oversight

Review of the Allocation of Funds for the Public Employment Program Under the Emergency Employment Act of 1971

Published by the Government Accountability Office on 1971-12-17.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

Department of Labor




                      DECJ7,197i
                               COMPYROLLER           GENERAL       OF   THE       UNITED      STATES
                                                WASHLNGTON.13.C.              20548




       b-163922



       Dear       Mr.   Chairman:

                This is the first       of a series        of reports     in response         to your letter
       of July 28, 1971, requesting               the General       Accounting        Office      to conduct        an
       ongoing     review     and evaluation          of the Public     Employment           Program           un-
   1   dertaken      by the Department             of Labor     to implement        the Emergency               Em-    4
   /
       ployment      Act of 1971 (85 Stat. 146).               This report     provides          information
                                                                                               -.,. -
              _ _- -
       on the August‘12,          1971, allocation         of funds,    under    section       9 of the act,
       by the Department           of Lab65       to the States      and to more        populous         counties
       and cities --the       program       agents--      and
                                                           __-- by selected     program           agents     to
       other    governmental         subdivisions        or agencies       to carry       out the provisions
       of section      5 of the act.

                  This report         is concerned         primarily     with the initial         allocation        of
        $600 million         of section        5 funds by the Secretary            of Labor.          We have not
        included      detailed      information          on section    6 funds,      because       the allocations
        were not made until               September         21, 1971, and because,            at the time of our
        review,      most program             agents     had not developed         their     proposals         for dis-
       tributing       the funds.        Similarly       we have not included           detailed       information
        on the allocation          of section        5 discretionary        funds,    because        the Secretary
        of Labor       did not begin to allocate               these funds until        September           28, 1971.
        We are continuing              to gather      information      on the allocation           of section        6 and
        section      5 discretionary           funds and plan to report            to you on these             sub-
       jects     in the near future.

                 The information        in this report       was discussed       informally    with of-
       ficials    of the Department         of Labor       and with representatives         of certain
       program       agents.     These     officials,     however,   have not been given the op-
       portunity     to formally      consider        and comment     on the contents       of this re-
       port.

             In accordance              with our agreement      with your office,     we are provid-                         1;
c 22   ing a copy of this           report   to the Chairman,      Select Subcommittee      on Labor,
  /    House  Committee              on Education    and Labor.      We are also making




                                     50TH    ANNIVERSARY                  192l-            1971
B-163922



arrangements        to provide      copies    to other       committees         and members      of
Congress       and to per sons having         responsibility         for     or an interest  in the
administration         of the Public     Employment           Program         under  the Emergency
Employment        Act.

                                                         Sincerely         your     6,




                                                         Comptroller              General
                                                         of the United            States

The Honorable         Gaylord    Nelson
Chairman,        Subcommittee      on Employment,                c
   Manpower,        and Poverty                                 3 ’’ ,2./
Committee        on Labor     and Public   Welfare
United    States    Senate




                                                   2
                               Contents
                                                                Pane

INTRODUCTION                                                      1

ALLOCATION OF $600 MILLION BY THE DEPARTMENT                      3
    Apportionment formulas considered by the
      Department                                                  5
    Formula used by the Department                                7

ALLOCATION OF FUNDS BY PROGRAMAGENTS                             9

APPENDIX

        I   Estimates of section 5 apportionments    to
              States under the four alternative   formulas
              considered by the Department of Labor             11
   II       Illustration      of section 5 apportionment
                formula    used by the Department of Labor      12

 III        Case studies      on section   5 allocations   by
              States                                            13

   IV       Case studies on section        5 allocations   by
              cities  and counties                              24
               REVIEW OF THE ALLOCATION OF FUNDS

                FOR THE PUBLIC EMPLOYMENTPROGRAM

         UNDER THE EMERGENCYEMPLOYMENTACT OF 1971

                              INTRODUCTION

      The purpose of the Emergency Employment Act is to pro-
vide unemp-%y-ed and underemployed persons with transitional
employment in jobs providing      needed public services     during
                                                             --._
times  of high unemployment.      Wherever feasible,   related      ser-
vices are to be provided to enable workers to move into em-
ployment not supported by the act.        The act authorizes      a
total  of $1 billion   for fiscal   year 1972 and $1.25 billion
for fiscal   year 1973.

      Under section 5 funds are made available        to employ un-
employed and underemployed persons through the Fublic Em-
ployment Program and through various demonstration           programs
whenever the Secretary      of Labor determines   that the nation-
wide unemployment rate equals 4.5 percent for 3 consecutive
months.   As of August 1971 this criterion       had been met, which
permitted  obligation    of the $750 million    appropriated     for
section 5 programs during fiscal      year 1972. The act autho-
rizes $1 billion     for programs under section 5 during fiscal
year 1973.

       Section 6 of the act establishes    a Special Employment
Assistance    Program and authorizes   $250 million  each for fis-
cal years 1972 and 1973 to provide public service employment
for unemployed and underemployed persons in areas of sub-
stantial    unemployment, as designated   by the Secretary   of
Labor.

       Section 9 of the act provides that 80 percent of the
section 5 funds be apportioned      among the States and among
areas within the States in an equitable       manner and that con-
sideration    be given to the proportion   which the total   number
of unemployed persons in each State bears to the total         num-
ber of such persons in the United States.        The remaining
funds are to be available     as the Secretary   of Labor deems
appropriate    to carry out the purposes of the act.


                                    1                rHx17,as7s
       Our review included an examination      into (1) the legis-
lative   history  relating  to the act and the appropriation        of
funds for fiscal     year 1972 and (2) the policies      and proce-
dures of the Department for allocating        $600 million   under
section 9 to carry out the provisions       of section 5 of the
act.    We also examined pertinent    Department,    State, and lo-
cal records.

        Although we inquired    into the source of the data used
to compute unemployment or statistical        information     used by
the Department or program agents to make the allocations,
we did not review the methodology or the practices            for the
computations     involved in developing the data,        During our
review we interviewed      representatives  of the Department and
officials     of the program agents.

       To obtain a cross section of how funds were allocated
within   States, our examination       included selected program
agents responsible      for allocating     $7,6 million    in the States
of California,     Georgia,    Indiana, Massachusetts,      and Washing-
ton; the County of Los Angeles, California,             and King County,
Washington;     and the cities     of Los Angeles, California,     and
Seattle,    Washington.

