits, persons not eligible for UI, those unemployedfor 15 weeks or more, the long-term low-income unemployed,former manpower trainees, etc.

Refine'data elements Data items that need to Be de-,fined more clearly and validated to be'useful include thecount of participants, the identification of the economi-cally disadvantaged, the labor force status of partici-pants prior to'entry in the program, and "direct" versus"indirect" placements.

Develop evaluation data Local management informationsystems require, at a minimum, outcome data by type ofprogram and by program operator, information on targeting,costs by service components; and more flexibility in czess-tabulation of program and targeting data.

Develop better follow-up data For evaluation purposesthe data system should furnish more information on post-program labor force experience--retention in jobs, 'dura-tion of employment, earnings, and whether employment is ina training-related/occupation.

These suggestions may increase the reporting workload,but offsetting savings could be achieved 'by other means,such as a regional computerized system with coded entriesfrom individual record cards. This could reduce process-ing time, provide needed flexibility, and free local stafffor validation of reports and for analysis of data.

Alternative approaches to the present, reporting systemthat might be considered are; periodic surveys of a na-tionally representative sample of sponsors to dbtain moredetailed information, special reports from all sponsors-Oh a less frequent basis than thenoiie/ quarterly cyclecovering selected items not in the regular reporting sys-tem, or expansion of the longitudinal survey being con-ducted for the Department of Labor to include specificitems that could be extracted quickly and fed back tosponsors and tie national office.

2. The,Depa;tment of Labor and state governments shouldassist prime sponsors in Installing management informationsyftems.

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Efforts'of the Department of Labor to improve manage-ment information systems should be increased. Exchangeof infeeemtion among sponsors and assistance from special-ists trained in operations research would strengthen localinformation and evaluation systems. Such excha4es would".be an appropriate activity for state governments to under-take with the state manpower services fund. The statescould arrang .'for consultants, training of local staffs,or for a central management informatiion system'to serveall pair sponsors within the state.

Technical assistance is especially necessary to makethe evaluation process more comprehensive. Broadly con-ceived, evaluation should deal with program results inrelation to needs and t415 relative effectiveness of alter-native program atrategies and various deliverers of service.

. 3. Methods -e. dIsuring the quality of programs shoulbe studied.

One of the most serious gaps is the.lack of informationori the quality of the services offered under Title of

. CETA. National and state tedhnical staff should exploremethod4 of systematically measuring the quality of train-ing and work experience programs. This would includeassessing curriculum, the duration of courses, proficiencystandards, and the adequacy of the equipment for-skilltraining, as well.as the training and supervision compo-nents of youth work experience programs. (See also p. 27)

'. Issue

The Delivery System

A-The fragmented nature of the deliveiy sy temp was one of

themost heairily criticized aspects of pre -L` TA slinpowerprograms. One 'pia/pose of CETA was to bring bout a betterintegration of various programs f itrainin and employ-ment and a closer coordination agencies providingthose services. At.issue la the extent to which localdelivery systems are being made more rational and whetherthis results in better Service to 1i1ents.

Findings

The NRC study noted a trend toward consolidation ofservices tcl enhance employability. Of the local sponsorssurveyed, about 33 percent have adopted a coAprehensive

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delivery system for Title I programsone iAich intakeis coordinated, a wide range of services is available ac-cording to individual need, ad each client is followedthrough a sequence of activiticts from initial assetsmentto training and eventually to placement. Forty percentretained i categorical delivery system and'the remainingsponsors in the study semple had mixed systems.

In a numbers of places manpower centers are being es-tablished as aufocal point for bringing clients and ser-vices together: There has also been some movement towardcentralize exit activities, particularly job developmentand placement The trend toward a comprehensive system

400 is more evi ent in smaller areas than in large cities andconsortia, which tend to uee established program deliverers.'Although there is a trend toward comprehensive delivery

of employability services (Title L), there is little in-dication that PSE programs are being integrated with them.

Recommendations..

