5. We are providing technical assistance to states. PWBA is also preparing technical assistance materials designed to assist the staffs of state agencies with respect to MEWAS and ERISA issues.

In addition, to the forgoing, the Department has filed amicus briefs in two cases in an effort to assist the state in exercising their jurisdiction over MEWAS.

6.

We are obtaining data regarding the characteristics of MEWA arrangements. The Department is also taking measures with respect to obtaining additional data regarding MEWAS. The Department has contracted with an outside contractor to perform research which will provide an estimate of the numbers of MEWAS, the number of employer groups participating in MEWAS and the number of individual employees covered under such arrangements. We expect this research to provide PWBA with helpful data for policy formation.

Question.

Would you support legislation to require registration for Multiple Employer Welfare Arrangements with the Department of Labor?

Answer. During the last Congress, the Department proposed an amendment to ERISA to require all MEWAS to file an annual registration statement with the Department of Labor. This amendment was part of a legislative package to enhance ERISA enforcement.

I expect to re-propose legislation to strengthen the enforcement provisions of ERISA. I am currently reviewing the specific elements of the proposal to determine whether any modification should be made in the Department's proposal.

Question. Do you think such legislation would be an adequate

remedy?

Answer. A registration statement would provide the means for closer regulation of MEWAs to deter abusive practices and provide assistance to the states in policing MEWAS without the problems that federal licensing and certification of MEWAs would create.

Included in the proposal is a requirement that the filer certify that a copy of the registration statement has been sent to the insurance commissioner of each state in which the MEWA conducts business or intends to conduct business during the following year. Registration would help state insurance commissions assess the level of MEWA activity in their states and to take appropriate and timely regulatory action. Willful failure to file by a trustee or other responsible person would be a violation of ERISA section 501. Criminal penalties under section 501 include imprisonment up to one year, a $5,000 fine, or both, and in the case of business entities, a $10,000 fine.

Furthermore, under section 411 of ERISA, any person convicted of such a violation would be barred from virtually any relationship with an employee benefit plan for a period of 13 years after the end of conviction or imprisonment, whichever is later. Criminal penalties for violation of this provision consist of imprisonment of up to five years or a fine of up to $10,000 or both. As previously noted, the MEWA registration proposal is being reviewed, as part the Department's legislative package to enhance ERISA enforcement.

ABUSE OF TARGETED JOBS TAX CREDIT PROGRAM

Question. The General Accounting Office has found that more than half of employers participating in the Targeted Jobs Tax Credit (TJTC) program take advantage of the tax credits without making special efforts to hire members of the target groups such as disadvantaged youth and welfare recipients. This report would seem to indicate that more than half the $4.5 billion given out in tax credits over the past ten years may have been wasted. Why should employers be allowed to get tax credits for hiring TJTC eligible workers they normally would have hired anyway?

Answer. By receiving a tax credit, the employer may be motivated to retain target group employees longer than they ordinarily would and give them more of an opportunity to gain valuable work experience or become permanent employees.

Question. Should we amend the law as GAO suggests, to require employer outreach efforts, or additional training or supervision, as conditions for getting tax credits?

Answer. Amending the law to increase training, supervision and outreach efforts will result in significantly higher administrative costs which may not make major improvements to the program, and would also place burdens on the employer community, unnecessarily complicating the program and discouraging employers from participating.

NEED TO EXPAND DISLOCATED WORKER ASSISTANCE

Question. According to the Bureau of Labor Statistics, there were more than 4 million dislocated workers in the last 5 years. While annual statistics are not available there is evidence the number of dislocated workers is rising. While many of these will not need job retraining, the Federal Dislocated Worker program now serves fewer than 300,000 persons annually and only about 1 million people were served over the last five years. As we have already discussed, unemployment is expected to exceed 8 million this year.

In the last year, bankruptcy filings skyrocketed, which usually signals a significant increase in layoffs. In my home State of Iowa, the Employment Service has reported a significant rise in plant closings and mass layoffs, resulting in a full one percent rise in unemployment during the month of February. Yet the administration is proposing to cut existing services.

1/ Represents phase-out costs; the budget actually requests $226 million based on current law, but would rescind $164 million once repeal is enacted.

2/ Serves all unemployed persons, not just dislocated workers.

Is this the proper time to be cutting Federal assistance to dislocated workers?

Answer. If the President's budget request is approved, funding for the JTPA dislocated worker program in 1992 would equal the 1991 level. The Department believes that the requested funding level for assisting dislocated workers is sufficient to meet projected needs, given limited Federal resources and the need to eliminate duplication of services. For Program Year 1991 which begins on July 1, 1991, and runs through June 30, 1992, Title III of the Job Training Partnership Act will grow from a current funding level of $463 million to $527 million, or almost 14 percent. The budget request for 1992 seeks to maintain that total funding level of $527 million, earmarking a portion of those funds for services to be provided to workers dislocated as a consequence of requirements under the Clean Air Act.