       In addition   to apportioning    the $600 million    of sec-
tion 5 funds to program agents under section 9, the Depart-
ment has made $3.2 million       of section 5 discretionary      funds
available    to Indian tribes    for public service jobs and
$115 million     of section 5 discretionary      funds available    to
25 areas in the States of California,        Illinois,   New Jersey,
New York, and South Carolina,        to help demonstrate the pro-
gram's impact on the local economy and on welfare recipients.

      The Department of Labor also has allocated     $214 million
under section 6 to artas having 6 percent or more unemploy-
ment for 3 resent consecutive    months.  The remaining
$36 million  made available   to carry out the provisions    of
section 6 is being held in reserve to be used by the Secre-
tary of Labor for further   aid to high-unemployment    areas.
        ALLOCATION OF $600 MILLION BY THE DEPARTMENT

      Section 9 of the Emergency Employment Act of 1971 pro-
vides that not less than 80 percent ($600 million)            of the
$750 million    appropriated    for fiscal    year 1972 to carry out
section 5 of the act be apportioned          among the States in an
equitable    manner.    In  apportioning   this   amount, considera-
tion is to be given to the proportion           which the total num-
ber of unemployed persons in each State bears to the total
number of such persons in the United States.

      Each State, the District      of Columbia, and the Common-
wealth of Puerto Rico, however, must receive at least
$1.5 million,    and the U.S. territories     combined are to re-
ceive a minimum of $1.5 million.         The remaining $150 million
appropriated   for fiscal    year 1972 to carry out section 5
shall be available     for such purposes as the Secretary    of La-
bor deems appropriate      to carry out the purposes of the act.

      The act further   provides that the amount provided to
each State be distributed      among areas within   the State in
an equitable   manner and that consideration      be given to the
proportion   which the total number of unemployed persons in
each such area bears to the total number of such persons in
that State.

      The initial  apportionment on August 12, 1971, of $600 mil-
lion of section 5 funds by the Department of Labor was made
to program agents representing   the 50 States,    the District
of Columbia, Puerto Rico, the territories,     Indian tribes,
and about 550 of the more populous cities    and counties.
This apportionment   was based on a two-part   formula consider-
ing (1) the number of unemployed and (2) the severity        of
unemployment.

       Under the formula the Department determined the amount
of funds which each of the States (as well as the District
of Columbia and Puerto Rico) would receive and determined
how much would be apportioned     within    the States to (1) de-
signated cities   having populations     higher than 75,000 and
(2) counties having populations      higher than 75,000 (not
counting designated cities    within    a county).    The Department
determined also the amounts of funds which the States would
allocate   among areas having populations      less than 75,000--

                                   3
designated as balance-of-state          areas--which   did not receive
funds under (1) or (2).

      The Secretary   of Labor, using the proportion   of State
government employment to total State and local government
employment, specified    that portion   of the funds apportioned
to the cities   and counties which was to be used for State
government jobs and that portion      which was to be used for
local government jobs within each area.

        The Department's      guidelines     for the Public Employment
Program provide that each program agent be required                to dis-
tribute    program funds and the jobs that the funds were to
create equitably        and effectively      within  its area.   The guide-
Lines specify       that States determine the distribution           of
balance-of-state        funds primarily      on the basis of (1) the
extent and serverity         of unemployment in areas included un-
der balance-of-state,         (2) the number and size of eligible
applicants     within     the balance-of-state      areas,   (3) the num-
ber of public service employment opportunities               in each area,
and (4) the extent to which public service needs are not
being met,

      City and county program agents should distribute    funds
and should give consideration   to (1) employment opportunities
available  within various levels of government,    (2) the ex-
tent and severity   of unemployment in various areas, and (3)
the extent of unmet public service needs.




                                    4
APPORTIONMENTFORMULASCONSIDERED
BY THE DEPARTMENT

      The Department considered four formulas for apportion-
ing the $600 million  to the States under section 5 of the
act.   The estimated amounts which would be available  to
each State under each of the four formulas considered by
the Department and the number of unemployed persons and
rate of unemployment in each State are shown in appendix I.

       Under the first  formula a State's apportionment    would
be based on the relationship     between the total number of
unemployed in the State and the total number of unemployed
in the United States.      In a staff paper dealing with the
four formulas,   the Department stated that this formula had
the advantage of simplicity     and ease of calculation   and did
not go beyond the language on apportionment      contained in
section 9 of the act.      The Department paper stated also,
however, that this formula did not consider differences       in
severity   of unemployment.

         The second formula based the State's        apportionment   on
the relationship      between the total number of unemployed
over 4.5 percent in the State to the national            total   exceed-
ing 4.5 percent.       The chief disadvantage      to this approach,
according to the Department's          staff paper, was that, on the
basis of its tentative       allocation,     eight States and the
District     of Columbia had unemployment rates of 4.5 percent
or less and therefore       would receive only the minimum amount
of $1.5 million     each.    These nine areas which account for
12 percent of the total unemployed would have received only
2 percent of the funds.

       The third formula, which is the one that the Department
adopted, provides for allocating       funds by taking into con-
sideration    the ratio of the total     number of unemployed in
the State and the total number of unemployed in the United
States as well as the ratio of and the number of unemployed
in excess of 4.5 percent in the State and in the United
States.    According to the Department this approach, in ef-
fect, averages out the differences        that would have resulted
from the above two alternatives       and avoids the extremes
that would result      from utilizing  either  of them.
        Under the fourth formula States would be assigned
points,    ranging from 1 to 13, for specified       levels of unem-
ployment and for rates of unemployment, the sum of which
would represent     the basis for distribution     of funds.     Under
this technique more points are given for relatively           higher
levels and rates of unemployment on the theory that the
problems of joblessness      tend to rise as both the magnitude
and the incidence of unemployment rise in an area; there-
fore, more funds should be allocated         to such an area.     The
Department decided not to use this formula because it in-
volved numerous computations,      was complex to describe,       and
was considered less precise than the method selected.




                                 6
FORMULAUSED BY THE DEPARTMENT

        Department officials    adopted the two-part  third for-
mula to apportion      section 5 funds among the States and a
similar    formula to apportion    funds among program agents
within each State.