1. Prime sponsors should arrange for cAbinations.oftraining and public service employment programajeadingto career opportunities. ..

Participants in structurally oriented programs sho Diss

have access to public service jobs, particularly thosthat offer carder potential:. Title II or Title VI o n-

ings could provge USeful experience x clients trai edinit4allyunder Title I. ThiS negl d concept of C TA.shou/a-be implemented. Congress sh d provi eadditiohal

.Title_/ funds specifically to encourage combi tions withPM-training. 1.

2. The Department of tabor should arrangefor research.to determine how client convenience and quality of ser-vices are related to various Title I delivery patterns. 4

Studies should aualyze the client flow and-availabilityof program options under comprehensive,' mixed, and cateTgorical systemiL -Centralized versus decentralizeh ar-rangements for service in-balance-of-state programs shouldbe'compared. Delivery models should be developed thatexpose clients to a speArum of services and ensure An- ,

tinuity of responsibility as clients move frofjintake toplacement.

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. ,

Continuing Research and, valuation

Issues,

The growth and complexity of CETA makes it increasinglyimportent to assess the degree to which the.purpoSes ofthe legislation are met. The act provides for research andevaluation activity and the passage of the Youth Employientand Training Ae't adds significant new experimental anddemonstration dimension. At issue is the need fot greateiin-house and independent research and evaluation capabil-

/Wes to provide to Congress and government agencies inkforettion necessary for the development of national policyand to provide experimental models for local programs.

Pin4ings.

The NRC study, as well as other research activity, has'identified numerousovwoblems regoiripg further explorationt,

experimentation4 and evaluation. There is a clear needfor further study of the content and quality of training 44

'and work experience programs, the relevance of CETA pro-ggans to job market demands,, the' participation of theprivate sector in employmdnt and training, substitutionof federal for local funds in PSE programs, alternativepatterns for delive4 of manpoWer services,.intergovern-mental roles, the Employment ServiceAC;TA relationship,linkagesbetween CETA and other manpower pkograms, and,in particular, the effects of CETA on clients.

Recommendations

1 Congress should provide for a continuous research,revaluation, and demonstrat4on program both within govern-ment agenciei and by outside, independent research organIrizations. Approximately percent'o CZ% funds should

e

be earmarked for th4s purpose.The Commi tee is awarejof the valuable research .activ- '

ities of th Department olLabor, !the National Commissionfor'Nlanpowe Policy, and e National Commission onployment ana employment Statistics. State and localgovernments and rivate nonproiAt'research organIzati6nshavelaso undertaken useful studies. However, the magni-0,tude and complexities of the probleks associated withCETA programs in a changing economic environment are so

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great that amore systematic and comprehensive program'should be underwritten by Congress. The Committee bell vesthat this would be a wise investment that would pay dividends in contribuCions to national policy and improvemenof local programs. An allotment of 1 percent of federalappropriations for this purpose would not be excessive,considering that much of the money would pe used forpayment of allowances in experimental and demonstrationprograms. In elementary and secondary education research,'approximately 5 perCent of the federal education budgetis devoted to research (this does not include allowancesfor student support).

INSTITUTIONAL RELATIONSHIPS

The priginal CETA legislation enacted not so much a newprogram as a new set of relationships. A system of checksand balances among federal, state, and local unite ofgovernment was designee to permit local flexibility withina framework of national objectives. Sponsor autonomy wasto be balanced by federal oversight. States were maderesponsible for conducting programs in the balance-of-,

sstate areas and for providing assistance to all sponsorswithin a state. Within the ponsor's jurAdiction, di-verse elements in the community were to plaxticipate inthe decision-making proCess. Sponsors were free to chooseinstitutions to deliver services; subject to giving dueconsideration to established programs of "demonstrated "'effectiveness."

