oversight

Senior Community Service Employment: Program Reauthorization Issues That Affect Serving Disadvantaged Seniors

Published by the Government Accountability Office on 1999-05-19.

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

                          United States General Accounting Office

GAO                       Testimony
                          Before the Subcommittee on Postsecondary Education,
                          Training, and Life-Long Learning, Committee on Education
                          and the Workforce House of Representatives


For Release on Delivery
Expected at 2:00 p.m.
Wednesday, May 19, 1999
                          SENIOR COMMUNITY
                          SERVICE EMPLOYMENT

                          Program Reauthorization
                          Issues That Affect Serving
                          Disadvantaged Seniors
                          Statement of Marnie S. Shaul, Associate Director
                          Education, Workforce, and Income Security Issues
                          Health, Education, and Human Services Division




GAO/T-HEHS-99-126
Senior Community Service Employment:
Program Reauthorization Issues That Affect
Serving Disadvantaged Seniors
               Mr. Chairman and Members of the Subcommittee:

               We are pleased to be here today to assist you as you discuss the
               reauthorization of the Older Americans Act (OAA), which provides for the
               economic well-being of disadvantaged older Americans. One important
               program under the OAA is the Senior Community Service Employment
               Program (SCSEP), which is a significant source of jobs for needy elderly
               Americans. SCSEP finances part-time, minimum-wage community service
               jobs each year for about 100,000 economically disadvantaged Americans
               aged 55 and older in schools, hospitals, senior citizen centers, and other
               community service activities.

               The Department of Labor administers this $440 million program through
               grants to 10 national organizations—called sponsors—and states. Two
               legislative provisions affect how funds are allocated between the national
               sponsors and the states. The first is a “hold harmless” provision that
               guarantees that national sponsors can carry out the same level of activity
               in states as they did in 1978. The second provision is that national
               sponsors receive 78 percent of total program funds under annual
               appropriations statutes. Concerns have been raised about how these
               provisions affect the distribution of services to needy elderly people.

               My remarks today will focus on (1) the effect of the hold harmless
               provision on allocating funds to where needy elderly people live and
               (2) the impact of the annual appropriations statutes on the distribution of
               SCSEP positions within states. My comments are based on the findings from
               our 1995 report on the SCSEP program, a 1998 report updating program
               information,1 and additional work recently done for the Subcommittee.

               In summary, we found that existing legislative requirements governing the
               allocations of SCSEP funds result in distributions of funds among and within
               states that do not match the distribution of the needy population.
               Specifically, the hold harmless provision, as interpreted by Labor, limits
               Labor’s ability to allocate funds among states in a way that ensures that
               funds are provided to the states where the most needy elderly reside. A
               majority of SCSEP funds are not responsive to population changes that have
               occurred since 1978 when the hold harmless provision was put in place
               because national sponsors are guaranteed funding for the same number of
               positions in each state that they had in 1978. In program year 1998, 63

               1
                Department of Labor: Senior Community Service Employment Program Delivery Could Be Improved
               Through Legislative and Administrative Actions (GAO/HEHS-96-4, Nov. 2, 1995) and Senior
               Community Service Employment Program: Status of National Sponsor Grants (GAO/HEHS-98-115R,
               Apr. 17, 1998).



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                 percent of the total appropriation of $440 million was subject to the hold
                 harmless provision. In addition, because 78 percent of total appropriations
                 go to national sponsors, some areas within states can be over- or
                 underserved. This annual appropriation provision has afforded the states a
                 more limited role in ensuring a more equitable distribution of funds than
                 was envisioned in the 1978 amendments, whereby states were to receive
                 55 percent of funds above the 1978 appropriation. In our 1995 SCSEP report,
                 we presented matters for consideration by the Congress that would
                 (1) amend or eliminate the hold harmless provision and (2) increase the
                 amount of funds allocated to the states. We believe that these options
                 remain valid today.


                 SCSEP evolved from Operation Mainstream, which trained and employed
Background       chronically unemployed adults under the Economic Opportunity Act of
                 1964. In 1965, Operation Mainstream provided funding to the Green
                 Thumb organization, at the time a nonprofit affiliate of the National
                 Farmers Union, to conduct a pilot training and employment program for
                 economically disadvantaged older workers in several rural areas. Green
                 Thumb was thus the first of the 10 nonprofit national sponsors that today
                 administer most of the SCSEP funds.