      In July 1971 Department officials       informed both of the
cognizant   subcommittees of the House and Senate Committees
on Appropriations,     during testimony    on the Rnergency -ploy-
ment Assistance    Act appropriation    for fiscal     year 1972, of
the Department's    plan to use the two-part       formula for allo-
cating funds to the States.

       Also this formula was discussed extensively         by the Sen-
ate and House in August 1971 during consideration            of the ap-
propriation      bill.    During the Senate discussions    the Chairman
of the Subcommittee on Labor and Health, Education,            and Wel-
fare, and Related Agencies, Senate Committee on Appropria-
tions,    inserted     in the Congressional   Record a table,   fur-
nished by the Secretary         of Labor, showing the tentative      ap-
portionment      of $600 million    of section 5 funds by State.

        During the House debate an amendment was offered to the
appropriation      bill which would have provided that the for-
mula to be used for distributing        funds be based solely and
entirely     on the proportion  of total unemployment in each
State to the total unemployment in the United States.         This
amendment was defeated.

        For the apportionment     to the States, the Department
determined the percentage relationship         between the total
unemployment within a State and the total           unemployment
within the United States and multiplied          this percentage by
$595,080,000      ($600 million   less $4,920,000 apportioned    to
territories      and Indian tribes).    The Department then deter-
mined the percentage relationship        between the number of un-
employed over 4.5 percent within a State and the total           num-
ber of unemployed over 4.5 percent in the United States and
multiplied     this percentage by $595,080,000.        The sum of the
two products was divided by 2 to arrive         at the apportionment
for a State.



                                   7
       The Department obtained the unemployment statistics
used for the State apportionments       from a Department report
entitled   "Area Trend.+ which contains monthly employment
and unemployment statistics.      A 3-month average of statis-
tics for the period January to March 1971 was used as the
base period for comparing each StateOs unemployment to that
of the Nation's.      According to Department representatives,
this was the latest     data then available.     The Department
used a similar    formula to apportion     funds to qualified
areas within a State.

     Although the Department had unemployment data on a
State basis and on a labor-market-area     basis, such data was
not available   on a city or county basis for allocating
funds to qualified   areas within a State.     Therefore   in July
1971 the Department requested State employment security
agencies to develop unemployment data for cities        and coun-
ties which were potential    recipients of section 5 funds.
This was to be done by breaking down the unemployment data
which was available    on a State basis or on a labor-market-
area basis.

      The Department suggested four possible methods for
computing unemployment data for cities        and counties, includ-
ing the use of data on unemployment insurance claims and
the 1970 Census of Population.        We were advised by Depart-
ment representatives   that the data submitted by the State
agencies had been evaluated by the Department and that,
when apparent discrepancies     existed,   the State agencies had
been asked to reevaluate    their procedures.

       Unlike the January to March 1971 data used for the ap-
portionment    to the States, the Department used May 1971
data as the basis for apportioning        funds among areas within
a State.     Appendix II is an illustration       of how the two-
part formula was used to compute the amount          to be appor-
tioned to a State and to a qualified         area within the State.

       After the Department announced the apportionment    of
$600 million     under section 5, program agents were able to
request an initial      allocation of 20 percent of the amount
apportioned    to them pending development of their applica-
tions for full     funding.


                                 8
            ALLOCATION OF FUNDS BY PROGRAMAGENTS

       After the Department had apportioned      funds, the program
agents for the 50 States, the District       of Columbia, and
Puerto Rico were required      to prepare plans showing how they
were to distribute     the balance-of-state   funds to smaller
units of government within       their areas of jurisdiction.
These funds represented     amounts which had not been allocated
by the Department to designated cities       or counties.     A
State's    plan had to be approved by the Department before it
would receive its full funding under section 5. As of No-
vember 3, 1971, the Department had approved the full-funding
applications    for all the States, except Indiana.

       The Department told us that the Indiana proposal was
not acceptable    and that it planned, through its Chicago Re-
gional Office,    to reapportion    the Indiana section 5 balance-
of-state   funds directly    to program agents.   These funds
would be apportioned      to (1) the State as program agent for
State government jobs in the smaller counties and (2) smaller
counties,   which applied for funds, as program agents for
local government jobs in their        areas.

        We obtained information  concerning    the methods used by
11 of the 51 State program agents for which full         funding
had been approved and by the State of Indiana to allocate
the balance-of-state      funds. The allocation    plans of these
12 States showed that various methods had been used for dis-
tributing    funds among subagents in the States.

      --Four of the States used a two-part      formula which was
         basically   the same as the one used by the Department
         to apportion   funds among the States.

      --Three of the States apportioned    funds to subagents
         primarily  on the basis of the ratio   of total area
         population  to State population.

      --Four of the States apportioned  funds primarily  on the
         basis of the ratio of the number of unemployed per-
         sons in an area to the number of unemployed persons
         in the State.



                                 9
      --One State allocated   funds on the basis of the areas
         in which State government jobs were needed and the
         priority for such jobs.

Although the factors     described above were      predominant    in
the States' allocation     of funds, most of      the States'   alloca-
tion plans also considered other factors,           such as availabil-
ity of jobs in a local area or the extent          of unmet needs
for public services    in an area.

      We believe that the allocation       of funds by States to
local areas, primarily    on the basis     of population  without
considering   the unemployment in the      areas, is questionable.
We plan to examine further     into this    matter during our re-
view of the Department's    approval of     program proposals.

        Case studies on the allocations   of $34 million  by Cali-
fornia,    Georgia, Indiana, Massachusetts,   and Washington are
included in appendix III.

       As direct   recipients   of section 5 funds, program agents
also were required       to make an equitable   distribution       of
funds to other units of government.          We obtained informa-
tion concerning the procedures and methods which two of the
cities   and two of the counties used to allocate           a total   of
$42,9 million    to local governmental units.         Case studies on
the allocation     of funds by the cities     of Los Angeles and
Seattle and by King County and the County of Los Angeles,
are included as appendix IV.