Projections indicate that the current downturn in the economy will be mild and short-lived. In fact, displaced workers who are likely to return to their jobs when economic activity picks up are not eligible for JTPA Title III services. The Department of Labor is making its request in an effort to ensure the availability of high quality services for eligible dislocated workers across the country without regard to the cause of their dislocation.

Question. What is the rationale for eliminating the Trade Adjustment Assistance program, without an offsetting increase in the JTPA Dislocated Worker Assistance program?

Answer. The Administration believes that the assistance provided under the Economic Dislocation and Worker Adjustment Assistance Act (EDWAA, or Title III of JTPA) is a much more effective, equitable, and cost efficient approach to meet the needs of dislocated workers. Repeal of the Trade Adjustment Assistance (TAA) provision of the Trade Act of 1974 would

eliminate a costly entitlement program which singles out one set of dislocated workers for special treatment and has a much lower job placement rate.

MCKINNEY ACT HOMELESS PROGRAMS

Question. Your budget proposes to transfer homeless job training programs to the Department of Housing and Urban Development. Why was this decision made, when just last December, GAO reported that HUD is not adequately monitoring its McKinney Act homeless programs while the Labor Department is?

Answer. The Administration has decided to consolidate McKinney Act homeless responsibility and funding into a smaller number of innovative demonstration programs that will fund local programs to develop comprehensive service strategies that hold promise of helping people to leave homelessness.

I am pleased that GAO has recognized the good work we have done in monitoring our two McKinney Act homeless programs. We are working closely with the Department of Education and HUD in the overall planning and implementation of HUD's proposed new demonstration program, including how the program will be monitored.

Question. Haven't your labor Department homeless job training programs been effective?

Answer. Yes, these demonstration programs have been effective in assisting homeless persons to become more economically self-sufficient through employment and upgraded housing. To illustrate, in ETA's Job Training for the Homeless Demonstration Program, after two years of program activity (as of September 30,1990), approximately 10,800 clients have received training and 5,400 have been placed in unsubsidized jobs. Approximately 40% of those placed in jobs were employed 13 weeks later. Moreover, the Administration believes these programs could be improved if offered as part of a comprehensive plan to attack the causes of homelessness.

CUT IN EMPLOYMENT SERVICE OFFICES

Question. Over the next decade, there will be a growing shortage of skilled workers to meet employer needs. In my own State, employers are coming to the Employment Service in greater numbers, seeking help to cope with skilled workforce problems. The Department proposes a $55 million or 6.8 percent cut in Employment Services. Shouldn't we be building up the capacity of the Employment Service, instead of proposing cutback and staff layoffs?

Answer. The reduction to the Employment Service from the 1991 level is a result of extremely tight budgets. Critical choices had to be made on how essential increases would be funded, such as increased unemployment workloads and increased Federal and State workloads resulting from the passage of the Immigration Act

of 1990. The States have complete flexibility in the use of their Employment Service resources and they choose the most effective and efficient ways in which to supply services to individuals and employers.

JOB CORPS CENTERS

Question. You have proposed cancellation of plans to open 4 of the 6 new Job Corps centers for which the Congress has already appropriated money.

Madame Secretary, Senator Burdick and I have already written you a letter expressing opposition to this plan. Can you give us your assurance that you will not slow down activity to prepare for opening these 6 new centers?

Answer. We clearly appreciate that there is existing Congressional direction to open the four centers in question. While the Congress is considering the proposal to cancel these four centers, we will therefore continue with preliminary design work, but will stop short of purchasing real property or issuing major construction and renovation contracts. This will avoid any serious delays should Congress later decide that the Department should proceed with the four centers. Proceeding with preliminary and relatively inexpensive preparatory site work will afford Congress an opportunity to examine and act on the President's proposal.

ADA TECHNICAL ASSISTANCE

Question. Do you believe a technical assistance plan for carrying out the Americans with Disabilities Act might also include spending some money to pull together in a manual or other document the policy decisions that you have made in individual cases under Section 503 of the Rehabilitation Act, including examples of reasonable accommodations required to be provided in particular cases?

Answer. It would be an excellent idea to include in a technical assistance plan a guide which contained the policy decisione established under Section 503 of the Rehabilitation Act. However, the enforcement of the Americans with Disabilities Act is the responsibility of the Equal Employment Opportunity Commission. We would have to defer to them any decision about technical assistance. We would be more than happy to work with them to develop such a manual or guide.

COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT

Question. Do you believe employers would have an easier time complying with the ADA if additional funds were provided to expand the operations of the Job Accommodation Network or the President's Committee on Employment of People with Disabilities?

Answer. Yes, that is why continued funding of the FY 1991 Congressional add-on is requested in the FY 1992 budget. The President's Committee on Employment of People with Disabilities (PCEPD) has a long history of working with the full range of subjects related to maximizing the employment of people with disabilities. Through our volunteers, we have over 600 employers, organized labor union officials, educators, rehabilitation professionals and people with disabilities involved in a

comprehensive program designed to advance the nation's awareness