                 During the next 13 years (1965-78), legislative and administrative actions
                 instituted most of the basic aspects of today’s SCSEP:

             •   responsibility for the program was moved to the Department of Labor;
             •   the program was made part of the OAA and given the goal of providing
                 subsidized employment in community service organizations to
                 economically disadvantaged older Americans;
             •   all grantees were asked to attempt to place at least 10 percent of their
                 program enrollees in unsubsidized jobs (the goal has been 20 percent since
                 1985);
             •   and 8 of the eventual 10 national sponsors, as well as most state
                 governments, were made grantees for the program.

                 Of the current 10 national sponsors, 5 were added because of OAA
                 amendments and other congressional guidance to Labor, which directed
                 that Labor add national sponsors whose services were directed primarily
                 toward minority constituencies or ethnic groups with high concentrations
                 of the elderly poor.




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                          Program Reauthorization Issues That Affect
                          Serving Disadvantaged Seniors




Statutory Provisions on   The OAA contains several provisions governing Labor’s allocation of SCSEP
Allocating Funds          funds. The hold harmless provision requires the Secretary of Labor to
                          reserve for the national sponsors a funding amount sufficient to maintain
                          the 1978 activity level. Any balance of the appropriation over the hold
                          harmless amount is to be distributed to the sponsors and state
                          governments mainly on an “equitable distribution” basis—that is, in
                          accordance with the state-by-state distribution of people 55 years old or
                          older, adjusted for per capita income.

                          Another provision requires that the portion of any appropriation that
                          exceeds the 1978 funding level in subsequent years will be
                          split—55 percent for states and 45 percent for the national sponsors.
                          However, the “55/45” provision—designed to provide state governments
                          more parity with the national sponsors—has never been implemented.
                          Every year since 1978, appropriations acts have overridden the 55/45
                          provision. These statutes have required that no more than 22 percent of
                          the SCSEP appropriation be allocated to the state governments. At least
                          78 percent must be allocated to the national sponsors.

                          A third provision that also still applies is the requirement for an equitable
                          distribution of funds among areas within each state.


SCSEP in Program Year     The SCSEP appropriation for the 1998 program year2 ($440 million)
1998                      accounted for about 30 percent of all OAA funds. To receive a SCSEP grant, a
                          national sponsor or state government must agree to provide a match, in
                          cash or in kind, equal to at least 10 percent of the grant award. Many state
                          governments make their match in the form of cash contributions. The
                          national sponsors, on the other hand, normally provide in-kind matches in
                          the form of donated office space, staff time, equipment, and the like. The
                          in-kind matches for most national sponsors come not from the sponsors’
                          own resources but from those of the community service host agencies,
                          where the SCSEP enrollees actually work. These host agencies typically are
                          hospitals, local libraries, nutrition centers, parks, and similar public
                          service entities.

                          National sponsors and state governments use the SCSEP grants to finance
                          SCSEP part-time jobs in host agencies. The cost of such a job, or enrollee
                          position—which generally must include at least 20 hours of work a
                          week—is the amount determined sufficient to fund (1) an enrollee’s

                          2
                           The SCSEP program year runs from July 1 to June 30. For example, the period from July 1998 through
                          June 1999 is the 1998 program year. Funds for the 1998 program year came from the Department of
                          Labor Appropriations Act, 1998.



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                           minimum wages, benefits, training, and incidental expenses for up to 1,300
                           hours a year in the program and (2) the associated administrative
                           expenses. Labor periodically adjusts this cost amount, termed the “unit
                           cost,” in consultation with the Office of Management and Budget (OMB).
                           The unit cost has risen from $6,061 in 1994 to $7,153 in 1998. Labor divides
                           each year’s SCSEP appropriation by the unit cost amount to determine how
                           many positions are available. Program enrollees, who must be 55 years of
                           age or older and earn no more than 125 percent of the federal poverty level
                           prior to enrolling in this program, are paid the federal or local minimum
                           wage—whichever is higher.3 For the 1997 program year, funding permitted
                           the establishment of about 61,300 positions nationwide. An enrollee may
                           leave a program position for such reasons as illness or acceptance of an
                           unsubsidized job, opening the position for another participant. Thus,
                           during the 1997 program year, about 100,000 enrollees occupied the 61,300
                           positions; about 73 percent of the enrollees were women. National
                           sponsors administered about 47,000 positions nationwide and the states
                           and territories administered about 14,300.