                                 10
                                                                                                                                                              APPENDIX                 I


                                                 ESTIMATES           OF SECTION             5 APPORTIONMENTS                TO STATES

                        UNDER II-III      FOUR ALTERNATIVS                   FORMUIAS           CONSIDERED         By THE DEPARTMENT                 OF lABOR

                                            Unemployment
                                               (note   a)
                                            Number                                                                                  Alternative                3
                                        (thousands)       Rate                Alternative             I   Alternative           2       (note            b)        Alternative             4

                                                                              -000                                              omitted)

Alabama                                        64.3                 5.0           $      7,310                $      2,690                 $      5,000                $      7,022
Alaska                                         15.9               14.2                   1,810                       4,490                        3,150                     16,364
Arizona                                        33.7                 4.8                  3,860                        1,500                       2,680                       7,022
Arkansas                                       45.9                 6.3                  5,170                        5,530                       5,350                       9,342
California                                   683.7                  7.9                77,710                     123,190                      100,450                      25,650
Colorado                                       29.9                 3.3                  3,380                        1,500                       2,440                       4,642
Connecticut                                  117.4                  a.4                13,360                       22,820                       18,090                     lb, 364
Delaware                                       12.7                 5.2                  1,500                        1,500                        1,500                     4,642
District        of     Columbia                33.7                  2.6                 3,860                        1,500                        2,680                     4,642
Florida                                      122.7                   4.3               13,960                         1,500                        7,730                      7,022
Georgia                                        70.5                  3.7                 8,020                        1,500                       4,760                      4,642
Hawaii                                         16.3                  4.6                 1,840                        1,500                       1,670                      4,642
Idaho                                          19.9                  6.7                 2,220                       2,660                        2,440                      9,342
Illinois                                     242.7                   4.9               27,630                        8,190                      17,910                      16,364
Indiana                                      133.1                   6.2               15,110                      15,350                       15,230                      13,984
IOWa                                           58.1                  4.8                 6,650                       1,790                       4,220                        7,022
Kansas                                         56.4                  6.5                 6,390                       7,290                       6,840                      11,664
Kentucky                                       75.1                  6.3                 8,510                       8,990                       8,750                      13,984
Louisiana                                      89.5                  6.6               10,190                      11,830                       11,010                      13,984
Maine                                          31.5                  7.9                 3,580                       5,580                       4,580                      13,984
Maryland                                       70.1                  4.7                 7,900                       1,500                       4,700                       7,022
Massachusetts                                182.7                   7.2               20,720                      28,320                       24,520                      18,686
Michigan                                     301.7                   a.0               34,290                      55,090                       44,690                      25,650
Minnesota                                      99.5                  5.1               11,300                      10,840                       11,070                      11,664
Mississippi                                    45.0                  5.4                 5,160                       3,160                       4,160                        7,022
Missouri                                     122.6                   6.0               13,920                      13,100                       13,510                      11,664
Montana                                        24.6                  9.0                 2,790                       5,190                        3,990                     13,984
Nebraska                                       25.6                  3.9                 2,900                       1,500                        2,200                       4,642
Nevada                                         15.6                  6.4                 1,750                       1,930                        1,840                       7,022
New Hampshire                                  15.7                  5.3                 1,720                       1,500                        1,610                      4,642
New Jersey                                   222.9                   7.2               25,330                      35,130                       30,230                      21,006
New Mexico                                     26.2                  7.1                 2,950                       3,950                        3,450                     11,664
New York                                     470.0                   5.7               53,380                      40,520                       46,950                      21,006
North       Carolina                           96.5                  4.3               10,760                        1,500                        6,130                       7,022
North       Dakota                             15.7                  6.5                 1,760                       2,040                        1,900                       9,342
Ohio                                         233.5                   5.2               26.530                      13,110                       19,820                      lb ,364
Oklahoma                                       51.9                  5.0                 5,920                       2,180                        4,050                        7,022
Oregon                                         70.2                  7.6                 7,940                     11,940                         9,940                      13,984
Pennsylvania                                 267.0                   5.4               30,390                      17,930                       24,160                       16,364
Puerto       Rico                            100.0                ii.8                 11,420                      25,720                       18,570                       21,006
Rhode Island                                   29.8                  7.6                 3,380                       5,060                        4,220                      13,984
South       Caroline                           54.9                  5.1                 6,240                       2,800                        4,520                        7,022
South       Dakota                             10.3                  3.9                 1,500                       1,500                        1,500                        2,321
Tennessee                                      88.4                  5.2               10,060                        4,820                        7,440                        9,342
Texas                                        193.7                   4.2               22,060                        1,500                      11,780                       11,664
Utah                                           30.4                  7.0                3,440                        4,540                        3,990                      11,664
Vermont                                        13.6                  7.1                 1,520                       2,040                        1,780                        9,342
Virginia                                       64.8                  3.5                7,420                        1,500                        4,460                        4,642
Washington                                   161.2                 11.7                18,310                      41,430                       29,870                       23,327
West Virginia                                  48.7                  7.7                5,530                        8,510                        7,020                      13,984
Wisconsin                                    116.5                   6.1               13,230                       12,830                      13,030                       11,664
Wyoming                                          7.8                 5.9                1.500                        1.500                        1.500                        7.022

                                                                                      595,080                     595,080                      595,080                     595,080

Territories                                                                              1,500                       1,500                        1,500                       1,500
Indian      tribes                                                                       3.420                       3.420                        3,420                       3.420

                                                                                     $600.000                 $600.000                     $600,000                    $600,000

aDased        on average          of   January         to    March         1971   unemployment            data.
b Formula       adopted       hy Department                 of   Labor.




                                                                                                 11
APPENDIX II


                 ILLUSTRATION OF SECTION 5 APPORTIONMENTFORMULA

                         USED BY THE DEPARTMENTOF LABOR
                                State Apportionment
State share based on total unem-                State share based on unemployment
ployment                                        over 4.5 percent
State unemployment, 240,575                     State unemployment over 4.5 percent,
                                                  19,377
National unemployment, 5,229,900
State unemployment, 4.6 percent                 National unemployment over 4.5 per-
  of national unemployment                         cent, 1,384,lOO
4.6 percent of $595,080,000a =                  State excess, 1.4 percent of na-
   $27,373,680                                     tional excess
                                                1.4 percent of $595,080,000a =
                                                   $8,331,120
          State apportionment       = $27,373,680+$8,331,120            = $17,852,400
                                                     2
                         Area Apportionment         Within    State

Area share based on total          unem-        Area share based on unemployment
ployment                                        over 4.5 percent