The Federal Role

Issues

The'relationship between federal and local units ofgovernment lies at the heart of decentralization. CETArepresents an uneasy compromise between a coemitment tolocaldetermination and.a recognition of the need for,federal oversight in thepfurtherance of national objec-,tives. the acit,61 ambiguous in defining the federal role.It leaves the unds of the federal presence toibe workedout in the interaction between the Departnent.of'Laborandprime sponsors. a

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iFindings

CSTA assigns bo the Department of Labor responai-bility for making sure that the'requirements of the legis-lation'aremet, but at the same time it cautions the DOLnot to second-guess decisions of local officials on pro-gram. Since the original act, Congress has added seve;a1categorical programs - -publiceervice employment:summertactivities for youth, and youth employment demonstrationprojects --that tend to circumscribe lOcal atbnomy, butthe basic federal -local relationship has not been clarified.

The Department of Labor has outlined four 'functionsfor itself in addition to allocation of funds: establish-ment 'of/national objectives, priorities,fand standprovision of technical assistance; review 'and approlv:fofplans; and assessment of prime sponsor performance against '

plans. During the first year there was a general feelingof uncertainty in federal-local relations, reflecting thegray area.between local autonomy and federal oversight.Federal involvement increased the second year as icon-sequence of the demands of new legislation and the aware- .ness of weaknesses in program implementation. .-

_ DOL regional-office review of prime sponsor plans'has focused largely on procedure. AssessMents emphasizedmeeting gels in plans,*the rate at which funds were spent,administrative costs, financial management, and reporting.Regional office staff intervened from time to time in suchprogram matters as placement policies and maintenance-of-effort and rehire problems, but not on a regular basis.

Tension between regional offices and sponsorecen-tered around repeated requests for modifying plans, lackof uniformity in interpreting regulations,.irregular andunpredictable.funding, and the-use of rigid performancestandards. Sponsors-felt that the performance standards'

nded toconstrain the kinds of programs and servicesthey could chooseAnd placed a premium on low-cost strat-egtes. They also resented DOL,pressure to use the employ-ment service agencies.

commendations

1. The Department of Labor should interpret nationaland issue annual statements of priorities for

prime sponsor guidance.The Department of Labor has responsibility to interpret

lie objectives of the act. In addition, it should have

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explicit authority to set national goal's and priorities.These could be issued in an annual statement of currentobjectives and priorities prior to the planning cycle.The statement should deal with such matters as types of-clientele to be served, mix of programs, and paterns ofdelivery. To achieve harmony or local programs with na-tional policies, the regional offices of the Department ofLabor should'then interpret evolving national' objectivesand goals in the context of lobal social and economic con-ditions. The purpose is not to replaye loc41 with nationalgoals but to provide additional and broader perspective tolocal plani*rs.

2. 'Federal oversight should emphasize program contentand quality in addition to placement goals and otherquantitative meallres.

Program assessment should be broadened to encompassthe content anirgnality of work experience and trainingprograms. Tecanical assistance has tended to .focus onprocedure, but it is equally important to help local staffgain an, understanding of the substantive aspects o; train -ingand.employment programs so that they can supervise andmonitor the performance.of program contractors: Regionaloffice, should have'a core of trained specialists toassist field representatives in working with sponsors.

3. The Department of Labor should promote intergovern-mental cooperation to assist local sponsors. '

The.. Department of Labor should reinforce present inter-

agency agreements or establish new ones with agencies-thathave manpower-related responsibilities (the Departments ofHealth, -Education, and Welfar4 and of and'ErbanDeVelopment and the EconOmic DevelOpment 'nistrationof the Department of Commerce) to fatter cooperation atthe local level. Concerted action can improve the quality e

and relevance of local training and open up new possibil-ities for unsubsidized jobs. .

The State Role

Issues

*CETh.has given state governments multiple responsibil-

ities, In addition to A :'sponsoring balance-of-state programs;they are responsible for'maintaining a manpower servicescouncil, administering the state.manpower services fundand the state vocational education fund, and cookdimiting

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. the services of state agencies with local prime sponsors.State manpower services coacils (SMSCs) are charged withreviewing local plans and monitoring local programs. There

are questions, however, as to whether the state role isproperly defined in thelegislation,.as well as to whether'the current role is being carried out effectively.

