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To conclude, I feel that our 1977 request for employment and training assistance in addition to the 1976 pending supplementals will provide sufficient resources at this time to meet our employment and training needs through the end of fiscal year 1977.

This concludes my statement, Mr. Chairman. My staff and I will be happy to answer any questions you may have.

CETA “WORK EXPERIENCE” PROGRAMS

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Mr. Flood. Under title I of CETA, what is this "work experience"? How do you define that? Can you give us some specific examples?

Mr. Hewitt. Under preceding legislation, there were several categorical programs which were called work experience. The Neighborhood Youth Corps is probably the best example where young people, after school, or people out of school on a nearly full-time basis, were provided jobs at essentially the minimum wage, mostly on public account, but they weren't prevailing rate jobs like public service employment, so they could get some experience as well as guidance and counseling on the job, actually doing a piece of work.

Mr. Flood. Why are the prime sponsors spending almost $800 million a year on work experience programs?

Mr. HEWITT. The general explanation, sir, as nearly as we can supply it, is that they are leery of doing hard skill training during the recession and not having the available job to refer the individual to when they complete their training. It is a training activity that will sustain people and provide them with some developmental experience, but it wouldn't be like completing a course in welding for 20 weeks and then be on the street looking for a job.

Mr. Flood. Do people get any lasting benefits from participating in this work experience program, or is it just another form of income maintenance?

Mr. HEWITT. My area of responsibility includes program evaluation. It would be my judgment that the lasting benefit was marginal to the individual.

SKILL TRAINING Mr. Flood. What efforts, if any, are you making to expand then the occupational and the skill—these skill training programs? What are you doing about that?

Mr. BURDETSKY. We are encouraging the prime sponsors to put more resources into skill training. Both institutional skill training and onthe-job training. As the economy comes back and the private sector gives evidence of needing workers, there is a placement potential that will be developing, and we are encouraging prime sponsors to move in that direction.

OLASSROOM TRAINING

Mr. Flood. What are the main kinds of classroom training programs that are being conducted under CETA?

Mr. Jones. There are probably two general categories. Some of them are what you would call firstline, secretarial, or clerical kinds of things and others are far more technical, such as welding, run by vocational systems within the States.

Mr. FLOOD. Are these classroom training programs being coordinated with any degree of success with vocational education programs the program.

being conducted all over the country? Are they coordinated with them?

Mr. Jones. The law requires such coordination, and some of these funds go directly through the vocational education system.

In our surveys of local prime sponsors' training, you will find almost without exception they are tied into the local school system and State vocational system, in determining what training is available, what are the needs, and in most cases they are the ones delivering and directing

That is probably one of the more successful parts of the program, in that we are providing training in the skills that are needed in each particular area.

MISUSE OF CETA FUNDS Mr. Flood. Has the misuse of any of the CETA funds for political purposes been a serious or a major problem so far?

Mr. BURDETSKY. There have been a few very highly publicized instances, one in my hometown of Philadelphia.

Mr. Flood. A significant problem?

Mr. BURDETSKY. I don't think it is significant. The few cases have gotten a lot of publicity, but overall it has not been a big problem.

Mr. FLOOD. How do you oversee this CETA operation to make sure the funds are not misused?

Mr. BURDETSKY. There are a number of mechanisms. We have 10 regional offices where we have field representatives who work very closely with and observe and monitor and follow up the work and activities of the prime sponsors. They are right there on the scene. You also have a great public interest. You have planning councils composed of people representing the community at large, business, labor, education, who have a say-so in what is to be done and how it shall be done.

There is also a system of publishing in the newspapers program plans and program activities which the public has a right to see and observe and I think, too, the community groups that are very much concerned about how these programs are going are very much alert to the politicization in any aspect.

Mr. FLOOD. You have no widespread cases?

Mr. JoNEs. We have a few very specific instances but on a national basis you will find the incidents of the participants involved in that kind of activity is very insignificant.

CETA WAGE RATES

Mr. Flood. How much are title I enrollees paid for participating in training programs?

Mr. Jones. Those people who are in the training programs receive an allowance that is equitable to the minimum wage, depending upon the number of hours they are in training.

SUPPORTIVE SERVICES

Mr. Flood. What kind of supportive services do they also get in addition to basic pay?

Mr. Joxes. They have complete flexibility at the local community level to provide services. Day care, medical, health, transportation, counseling, or other services as necessary.

LENGTH OF TRAINING

Mr. Flood. How long does the average person remain enrolled in title I?

Mr. Joxes. We haven't figures on the average length of stay. It is far too variable depending on the structured length of each case. Most of them have a specific time.

DEMAND FOR PEOPLE COMPLETING TRAINING

Mr. Flood. Are these people being provided with useful, salable skills? Is there a demand for them? Is there a demand for them when they complete that training?

Mr. Jones. The system set up with prime sponsors provides for two or three checks on that point. In the planning of the program they must undertake surveys of the community and create classroom training situations which relate to the industrial needs or the job availability in that area.

They work with the employment services and State vocational institutions to determine the needs and there is a direct relationship. As Mr. Burdetsky pointed out, the members in the business community are on the planning council and relate to the needs in those areas. I think it is fair to say they are definitely in areas that provide them with a marketable skill when they come out of the training institution.

Mr. Flood. Do you have any figures on the percentage placed in full-time, permanent jobs?

Mr. Jones. I believe we have some figures on that. I will point out at this time we have barely completed 1 year of program activity in title I, so it is really very early to tell.