Area unemployment,       90,400                 Area unemployment over 4.5 percent,
                                                  10,154
State unemployment, 240,575
Area unemployment, 37.6 per-                    Area excess,          52.4 percent   of State
  cent of State unemployment                      excess
                                                52.4 percent          of $8,331,120 =
                                                     $4,365,506
37.6  percent of $27,373,680=
   $10,292,504
        Area apportionment        = $10,292,504+$4,365,506            = $7,329,005
                                                2

                   Division     of Area Apportionment Between
                              State and Local Governments

Total government employees in area, 1,770,OOO
State government employees in area,    169,920
State government employees, 9.6 percent of total government employees
  in area
9.6 percent of $7,329,005 = $703,584 = State share for State government
  jobs in area
$7,329,005-$703,584 = $6,625,421 = Program agent share for local govern-
  ment jobs in area

aAmount available    for distribution  after             deduction     of amounts allo-
 cated for territories    and Indians.
                                           12
                                                        APPENDIX III


     CASE STUDIES ON SECTION 5 ALLOCATIONS BY STATES

                           CALIFORNIA

ALLOCATION BY THE DEPARTMENT

       Of the $100.4 million    in section 5 funds apportioned       to
California,    $95.9 was allocated   by the Department of Labor
to the 36 largest     cities  and the 31 largest   counties in
California.     Of the amount allocated    to the cities    and
counties,    $11.9 million   was to be available   for State gov-
ernment jobs in those localities.        The remainder,    $4.5 mil-
lion, was provided to the State government for allocation            in
the balance of the State's      27 smaller counties.

ALLOCATION BY THE STATE

       California   assigned to its Office of Manpower Utiliza-
tion, Department of Human Resources Development, responsi-
bility   for administering   the program.    This office     developed
the allocation    formula for the balance-of-state       allocations
by using data developed by its research and statistics             sec-
tion.

      Our review of California's     allocation    of the $4.5 mil-
lion indicated   that the total    number of unemployed persons
and the rate of unemployment in each county had been taken
into account for allocation      of funds.     Consideration  was
given to the number of available      public service employment
opportunities.

     About $230,000 of the $4.5 million     was set aside by
the State to provide jobs on certain    Indian reservations
where the State estimated  that about 5 percent of the un-
employed labor force resided.

       The State's Department of Human Resources Development
reported that the balance of $4.3 million   had been distrib-
uted among the 27 smaller counties on the basis of a formula
which took into account both the total number of unemployed
and the rate of unemployment in each county.    Under the
formula the rate of unemployment was weighted to provide
counties having larger unemployment rates with proportion-
ately more funds than counties having lower rates.
                                   13
APPENDIX III

        According to State officials   the reason for the use of
the adjustment     factor was their belief   that it would be more
difficult     for persons in high-unemployment    areas to obtain
jobs because there would be more competition         and that there-
 fore the need for more jobs in those areas would be greater.

       We were told that this formula had been applied to al-
 locate funds to 24 of the 27 counties.       In some cases, how-
ever, adjustments     had to be made because public service
jobs were not available.      For the remaining three counties,
the allocation    procedure would have resulted    in too small
an amount to do the counties any good in providing       meaning-
ful jobs, so it was decided that these counties would be
awarded $14,000 each, or about enough to provide two $7,000
jobs in each county.




                                14
                                                          APPENDIX III


                                GEORGIA

ALLOCATION BY THE DEPARTMENT

       The Department of Labor allocated    a total   of $4.8 mil-
lion to the State of Georgia under section 5--about
$2.7 million   was allocated  directly   to four cities     and six
counties in the State, of which about $340,000 was designated
for State government jobs in those areas.         The remaining
$2.1 million   was designated as balance-of-state       funds.

ALLOCATION BY THE STATE

     The Employment Security   Agency of the Georgia          Depart-
ment of Labor administers   the program in Georgia.

      Four of the counties and one of the cities         which re-
ceived separate fund allocations        from the Department of
Labor agreed to have the State act as program agent for
them. Their allocations        of $708,000, together with the
$340,000 for State jobs in the designated areas and the
$2.1 million  balance-of-state      funds, were therefore     avail-
able to be included in Georgia's        allocation  plans.

       Of the $3.1 million  available    for distribution,      Georgia
submitted a plan to distribute      about $3 million.        The plan
stated that the remainder would be distributed           after the
outlying    counties and communities could be contacted and
their needs could be determined.

        The distribution     formula used by Georgia for balance-
of-state    funds is almost identical       to the one used by the
Department of Labor.         Under the formula funds are distri-
buted by the State to economic development districts            consist-
ing of groups of counties.          The State is divided into 18
such districts,        and each has a planning and development
commission and a board of directors           consisting of a repre-
sentative     from each county.

       According to State officials        responsible    for preparing
and administering     the balance-of-state       plan, the employment
information    used in allocating     funds was obtained from in-
formation    developed or received by the State Department of
Labor.     They stated that the information         for the most part

                                   15
APPENDIX III


was provided by the Department's     Employment Security Agency
from analyses of State unemployment tax returns.        Other
sources used included reports    from the Department of Labor
and from the Railroad Retirement     Board and surveys and es-
timates by the State Department of Labor.

       Funds allocated   to each district     are to be distributed
to cities   and counties within that district        on the basis of
the recommendations of the planning and development commis-
sion's board of directors.       Funds are to be distributed        to
areas which have the greatest number of unemployed persons
and which provide the greatest       assurance of transitional        em-
ployment.     Such employment has as its objective        to move in-
dividuals   from jobs supported under the program into public
or private    employment or training      not supported by the Ekner-
gency Employment Act.

       The State's    application    to the Department of Labor
shows that funds will be distributed         to six State agencies,
76 city governments,       and the governments of 79 of Georgia's
159 counties.      Of  the  remaining 80 counties,    41 contain
cities   that will receive funds; thus, the funds are to be
used for jobs in 120 of the 159 counties.




                                   16
                                                        APPENDIX III


                               INDIANA

ALLOCATION BY THE DEPARTMENT

       Indiana was apportioned   $15.2 million   under section 5
 of the Emergency Employment Act of 1971 for public service
jobs.     Of this amount, $7.7 million   was allocated     by the
 Department of Labor to six cities     and 15 counties     and $7.5 mil-
 lion to the balance of the State.      Included   in  the  amount
 for the above six cities    and 15 counties was $1.4 million
 to be used for State government jobs.