Findings

During the first year of CETA, the NRC survey foundthat SMSCs had virtually no impact on local manpower pro-grams. Some councils were not organized in time to reviewplans, and there was little monitoring of local activities.,In the second year, plan review was still perfunctory,there was some monitoring but for the most part SMS/4still had little influence on local programs.

. Although there were some attempts at the state levelto coordinate the services of various agencie% with CETA,most states did not systematically establish such arrapge-ments.

Th act intended that the state manpower servicesfund (4 pe t of the Title I appropriation each year)would enable. tates to provide services to areas andgroups not a quately covered by local programs and wouldensure the s rt of state agencies. The NRC study foundthat these f ds are being used mainly for miscellaneousprojects rather than for supportive services to localsponsors, such as labor market information and programevaluation.

Recommendations

1. Congress should strengthen the coordinating re-sponsibilities:of the State Manpower Servicek Councils.

Congress should give the SMSCs responsibility for thecomprehensive state manpower plan, increase their authorityand respodsibility for coordinating manpower-related ac-tivities at the state leiel, and end their responsibilityto monitor local programs.

A SMSC is too unwieldy an organization to monitor localprograms. Moreover, in a federal-local system, statemonitoring is redundant, especially since the state'sauthority to influence local programs is minimal. SMSCsshould continue to review local plans with a view to iden-tifying areas in which, the state can be helpful to local

' sponsors.

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The state may be most helpful in Coordinating statesocial services, vocational education, employment servings,and economic development activities with the CETA programs.The governor is in an advantageous position to accomplishthis coordination through the use of the state grant funds,authority ovir.state governmental units, and the overallinfluence of the office.

2. State manpower services grants should be used pri-marily to support activities beneficial to all primesponsors.

In addition to funding projects, the state should useita manpower services funds for activities that.assistlocal sponsors and promote coordination. The state coulduse the fund to providncurrent data on labor supply anddemand for sponsor planning, to establish residentiatraining facilities beyond the capability of indivisponsors, to organize statewide on-the-job training pgrams with major emplOyers, or to arrange with universitiesor research organizations to provide technical ssistanceto local sponsors in installing management info, tionand evaluation systems.

Local Planning Councils

Issues

IA an effort to ensure community perticipation'in de -'.cisions Affecting local programs, Congress mandated the ,

establishment Ol'aiimal advisory councils. Membership wasto include those who delivered manpower services, those.who received them, and others who might be directly af-fected by the quality and substance of programs Offered.It was presummt that suppliers and consumers rid operateas artilheck on each other and that members ,e general.public would exercise a moderating inflUenceL Under therecent extension of Title VI, the purview of the planning' .

councils was extended to include review of public serviceemployment projects. At issue is Whetfier advisory coun-'enslave played the active role contemplated by thelegislation.

Pidakngs

The advisory councils in the first y of CETA fellshort of fulfilling the legislative intent. There was a'

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' quickening of interest in manpower planning on the part oflocal officials, but the community was'not drawn into thedecision-making process to any significant extent. Lackof time was partly responsible; councils were being estab-lished as Title I decisions were being made. By the secondyeai, about a third of the planning councils in the NRCsample were rated as having a significant influence inTitle I planning, usually through a subcommittee structure.

Influence on the councils from the various sectorsof the community has been uneven; client groups and privateemployers have had the least weight. Securing adequateparticipation by employers has been difficult although thatlink is critical for effective planning. Community organ-izations, as program operators, have interests that do notalways coincide with those of the client groups whom theyrespresent.

Conflict of interest continues to be a problem whereprogram operators participate in decisions affecting con-tract awards. To avoid such conflicts, some prime spon-sors exclu$e service deliverers from council membershipalthough permitting them to form a technical council toadvise the CETA administrator. Others permit sez'vice

deliverers'to be members of planning councils but do notallow them to vote on renewal of their own contracts.