Mr. Flood. Could you give me an educated guess and for the record nail it down?

Mr. WALKER. Approximately 63 percent of our people either are placed in a job or return to school or some other kind of what we call positive termination; 32 percent are actually placed in full-time jobs.

TITLE I REQUEST

Mr. Flood. You are asking for $1,580 million for title I. Now, by the way, that is the same amount that we appropriated last year. Now, when you allocate these funds for 1977, will there be a shifting of these funds among the prime sponsors!

Mr. Hewitt. As you know, Congressman, there is a formula in the statute and it provides for a 90-percent "hold harmless" of the prior year's allocation so it can't be more than a 10-percent reduction with the same appropriation level in any given prime sponsor's jurisdiction.

There will be some shift as the full formula takes effect in 1977. That, combined with variations in the amount of unemployment that a prime sponsor has, compared to the country as a whole, and the amount of low-income adults that reside in that jurisdiction, those can introduce changes in the allocation from year to year among the prime sponsors, but they are muted by the 90-percent hold-harmless position.

TITLE II REQUEST

Mr. FLOOD. When do you intend to obligate the $400 million asked for under title II in 1977? By that I mean, at what point in the fiscal year?

Mr. JoNEs. We would do that based on these two points. It is based on allowing the prime sponsor enough time to plan his program and yet use the latest unemployment data available to us.

I would estimate that money probably will be allocated some time around June or July. Assuming funds were appropriated by October 1, we would expect to obligate them in early October.

Mr. Flood. How much of the $400 million will actually be expended in fiscal year 1977? I am talking about outlays now.

Mr. JONES. Virtually all of the $400 million.

Mr. Flood. Does the administration regard title II of the program as being more or less permanent? That is the phrase a lot of people use. I don't know how you can be more or less permanent.

Mr. BURDETSKY. It is the permanent part of the legislation-
Mr. Flood. I borrowed that habit from you.
What did you say?
Mr. BURDETSKY. It is a permanent part of the CETA legislation.

TRANSITION TO PERMANENT JOBS

Mr. FLOOD. Now, what steps is the Labor Department taking to be sure that the title II enrollees are making a transition to regular, permanent employment? What has the Department done about that?

Mr. Jones. During this past year those efforts have not been a key focal point with unemployment rates being as high as they are, but as they are starting to come down now, a major part of our emphasis is being placed on transition. When the prime sponsors come in with their plans, we ask specifically in what number and where these people will be transitioned to.

Mr. FLOOD. I know the problem, but the situation being what it is, can we take for granted that you will pursue this?

Mr. BURDETSKY. Absolutely.

Mr. Flood. On the average, how long do people remain in these public service jobs? What has been your experience to date?

Mr. Jones. Our experience to date is it is a little difficult to deal with that in that we have only been there about a year and a half with those people and it is too early to predict a turnover rate and I wouldn't want to guess.

Mr. FLOOD. Not even an educated guess?

Mr. Jones. I would expect on an annual basis, looking to our past experience, that the figure probably will run something like 9 to 10 months out of the year, but that is purely my own guess. I think it will take another year before we have a sufficiently large basis upon which to predict that number.

MAINTENANCE OF EFFORT

Mr. FLOOD. What are you doing about the so-called maintenance of effort problem? How do you enforce that?

Mr. Jones. The maintenance of effort problem is probably the most difficult problem we have in administering the program. Éssentially what it requires us to do, when the prime sponsor indicates to us that he intends to call back certain city employees or put them back into jobs after layoff, we go in and try to determine whether that layoff occurred as a result of these Federal funds or would have occurred outside of that.

I guess New York City probably is the best example of a case where it is easy to determine. In their budget situation you don't have much difficulty in determining it would have been a layoff that would have occurred anyway.

We are sitting down there with them, reviewing their budget situation, their tax situation, in an attempt to determine if that layoff has occurred for that reason. It is difficult, in that we don't have field people who are complete auditors and are able to go out and make the decision.

Second, you have to determine whether the layoff occurs in one area, or across the city. If it is the latter, it is somewhat easy to determine.

It is a difficult problem. We haven't a standard we can simply apply to make a judgment.

Mr. Flood. You know you have a problem.
Mr. Jones. A major problem.

GOVERNORS' DISCRETIONARY FUNDS

Mr. Flood. What are the States doing with that 4 percent set-aside money under title I? The phrase is "flexible State activities." How are the Governors using that?

Mr. Jones. They are using it in a combination of both of the reasons set forth in the law. They are using it to some extent for direct program services that can't be met by a prime sponsor on an individual basis-programs for the retarded, or other special group projects, and in some cases they are using them for statewide coordinated services as indicated in the law.

SUMMER YOUTH PROGRAM

Mr. FLOOD. You indicated the President will request these summer youth funds for the summer of 1977. I believe your preliminary estimate was $100 million. Now, that is quite a cut from $140 million that you are estimating for this summer.

Mr. BURDETSKY. That is part of our hope.
Mr. Flood. How can you justify a cut of that magnitude ?

Mr. BURDETSKY. Our budget is a budget which says “Down the road into 1977 there will be a reduction in the unemployment level of at least a point and a half or more.”

It is predicated on the notion that there will be a better employment situation in this country at that time and that we will not need the same level of the summer jobs as we do, say, for 1976 or 1975.

The private economy will be in a position to pick up more kids than it had in all the years before and will need less Federal support.

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