ALLOCATION BY THE STATE

        The Indiana program is being administered          by the Per-
sonnel Division      of the State's    Department of Administration,
As of the time of our review, Indiana's           proposal for the
distribution     of section 5 funds still       had not been approved
by the Department of Labor.          The Department told us that
the State's     proposal was unacceptable       and that it planned,
through its Chicago Regional Office,          to reapportion     the
section 5 balance-of-state        funds directly     to program agents.

      In its proposal the Indiana State government elected
not to use county, city,    or other units of local government
as subagents for the balance-of-state     funds.    The State
government believes   that it does not have enough authority
over these units of government to assume the responsibilities
and to provide the assurances required      of a program agent
by the Federal regulations.

       Therefore   the State's  plan for balance-of-state   funds
provided that the $7,5 million      be used for 1,043 positions
in about 60 different      State agencies and institutions
throughout     the State.

      According to the State's application,    the distribution
of jobs and funds was based on recommendations and supportive
data submitted by State agencies and institutions.

      Recruiting   areas were established    for each State agency
and institution    where positions    had been created.   In most
cases the recruiting     area consisted   of several counties  in
close proximity    to the facility.     In some cases the

                                   17
APPENDIX III


recruiting      area was to be State-wide.      Cities and counties
designated as program agents by the Secretary were excluded
when these recruiting        areas were established.    In filling
State positions       in Department of Labor-designated     program
agent areas, the State is restricted         to hiring  persons re-
siding in these areas; therefore,         in these cases no addi-
tional     recruiting   areas were established.

      The counties in each recruiting      area were ranked ac-
cording to their unemployment rates.        Jobs were to be allo-
cated on the basis of these rates;      the greatest   number of
jobs were to go to the county having the highest unemploy-
ment rate.   The unemployment data by county was provided by
the Indiana Employment Security     Division.




                                 18
                                                         APPENDIX     III



                           MASSACHUSETTS

ALLOCATION BY THE DEPARmNT

      The Department of Labor allocated          $24.5 million   under
section 5 to the Commonwealth of Massachusetts.              Of this
amount, $10.2 million        was allocated    by the Department to
the 12 largest Massachusetts         cities.    Of the $10.2 million,
$1.6 million     was designated for State government jobs in
those cities.,     Although 11 of the 14 counties        in Massachu-
setts had populations        in excess of 75,000, they were not
designated as fund recipients          because the counties in the
State do not possess the necessary governmental powers.
Therefore    the remaining $14.3 million        was designated as
balance-of-state      funds.

ALLOCATION BY THE STATE

      Normally the State is required        to distribute  the
balance-of-state       funds but, because of the sizes of the
populations      in the counties and because of the nature of
the county organization,        the Departmentes regional    office
developed the plan for distribution         among the various
counties.

       In distributing    funds within    the State, the Department
used the same two-part       formula used in its other apportion-
ments.    A determination     was made of the relationship   of to-
tal unemployment in a county to total unemployment in the
state and of the relationship        between the number of unem-
ployed over 4.5 percent in the county and the number of un-
employed over 4.5 percent in the State.

       The State designated its Office of Manpower Affairs         to
administer    the program.      The office made an additional   cal-
culation   to determine what each town within       a county should
receive.     Because statistics     are not kept by the State on
the number of unemployed in each town, the State made a
count by postal zip codes of all unemployment checks paid
during the week ended June 19, 1971.         The total   number of
checks issued that week was 102,558, including         those in
major city areas.



                                   19
APPENDIX III


        Using the zip code data, the total       number of checks
was computed for each county minus the 12 separately           funded
cities.      The number of checks for each county then was
broken down into checks for each locality          within the
county, and the ratios         of locality checks to county checks
were used to produce each locality's         percentage of county
unemployed.        This percentage figure was multiplied     by the
dollar    allocation    for the county to produce the locality's
share of the county's        funds.

      Instead of having each locality       act as a program sub-
agent, 24 consortiums,    each involving     several localities,
were established.    This  action  was   taken  because the State
did not want to deal with 339 individual        subagents and be-
cause some of the smaller towns would be receiving           less
than $1,000 to fund jobs,      The consortiums     were established
by the towns themselves with the guidance and approval of
the State Office of Manpower Affairs.

       The funds allocated     to towns having a consortium were
pooled and were used to fund jobs open to anyone living
within   the consortium.      Each town thereby might have re-
ceived more or less than the number of dollars        that would
have been allocated      to it using the State's  formula.

      One of the problems with the State's    method of alloca-
tion was the fact that some of the localities     were in bor-
der areas and that their residents  worked in and received
unemployment insurance payments from neighboring     States.
Thus these people would not be included in the statistics
used by the State to allocate  funds to individual    communi-
ties.

        Essex County officials           complained that the State's
procedure did not consider the fact that many of the
county's     residents,      because they had been employed in New
Hampshire, filed         for unemployment benefits       in New Hampshire.
Therefore,      after obtaining        data prepared by the county, a
revised formula was negotiated              between the county and the
State, which required           that, in essence, consideration      be
given to each locality's             percentage of the county popula-
tion,    in addition       to its share of unemployment.       These two
resulting     ratios     were averaged and then were multiplied         by
the dollar      allocation      to the county to produce each local-
ity's    share of the funds.
                                    20
                                                          APPENDIX III


       Because the revised formula for Essex County was nego-
tiated   just prior to the State's   submission of its plan for
Department of Labor approval and because similar      data to
that used by Essex County to present its case was not avail-
able for other border counties,    the revised formula was not
used by the State for allocating     funds within any other
county.

       We noted only two other controversies           over Massachu-
setts'   method of allocation.        The town of Rehoboth desired
a per capita distribution        equivalent    to distributions       of
adjacent communities.        Town officials      contended that the
State's    survey of the unemployed in a l-week period in June
was unfair     because unemployment is normally low during that
month when there is considerable          agricultural     activity    in
the community.       They also stated that many of the town's
citizens    were enrolled    for unemployment benefits          in the
nearby State of Rhode Island.

       Program officials    told us that the town of Seekonk had
similar   complaints--   it is also on the Rhode Island border.
No action was taken on the two complaints         because the State
did not have data available       on the towns and because the
towns could not provide data on their own to substantiate
their   contentions.     A State official   advised us3 however,
that better unemployment data in border locations          had been
requested from the Department of Labor and that the use of
such data might permit a later redistribution         of funds.




