NASWA Survey

According to the January 10, 2012 NASWA NewsWire, states are spending their Workforce Investment Act funds much faster than required under the law, according to a NASWA analysis of U.S. Department of Labor (USDOL) data for the period ending June 30, 2011. By the end of Program Year (PY) 2010, states had spent virtually all funds allocated in PY 2008 and almost 98 percent of funds allocated for PY 2009.

At the end of PY 2010 (June 30, 2011), states had roughly $630 million in “unobligated/unspent” funds from PY 2010 funds going into Program Year 2011. The NASWA analysis shows the unobligated/unspent funds for all three program years is just over $700 million or about 7 percent of appropriated funds. By contrast, USDOL data suggests a much slower pace of spending, as they reported some $1.2 billion as unobligated/unspent for the June 30, 2011 period.

The NewsWire continues to to describe what accounts for the difference:

USDOL financial reports do not take into account unliquidated obligations. These funds (unliquidated obligations) are legally binding commitments made by states and for which an accrued expenditure has not yet been booked. These and other terms are defined in Training and Employment Guidance Letter (TEGL) 28-10

In short, USDOL generally recognizes expenditures to gauge budgetary needs; therefore overestimating the funds states actually have available for spending. Further, much of the remaining unobligated/unspent funds going into program year 2011 are for future expenses such as leases, long term training, or salaries., which cannot be booked as obligations until they are due. For example, USDOL’s guidance allows training funds to be obligated for the “current” semester, but funds set aside for future semesters are considered unspent. For leases and salaries, states are only permitted to recognize costs as they occur and cannot show projected costs as unliquidated obligations. Much of the unspent funding going into program year 2011 are such items.

These reporting issues have created misunderstanding and confusion among states, USDOL, and Congressional staff on the House and Senate Committees on Appropriations. The issue carries serious implications as Congress is under the impression states are not spending their formula funds in a timely manner. This has led (in the past) to rescissions and over the last two years funding cuts to the workforce system.

NASWA indicates that it continues to work with USDOL to help resolve these differences so the most accurate picture of state spending can be provided to policy makers.