Recommendations

1. The prime sponsors, with the support of th& De-partment of Labor, should increase the effectiveness andindependence of local planning councils.

If planning councils are to be effective their membersneed to be well informed and capable of taking independent

* positions. Prime sponsors should assign staft to ensurethat the council is fully informed. Councils should bedrawn intb the Planning process for Titles II and VI andfor youth programs, as well as for Title I. (The act

.calls for separate local councils for youth employment.)DOL regiOhal offices and prime sponsors should arrangefor periodic training of council members. Councils shouldactively participate in the evaluation process throughspecial subcommittees or other means.

The legislation should require that all Title I pro-gram proposals be subject to council consideration andrecommendations.. Prime sponsor decisions that are con-trarx to council recommendations should be explained inwliting.

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2. Service delivererstechnical councils shouldcontracts.

51

that are memberskof planning orbe prohibited from voting on

The participation of service deliverers is desirableto keep councils informed of issues and praptioalsroblemain service delivery, but- their'presence may leap to con -

r/ flicts of interest. Present regulations do not permitthem to vote on their own contracts, but do permit themto vote on other contracts. It'is recommended that ser.--vicedeliverers work with planning councils,.but not voteon any contract decisions.

3. The Department of Labor should encourage prime

sponsors to broaden council representation and publicawareness of CETA.

The DOL should foster increased representation andparticipation of employers, client representatives, andcitizen groupi on local councils and in related planning'and monitoring activities.

Realignment of Servict Deliverers

Issues

The ubiquity of CETA with respect to the selection of*local Ifganizations to provide manpower programs andservices has been a source of concern. Respecting thedeCentralization objective, CETA gave prime sponsors theoption of using existing program deliverers or selectingnew ones. Yet in deference to established institutions,CETA stipulated that existing agencies of demonstratedeffectiveness must be considered to the extent feasible.The issue,is how to reconcile these two principles and,more importantly, whether the organizations selected arethe best available to serve the needs of clients, par-ticularly mihority groups and the poor, formerly servedby ethnic-oriented, community -based organizations.

The employment service-prime sponsor relationship isparticularily troublesome. In its effort to eliminateduplication among manpower programs, Congress created,through CETA, a federal-local manpower system that paral-lels in many respects the Wagner-Peyser network of localemployment service offices. At issue is the structuring

- of a relationship between the two systems that identifies(or merges) the separate roles of each and uses thestrengths of each.

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Findings

,The selection of service deliVerers has been accompaniedby a struggle over turf. Pre-CETA agencies sought to re-tain their influence and their funding; others sought entryinto the system.

Congress expected that prime sponsors would choosethe best program deliVerers. However, with new responsi-..bilities facing them, there was neither the tile nor thecapability to assess the relative performance of competingagencies in the first year. Decisidns were based largelyon general impressions, political considerations, agencyinfluence, and cost. Initially, existing program deliver-ers were continued, although in many cases their activitieswere changed to fit sponsors' plans.

One of the most striking and unexpected results ofdecentralization is the appearance of prime sponsors asdirect deliverers of services.', Within the NRc *ample, 17of 24 local sponsors were directly operating some programs.This development has far reaching implications for-therelationship between the prime sponsor and other agenciesproviding manpower servicA,and needs further study:

Community based organizations such as the Opportun-ities Industrialization Centers (OIC), Jobs for Progress(SER), and the Urban-league have been receiving more fundsthan previously, but their roles and their autonomy havediminished. The rise of these kinds of community organiza-tions in the 1960s wes part of the "Great Society" thrust

- "Nto ensure attention and service to minorities. They arenow concerned about whether the service and attention theywere able to gain for their constituencies will obntinueunder the decentralized CETA system.

Under CETA, the proportion of funds going to publiceducational institutions has been sustained, but their in-fluence has declined. Sponsors are using larger numbers oftraining agencies and have shifted to the use of individualreferrals of enrollees to established skill training pro-grams rather than organizing classes of CETA participants.