The 10 National Sponsors   Labor distributes 78 percent of SCSEP funds through noncompetitive grants
                           to 10 national organizations, called national sponsors. Labor provides
                           annual grant applications only to national organizations that currently
                           sponsor SCSEP. Labor’s action is consistent with the statute and with
                           expressions of intent by the Senate Appropriations Committee. Labor
                           officials rely on annual Appropriations Committee report language such as
                           the following from a recent Senate Appropriations report that seems to
                           indicate support for the current sponsors: “It is the intent of the
                           Committee that the current sponsors continue to build upon their past
                           accomplishments.” In addition, although it permits awards to other
                           entities, the OAA creates a specific preference for awards to “national
                           organizations and agencies of proven ability in providing employment
                           services . . ..”4

                           As shown in table 1, during program year 1998, the national sponsors
                           received more than $352 million to fund 47,738 enrollee positions. National
                           sponsors administered the program in from 8 to 45 states.




                           3
                            The current federal minimum wage is $5.15 per hour.
                           4
                            Senate Report 103-143, p. 16 (1993).



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                                     Program Reauthorization Issues That Affect
                                     Serving Disadvantaged Seniors




Table 1: Grant Awards, Employment
Positions, and Number of States in                                                  Grant amounta (in         Number of        Number of
Which SCSEP National Sponsors        National sponsor                                        dollars)          positions          states
Operate, Program Year 1998           American Association of Retired
                                     Persons Foundation (AARPF)                            $52,781,434              7,071                  34
                                     Associacion Nacional Pro Personas
                                     Mayores (ANPPM)                                         13,330,666             1,838                  11
                                                                b
                                     Green Thumb, Inc. (GT)                                109,137,519             14,896                  45
                                     National Asian Pacific Center on
                                     Aging (NAPCA)b                                           6,018,169               835                   8
                                     National Center and Caucus on Black
                                     Aged, Inc. (NCCBA)                                      13,040,594             1,810                  11
                                     National Indian Council on Aging, Inc.
                                     (NICOA)                                                  6,001,653               839                  14
                                     National Council on the Aging (NCOA)b                   40,091,501             5,320                  19
                                     National Senior Citizens Education
                                     and Research Center, Inc. (NSCERC)b                     66,963,276             9,003                  28
                                                                             b
                                     National Urban League, Inc. (NUL)                       15,622,159             2,142                  16
                                     U.S. Department of Agriculture–Forest
                                     Service (USDA)                                          28,469,959             3,984                  42
                                     Total                                                $352,256,930             47,738
                                     a
                                      The total for national sponsors’ grant amounts includes state funds when states request that a
                                     portion of their funding be provided directly by Labor to a national sponsor for program activities
                                     for their particular state.
                                     b
                                      Labor also provided additional competitive grant awards to several national sponsors. The
                                     amounts of the national sponsor awards were, for NUL, $300,000; GT, $800,000; NSCERC,
                                     $215,200; NAPCA, $45,000; and NCOA, $204,999.



                                     With the exception of Alaska, Delaware, and Hawaii—which operate their
                                     own SCSEP programs and have no national sponsors—at least two national
                                     sponsors operate in each state. In one state, nine national sponsors
                                     operate SCSEP programs in addition to the state agency. Thirty-six states
                                     have four or more national sponsors receiving federal funds to provide
                                     SCSEP services within their borders. So, most states have several entities
                                     making decisions about where to provide services.

                                     Whenever the SCSEP program has a new appropriation level, Labor
                                     conducts with the national sponsors a meeting known as the “melon
                                     cutting.” At these meetings, Labor makes known its allocations to each of
                                     the national sponsors and presides over discussions in which national
                                     sponsors often trade enrollee positions in various areas. Sometimes, a
                                     representative from the National Association of State Units on Aging is




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                         Program Reauthorization Issues That Affect
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                         invited to express states’ concerns, but the states have no formal control
                         over the distribution of positions.


                         The hold harmless provision of OAA’s title V limits Labor’s ability to
Hold Harmless            allocate funds among states in a way that ensures equitable
Provision Prevents       distribution—in accordance with the state-by-state distribution of people
Allocating the           55 years old and older, adjusted to give greater weight to economically
                         disadvantaged areas and persons. The result is a pattern of too many SCSEP
Majority of Program      positions in some states and too few in other states relative to their
Funds to States With     eligible populations. Legislative action could correct this problem.
the Greatest Need
Equitable Distribution   In applying OAA’s hold harmless provision, Labor officials establish a
Among States Not Fully   reserve amount from each year’s SCSEP appropriation to finance the 1978
Achieved                 level of national sponsor positions in each state. Therefore, if the national
                         sponsors together administered 100 positions in a certain state in 1978,
                         they would receive thereafter, from a Labor set-aside of appropriated
                         funds, enough funds to finance at least 100 positions in that state,
                         assuming that the appropriation level is high enough to finance the 1978
                         total number of positions.