                                    21
APPENDIX III


                           WASHINGTON

ALLOCATION BY THE DEPARTMENT

      Of the $29.9 million   in section 5 funds apportioned     to
the State of Washington by the Department of Labor, about
$25.2 million    was awarded to three cities   and nine counties
and $4.7 million    to the State for the balance of the State.
Included in the allocation     for the above three cities   and
nine counties was $6.3 million     for State government employ-
ment.

ALLOCATION BY THE STATE

      The Washington State government, as program agent, al-
located the $4.7 million      of balance-of-state    funds to
 (1) local governmental    units in the 30 counties that were
not funded directly    by the Department of Labor, (2) State
government agencies for State employment in those 30 coun-
ties,   (3) Indian reservations    located in the 30 counties,
and (4) training,    employment service,      and administration
expenses.

        The State first   set aside about $470,000 for the train-
ing and administration       services   for those employees to be
hired with the $4.7 million.          The balance of almost $4.3
million    then was split    into amounts that would go to the
local governments in the 30-county area and to the State
government; the basis of the split         was the ratio  of the num-
ber of State employees to the number of local government em-
ployees in the total      area.

      The State government's    share was $1,227,630 (29 per-
cent), which was allocated    to each of the 30-county areas
on the basis of population    in the county.    This allocation
was subject to revision    on the basis of the existence      of
State agencies in those counties.

       From the local governmental   share of $3,030,540,     the
State set aside $151,515 (about 5 percent)      on an arbitrary
basis for the Indian reservations     in the 30-county area.      At
the time these funds were allocated,      the amounts of the al-
locations   of the Federal Government and other State program


                                 22
                                                      APPENDIX III


agents to Indian reservations were unknown and the State
had set aside these funds to correct possible inequities.

        The balance of local government funding was allocated
by the State among the 30 counties on the basis of Universe
of Need data prepared by the Washington State Comprehensive
Area Manpower Planning System. This data took into consid-
eration    such factors  as distribution of population and dis-
tribution    of persons in need of manpower services.

       Within each of the 30 counties,     funds were allocated
further    among local government units,     taking into consider-
ation such factors as their ability      to structure    jobs and
their experience     in job retention.   The within-county    allo-
cations were decided at meetings attended by representatives
of the local government units and the State.




                                  23
APPENDIX IV


              CASE STUDIES ON SECTION 5 ALLOCATIONS

                     BY CITIES AND COUNTIES

                       CITY OF LOS ANGELES

ALLOCATION BY THE DEPARTMENT

        The Department of    Labor apportioned  $19.8 million  to
the city of Los Angeles       under section 5 of the Emergency Em-
ployment Act of 1971.        A total  of $16.4 million  was to be
utilized    for local jobs    and $3,4 million  for State employ-
ment within     the city.

ALLOCATION BY THE CITY

       The city of Los Angeles government comprises 21 depart-
ments and 11 bureaus.     A letter  from the Mayor was sent to
each department and bureau chief,      requesting    that programs
be developed to hire participants      for needed public service
positions.     The letter did not set limits      on either  the num-
ber of jobs or the dollar     amount that could be requested.

       The city designated as subagents for a share of the
city's    funds the Unified    School District,     the Community
College District,     the Housing Authority,      and the Community
Redevelopment Agency.        Unlike the city's    request for pro-
posals from its departments and bureaus, in which dollar
guidance was not given, these subagents were given specific
dollar    allocations   by the city on the basis of the popula-
tion served and of the significance         of their functions    in
providing     unmet public service needs,       They were asked to
submit programs to match the dollar         amounts.

      The city departments and bureaus developed programs
showing public service needs, types of positions    to meet
the needs, number of positions,  and personnel costs.     The
agencies requested more jobs than reasonably might be funded
and submitted  their proposals to the City Administrative
Office and to the Personnel Department for evaluation.

      In its evaluation   of city agency proposals,     the city's
Administrative   Office considered two factors    in deciding
how to allocate   the funds:     (1) whether the positions   were

                                  24
                                                         APPENDIX IV


justified  and the programs were appropriate and (2) whether
the departments or bureaus could provide the necessary equip-
ment or materials  to sustain the proposed positions,

        The Personnel Department considered whether (1) the re-
quested positions      were reasonable as to need and types
 (2) the majority     of the requested jobs were trainee       or entry
level,    (3) the agencies could expect to absorb 50 percent
of the number of positions         requested,   (4) the proposed jobs
were applicable     to significant      segments of the target   popu-
lation,    and (5) the positions       were identifiable  with needed
public services.

      Using the above criteria,  the city's Administrative
Office and the Personnel Department made decisions      on the
number of jobs and the dollar   amount that would be allotted
to each department or bureau.    The city evaluated the pro-
posals of the subagents using essentially   the same criteria
used for the departments and bureaus.

       The allocation     decided upon resulted    in receipt  by the
city and the subagents of the following         section 5 funds:
$10 million    to the city of Los Angeles, $4,5 million        to the
Unified   School District,      $0.8 million  to the Community Col-
lege District,      $1 million   to the Housing Authority,    and
$0.1 million     to the Community Redevelopment Agency.




                                  25
APPENDIX IV

                          CITY OF SEATTLE

ALLOCATION BY THE DEPARTMENT

       The Secretary  of Labor apportioned   $6.6 million    in
section 5 funds to the city of Seattle--$4       million  for local
employment opportunities    and $2.6 million   for State govern-
ment jobs in Seattle.

ALLOCATION BY THE CITY

        The ciq  allocated    the local funds, including     the
amounts that would go to its own departments and bureaus,
on the basis of the proportion        of each agency's full-time
employment to the total       employment by all the agencies;       ad-
justments    were made to fit the number of positions        requested.
Under this allocation       about 60 percent of the funds went to
 the civ    of Seattle,    37 percent to the Seattle   School Dis-
 trict,   and 3 percent to the other local governmental        units.

       Within the ciq   of Seattle,   there were a number of
autonomous agencies that the city decided would be given a
share of local funds.      The agencies which submitted proposals
for use of the funds were the Seattle       School District, the
Seattle Housing Authority,     the Metro, the Puget Sound Air
Pollution    Control Agency, and the Puget Sound Governmental
Conference.