The Employment Service (ES), which had a leadingrole under the Manpower Development and Training Act andother pre-CETA programs, lost its key position as well asfunds and staff in the first year of CETA. Its responsi-bilities.in many areas, particularly large metropolitancities, were taken over by prime sponsors or other agencies.These loss were attributed by sponsors to cost considera-tions, effectiveness, and degree of rapport with the dis-advantaged. There was slime recovery in the second year as

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the Employment Service was used more extensively in im-plementing the Title.I/ and VI programs.

The Emergency Jobs Programs Extension Act and the ex-. pension of PSE programs resulted in a larger role for the

ES. The impact was felt in several ways. First, the

' legislation specified UI beneficiaries and welfare clientsas people eligible for Title VI programs. This fosteredthe use of the ES in developing pools of applicants sincethese groups are already registered in local ES offices.In addition, the policy of the DOL to relieve prime spon-sore of responsibility for enrolling ineligible partici- -

pants, provided the eligibility determination is made bythe ES, encouraged the use of that agency. Finally the

large and rapid expansion of PSE programs led sponsorsto rely more heavily on the ES.

Recommendations. ...---

1. Objective standards should be established by primesponsors for rating program deliverers.

Sponsors now have sufficient experience to enable themto assess "demonstrated effectiveness" in selecting pro-gram operators. 'The criteria for selectin9 Title I con-tractors should be stipulated and the ratings of competingorganizations should be available to the planning councilst.

2. ,several alternatives for structuring ES/CETAresponsibilities should be Considered.

Earmarked funds for ES One alternative is,to earmarka proportion of Title I CETA fund for.stite ES agenciesto be used to provide services t -prime-sponsors. Thiswould parallel the existing S pe ent fund for statevocational education agencies. The ,,, oyment serviceand prime sponsors would n )6ria .. nancial agreementsstipulating the services t be provied.

"Laispez faire" Unde is approach, each sponsor andES local office would work out their /arrangements,based on local needscoapabilities, and relationships.The present effort of the DOL to experiment with differenttypes of ES/CETA relationships is a step in this direction.

A two -part system This alternative would differentiateWitoen j6b-ready clients and those needing services tdevelopop employability. The employment service would beresponsible for the job -ready and CETA would concentrateon supplying developmental services and PSE programs. .'

Employment Service as. presumptive deliverer CETAcould be amended to reintroduce the employment service

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as the exclusive deliverer of all manpower functionsstipulated in the Wagner-Peyser Act. These servicescould be provided to the prime sponsor 4ithout coat ifprovision were made to defray the ES cost.

Merger The most fundamental (mid the most difficult)resolution would combine the Wagner -Peyser and the CETAsystems through legislation and create a single "super"manpower system. This alternative would require a re-examination of the state role in the manpower system andthe restructuring of federal-state-local relationships.

Cpngress should mandate an independent study that would*examine the manpbwer functions now being performed by boththe ES and CETA organizations, assess existing ES /CETArelations, and explore the merits and problems associatedwith each of the_ alternatives. Basic legislative changesshould be based upon the findings of such a report.

SUMMARY

During the four years since CETA became operational,employment and training programs.haye become.institution-eased as an integral part of 'local and state government,activities and structures. Federally funded manpowerprograms, previously administered by the federal establish-ment, are now the responsibility of local units of govern-moot and are conducted under the d4rection of state andlocal officials.

The NBC study has focused both on the processes and theproduct of manpower programs. It has found that local con-trol of.programs has resulted in tighter program manage-,anent, greater accountability, and more rational deliverysystems. Local manpower planning, though still weak,'iS.more meaningful than in the pre-CETA period, abdgrassroots participation in the planning process is greater.However the shift of program control scrambled the rela-tionships among government jurisdictions and among thelocal institutions that deliver manpower services. Therole of the Employment Service was particularly affected.