                         Because the 1978 distribution of SCSEP positions did not, and still does not,
                         correspond to the size of each state’s economically disadvantaged elderly
                         population, the hold harmless provision in effect prevents a fully equitable
                         distribution. For the 1998 program year, for example, about $277 million
                         (63 percent) of the total appropriation of $440 million was subject to the
                         hold harmless provision.5 These funds are allocated to the national
                         sponsors on a state-by-state basis to protect the positions of 1978 enrollees
                         and allow the national sponsors to maintain some long-standing
                         relationships with host agencies. Had the $277 million been distributed in
                         accordance with current age and per capita income data, shifts in the
                         number of positions would have occurred in many states.

                         In the analysis of the hold harmless issue in our 1995 report (based on
                         program year 1994 data), 25 states would have gained or lost at least
                         $500,000 each, and 13 states would have gained or lost more than
                         $1 million each if the hold harmless provision had been discontinued.
                         While in a majority of states the change would have amounted to less than

                         5
                          This is the amount that Labor determined was needed from the appropriation to fund 38,672 positions
                         nationwide—the 1978 number of positions. Labor derived the $277 million by multiplying the 38,672
                         positions by the unit cost of each position for 1998—$7,153.



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                         Program Reauthorization Issues That Affect
                         Serving Disadvantaged Seniors




                         10 percent of total SCSEP funding, a few states would have had a change of
                         more than 20 percent.6

                         Furthermore, in the future, the effect of the hold harmless provision could
                         increase. As the unit cost of each position increases (primarily through
                         increases in the federal minimum wage rate), without SCSEP appropriations
                         increases, the share of the total SCSEP funds needed to support the 1978
                         hold harmless positions increases. This would result in more funds being
                         allocated on the basis of 1978 state positions and less allocated to states
                         on the basis of up-to-date population and income data that more
                         accurately reflect the needs of low-income elderly populations.


Options for Overcoming   The hold harmless provision could be modified in two ways. The relevant
the Problem              provision states that the Secretary of Labor will reserve for the sponsors’
                         grants or contracts sums necessary to maintain at least their 1978 level of
                         activities “under such grants or contracts.” Labor interprets this
                         provision to require a state-by-state distribution of positions based on the
                         sponsors’ 1978 activities. One option is to amend the hold harmless
                         provision to specifically authorize Labor to base the distribution on the
                         national sponsors’ 1978 total positions nationwide, rather than on the
                         levels in each state. If the hold harmless provision was amended this way,
                         Labor would still be required to provide sufficient grants to the national
                         sponsors to finance their 1978 number of total positions, but it would not
                         distribute positions according to the number of sponsor positions in each
                         state in 1978. With the amendment, Labor could distribute all of the SCSEP
                         dollars in accordance with the pattern of need, as measured by each
                         state’s 55 and older population size and per capita income.

                         Another approach would be to repeal the entire hold harmless provision.
                         This would remove the authorizing legislation’s protection of the national
                         sponsors’ historic base of positions. Such a change could significantly shift
                         funding from the national sponsors to the states, unless the annual
                         appropriation acts continue to stipulate that 78 percent of funds is to go to
                         national sponsors.




                         6
                          These results are based on an update of our simulation using Labor’s program year 1994 data that also
                         incorporated the OAA provision guaranteeing a .5-percent SCSEP appropriation minimum to the states
                         and a .25-percent minimum to certain other areas, such as Guam and the Virgin Islands.