     Since all positions    were in the city of Seattle and
since the population   served by all the agencies was the
same, unemployment rates were not broken down by geographi-
cal area.




                                  26
                                                            APPENDIX IV


                         LOS ANGELES COUNTY

ALLOCATION BY THE DEPARTMENT

        Los Angeles County was apportioned    a total  of $17.3
million    in section 5 funds by the Secretary     of Labor.   Of
this amount, $16.5 million    in grant funds was to be uti-
lized for local jobs and $0.8 million      for State government
jobs.

ALLOCATION BY THE COUNTY

        The Los Angeles County Division       of the League of Cities
and the educational         groups in the area established     task
forces to work with the county in developing allocation             for-
mulas and in reviewing          proposals from each of the public en-
tities     in the county which were eligible       to receive funds
as subagents.        Each city manager and mayor assumed responsi-
bility      for reviewing    public service needs within    their ju-
risdiction,      and the county government reviewed public ser-
vice needs within        the unincorporated   areas.

       By agreement with all eligible          subagents and due to
severe time limitations,        the county, as program agent, sub-
mitted an application       to the Department that included jobs
to be provided by the county.           Approximately     $6 million   was
committed for this purpose.          The task forces then made pre-
liminary   allocations     of $5 million     for cities,    $4.5 million
for school districts,       $0.4 million     for community colleges,
and $0.5 million       for special-purpose      districts   (i.e.,   mos-
quito abatement).

        Once these allocations    were made, the task forces
called a meeting     of representatives      of the 65 eligible
cities.     The representatives     were briefed     on the program
guidelines,     were given dollar    estimates    of their alloca-
tions,    and were encouraged to submit proposals to the
county for using the funds.         A two-part    formula for allo-
cating funds to the cities       was developed and approved by
the task forces.

     Under the formula each city first    would receive $1 for
each person residing  in the city.   If the city had an unem-
ployment rate in excess of 4.5 percent,    it also received

                                    27
APPENDIX IV


$1 for each person multiplied      by the numerical   rate differ-
ence between 4.5 percent and the city's       unemployment rate
in excess of 4.5 percent.       For example, a city having a
population   of 50,000 and a 6.5-percent     unemployment rate
would receive   ($50,000)+($50,000x2>,     or $150,000.

        The $4.5 million    allocated    to the 33 school districts
applying for grants was based on each school"s proportion
of the total     number of students enrolled        whose families
were assisted     under the aid to families        with dependent
children    program (counted twice) and on the average daily
attendance     of all students (counted once) in the area cov-
ered by the county's       grant.     For example, if the 33 school
districts    had a total    enrollment     of 50,000 students whose
families    were assisted under the aid to families         with de-
pendent children      program, if the average daily attendance
was 900,000, and if school district           A had 6,000 such stu-
dents and an average daily attendance of 30,000, the compu-
tation    would be:

Total   school district   A:
     (6,000x2)+(30,000)                       =                 42,000
Total all school districts:
     (50,000x2)+(900,000)                     =              1,000,000

      42,000 = 4.2%x$4.5       million        = $189,000
  1,000,000

        Some schools submitted proposals for less than the al-
located figure,     and other schools submitted proposals for
above the allocated      figure.      After giving the requested
amount to each of the schools which had requested an amount
less than the allocated        figure,     a balance of $600,000 was
distributed     among the remaining school districts,         which had
requested more than the allocated            amount, on the basis of
each district's     percentage of the total         average daily at-
tendance for these districts.

         F'unds were allocated     to four community colleges on the
basis of relative       average daily attendance.        Special-purpose
district      proposals were analyzed and grants were awarded on
the basis of the relative         merits of the district's       program
in relation       to similar   programs funded under formula alloca-
tions.       Not all special-purpose      districts were covered, but

                                         28
                                                  APPENDIX IV

a county official said that a more concentrated   effort
would be made to cover more districts with section 6 funds.

     Most of the information  necessary to make allocations
was obtained from data compiled by the local State Depart-
ment of Human Resources Development.




                              29
APPENDIX IV


                             KING COUNTY

ALLOCATION BY THE DEPARTMENT

      King County, Washington, was apportioned   $7 million in
funds under section 5 of the Emergency Employment Act of
1971. A total    of about $6 million was to be used for local
jobs and about $1 million   for State government employment
in King County.

ALLOCATION BY THE COUNTY

       The formula used by King County to allocate          funds to
the four types of governmental units in the county--the
county government, city governments,         school districts,      and
fire districts    --used three variables:     (1) the number of ex-
isting   public service jobs, (2) population,        and (3) the
rates or numbers of unemployed by geographic area.              The
county allocated      $5.5 million after subtracting       $467,694 for
estimated    employment service,   training,     and administrative
costs.

       On the basis of the number of public service jobs within
all local government entities     in King County, the county
government was allocated    $2,481,152.    Of this amount,
 $2,330,847 went to the King County government and $150,305
was divided among five noncounty government agencies--the
King County Housing Authority,     the Metro, the Puget Sound
Governmental Conference,    the Puget Sound Air Pollution      Con-
trol Agency, and the Muckleshoot Indian Tribe.         This alloca-
tion was based on each agency's proportion       of existing   pub-
lic service jobs within   the five agencies.

       Of the remaining $3 million,     the cities    were allocated
$858,083 primarily     on the basis of population      rather than on
the basis of the number of public employees.           Had the allo-
cation been based on the number of public service jobs, the               .
cities   would have received much less.        King County officials
believed that it would be more equitable          to base the allo-
cation primarily    on population    because of the cities'     lim-
ited revenues, high needs, and variety         of potential   perma-
nent jobs.    Each city's    portion  of the $858,083 was computed
on the basis of the incorporated       population,    and some small
adjustments   were made.

                                  30
                                                              APPENDIX IV


        The school districts      were allocated     $2,021,246.      These
funds were distributed        to each school district       as follows:
one half of the total        allocation     was based on estimates      of
a district's     portion    of the total     staff to the staff     in all
school districts       in the county, and one half was based on a
district's    portion    of the total number of insured unemployed
and welfare recipients        to the total number of such persons
in all the school districts           in the county.

       The fire districts    were allocated    $124,825.  Participa-
tion in this program was requested by 14 districts,           and
each district    was allocated   one position.     The decision to
allocate    one position   to each of the 14 districts    was an
administrative    decision made by county officials.




                                    31