The study identified several major areas of concern,including:. the choice of participants to be served, theprocesses for providingweervices, the kind and quality ofprograms, and their outcomes in terms of the adjustmentof ctiehts to the labor market. There are also seriousquestions as to the extent of new job creation under pub-lic service employment programs--now the bulk of manpoweractivities.

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The .recommendations of the Counittie on Evaluation ofEmployment and Training Programs areidirectedto ,theseissues and are summarized below under two categories;processes and institutional aspects of CETA, and programsubstance and outcomes, '4

Processes and institutional Aspects of CETA

- Revise forpulas for allocating Title I, II, VI, andsummer youth employment funds so that resourcea.tare dlis-stributed among areas on the basis of the specific groupsto be served under each title.

' - Integrate Title I, II, and VI plans and incorporateinformation on related programs in the community,

- Require evidence of private sector participation inTitle I planning as'a condition for the approval of Plana.

IneKease the effectiveness and independence of localadvisory councils; strengthen the coordinating authorityof State Manpower Services Councils and elimMmte theirmonitoring responsibilities.

- Establish a federal-local task force to design amore useful data base for planning, management, sgd evalu-ation; provide assistance to prime Sponsors in developingmanagement information systems.

- Conduct research to illuminate such issues as: the

Employment Service /CETA relationship, linkages betweenCETA and other manpower programs, and,the effectiVenessof various systemb for delivering client services.

grogram Substance and Outcomes

- Rely on unemployment insurance asthe major means ofdealing with short-term unemployment, but rely on trainingand public service employment programs as the primary ve-.hicles for assisting the long-term unemployed,

- Restrict Titles I and II to personS.who are econom-ically disadvantaged or members of low-income faMilies.Limit Title VI to the same groups or, alternatively, tothe lorig.:term unemployed, with representation of theeconomically disadvantaged in proportion to their numbersamong all eligible persons. -

- Stress greater control by prime sponsors over clientselection to assure that the priorities in the act are -.

observed.

14.

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56

- Gi riority to Title I programs that enhance humancapital ov r those that are primarily incone maintenanceprograms.

Give greater emphasis, at all levels of admiwistrat-tion; on upgrading the program content and quality oftraining programs. .

- Grater emphasis should be given to job developmentand placement of program participapts in unsubsidizedemployment, with more follow-up to determine,whether CETAparticipants are able to obtain stable" employmerit%

- integrate PSE and employability development programsto improve'the effectiveness of both training and place-ment outcomes.

- Redesign the PSE program to provide a three-partsystem aimed at both structural and countercyclicalobjectives: (a) continuing _program for low-inoome" long-term unemployed and welfare recipients; (b) supplemental.funds for areas of substantial and chronic unemployment,alio limited to those-une4loyed for structural reasons,and; (c) countercylical program triggered automaticallyby changes in the national unemployment rate.

- Constrain the stbstitutionsbf PSE funds forrlocalresources bit: (a) providing countercyclical revenue shar-ing fUhd to sustainhe regular work force of state andlocal governments; 004, limit PSE projects tothose thatare outside of the regular activities of local godernment;(c) require that a proportion of all Title-Vi projects, be,

used for jobs in the, private nonprofit sector; (d) amendCETA to permit limitations on rehires, and;,4e) strengthenthe DOL review and auditing capabilities.

NOTES

1. See, for example. U.S. Congress, Cohqressional BudgetpfficerTemporary Measures toStimulate Employment--An Evaluation of Some Alternatives, Prepardd by Nancy' 440'S. Barrett and George Iden, Washington, p.C.: Con-

gressional Budget Office; September -1975; "inflation-

and Unemployment," Economic Report eLdie President"1.978,. Waihington, D.C.: 'U.S. Government PrintingOffice, 1978, Ch.'4; National Commission for ManpowerPolicy, "Commissioned Papers," Volume III of JabCreation Through public Service EmployMent, An InterimReport to the Congress, ifaihington, D.C.:. National'

A Commission, for Manpower Policy, 1918.