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                          Senior Community Service Employment:
                          Program Reauthorization Issues That Affect
                          Serving Disadvantaged Seniors




                          The annual appropriations acts essentially prescribe that 78 percent of
The “78/22”               funds go to national sponsors and 22 percent to states, and this provision
Appropriations            can result in areas of states over- or underserving the needy elderly. A
Provision Affects the     more equitable distribution of funds might occur if states received a larger
                          share of the program funds.
Equitable Distribution
of SCSEP Positions
Within States
Equitable Distribution    Once funds are allocated to all entities operating within a state, a provision
Within States Not Fully   of the OAA requires an equitable distribution of funds among areas of each
Achieved                  state, and state agencies are charged with responsibility for accomplishing
                          this. The 1978 amendments to the act provided that states would receive
                          55 percent of funds greater than the 1978 appropriation. Under this
                          provision, if appropriations increased, the states’ share of SCSEP resources
                          would gradually increase, and the states would eventually achieve parity
                          with the national sponsors. However, this provision—the 55/45
                          provision—has never taken effect. Instead, every year since 1978,
                          appropriations acts have overridden the 55/45 provision and required that
                          at least 78 percent of the annual appropriation be allocated to the national
                          sponsors.

                          Because 78 percent of the funds go to national sponsors, factors that
                          inhibit national sponsors from moving positions to where needy elderly
                          people reside could result in an inequitable distribution of enrollee
                          positions. For example, the predominant role of the national sponsors and
                          the relationships they have established with particular host agencies in
                          determining where positions will be located are one barrier to efficient
                          movement of positions within a state. In addition, national sponsors with
                          an ethnic focus have been reluctant to serve areas that do not have
                          significant numbers of their ethnic constituents. Furthermore, national
                          sponsors may not want to enter new or rural areas because that could
                          increase administrative costs. Finally, in any particular state, relationships
                          between the state staff and the national sponsors or among the national
                          sponsors can affect where the SCSEP services are provided.

                          In our 1995 SCSEP report, we reviewed each state’s county-by-county report
                          of equitable distribution for SCSEP positions and found deficiencies in many
                          cases. In three states we cited as examples, we found that most counties
                          had either too many positions or too few positions compared with the
                          number that the distribution of eligible people would indicate.




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                                Senior Community Service Employment:
                                Program Reauthorization Issues That Affect
                                Serving Disadvantaged Seniors




                                States can use their 22 percent of SCSEP funds to fill in where national
                                sponsors are not meeting the needs of the elderly, but they can only
                                encourage national sponsors to move their positions. So, it is not possible
                                for some states to fully address the needs of the elderly in underserved
                                areas. Also, as funds become available to national sponsors for new
                                positions, the “melon cutting” meeting that Labor holds with national
                                sponsors may not fully incorporate the views of state agencies about
                                where positions are needed. Our 1995 report acknowledged that other
                                factors such as some states not participating actively in the program affect
                                the equitable distribution of positions within states. However, the 78/22
                                provision is an important factor in determining the distribution of
                                positions within states.


Option for Overcoming the       One option for more equitably distributing SCSEP positions within the
Problem                         states is to increase the percentage of funds dedicated to state
                                governments from each year’s appropriation from the 22 percent to a
                                higher percentage. If the Congress stopped enacting the 22-percent limit
                                on state funding, the OAA provision requiring that state governments
                                receive 55 percent of all funding above the $201 million 1978 appropriation
                                level would take effect. If the 55/45 provision had been in effect for
                                program year 1998, the funds allocated to national sponsors would have
                                decreased from $343 million to about $268 million and the states’ share
                                would have increased from $97 million to approximately $172 million.
                                With their statewide administrative structures and additional funds, state
                                governments might have more flexibility in serving their eligible
                                populations and greater ability to meet their statutory responsibility.


                                For almost 30 years, the SCSEP program has been an important source of
Conclusions                     jobs for needy elderly Americans. Currently, approximately 100,000
                                enrollees annually work in subsidized community service jobs and are
                                given an opportunity to acquire skills sufficient to leave the program for an
                                unsubsidized position. Because the program continues to operate in the
                                same manner as it has since 1978 and because the states where
                                concentrations of elderly Americans reside have changed over that time,
                                there is a mismatch between where needy elderly live and where the
                                subsidized positions are provided. In 1995, we offered several matters for
                                consideration by the Congress that we believe could help alleviate this
                                problem. These matters included

                            •   amending or eliminating the hold harmless provision and



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           •   increasing the portion of SCSEP grant funds allocated to state governments
               from the current 22 percent.

               We believe that these options are still valid ways to ensure a more
               equitable distribution of positions and funds. While these represent major
               changes in SCSEP, we believe that if they are properly phased in over a
               period of time, states, national sponsors, and program participants will
               benefit by ensuring that funds are awarded to serve locations with the
               highest concentrations of needy older Americans.


               Mr. Chairman, this concludes my testimony. I will be happy to answer any
               questions that you or other Members of the Subcommittee may have.




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