69s. .

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.2. The National Commission on Employment and UnemploymentStatistics is studying various alternatives.

3. Progress and Problems in Allocating Funds under Titler and 11 -- Comprehensive Employment and Training Act,

General Accounting Office, Jan. 1977.4. Economically disadvantaged persons are defined as_

members of families whose annual incoi is lesIbthanthe poverty criteria--$5800'for an an family of,4in 1,76. A low- income person is orinlhose family in-comi is less than 70 percent of tIWBureau of LaborStatistics lbwer income family budget-rabout $6700fof a family of 4 in'1976.

5. A longitudinal study conducted'by the Census Bureauand byr.Westat.inc. for the Department of Labor willhave information` on the long-Ange effect on the earn-ings potential of enrollees.'

do. Fdr a summary of the recommendations of the NationCommission For Manpower Policy on job creation in e

public sector, see Appendix C in Nationa* ReseaichCouncil, CETA: Manpower Programs, Under Laca2 Control,Prepared by WiiliamMirengoff and Lester Rindler,Committee on EvaluatiOn of Employment and TrainingPrograms, Washingt^n, W.C.: National Academy ofSciences, 1978.

4,

A

APPENDIX

MANPOWER ACRONYMS

I

LegislationA

AFDC,

Aid to Families'with Dependent ChildrenCETA Comprehemsive,Employment and Training Act of

1973: EEA Emergendy Employment Act of 1971

EJPEA Emergency Jobs Programs ExtOnsion-A4of 1976EjUAA Emergency Jobs and-Unemployment Assistance Act'\

2 of 1974 .

ESA .. 'Economic Opportunity Act of 1964MDTA Manpower Development and.Training.Ace of 1962'PWEA Public Worfci Employment Act of 1976PWEDA Public-tforka and Economic Development Act of

1965 ' .

YEDPA Youth Employment and Demonstration ProjectsAct of 1977

Planning Systems

, .

AMPB Anbillary Manpower Planning Board (pre- CETA)'- BOS/MPC Balance of State Manpower Planning CouncilCAMPS. Cooperative Are' Manpower Planning, System

(pre-CETA)MAPC Manpower Area Planning Council (pre-CETA),"

- MPC Local Manpower Planning CouncilSMPC ...State -Manpower Planning Council (pre -CETA)

SMSC State Manpower Services Council

,

58

Programs

59

CEP Concentrated Employment ProgratFSB Federal Supplemental Benefits (extended UI)JOBS . Job Opportunities in the Business Sector -

s. -National Alliance of suiinussmenJOP Jobs Optional Program (MDTA-OJT) ._

' NXp Neighborhood Youth Corps' r iOJT On-the-Job TrainingPEP Public Employment Program. (EEA)

II.PSC Public Service Careers Program (includes New

.

Careers) .

% AE Public' Sery &ce Employment (CETA or EEA)SUA Special Unemployment Assistance ProgramVI Unemployment InsuranceWE Work Experience .,

WIN I Work Incentive Pragiam (for welfare 4cipients)-IP' .

Organizations and Agencies. A

BOS _balance of State...

CAA COmmunity Action AgencyCB0 COsamnAty Based OrganizationsCOG Council of GovernmentsCSA ' Community Services Administration. .

DHW U.S. Department of'Health, Education. andWelfare

DOL U.S. Department of LaborES EmploymeptService (state agency)

\ETA Employment and Training Administration (DOL).

(lormerly"Manpower Administration)NPO NOnprofit Organizatica' ,

0E0 , Office of Economic Opportunity (now Community.

I' Services Administration)

OIC OpPartunities Industrialization-CenterSER Services, Employment, Redevelopment (also Jobs

for Progress) ,

. .

SESA Stag Employment Security Agency (includes ES,_

Ulf and WIN)UIS $ .Unemployment.Insurance Service (state agency)UL Urban League

- ..: A

.

VOED Vocational Education Agency (state or local) ,

VV

72