now face and have and must deal with. There is no ducking these problems.

However, even if we had perfected vocational education, we still would have all sorts of so-called manpower problems because people shift their jobs, new things come along, and you need to do a great deal of work on unemployment compensation and our whole adult training area as well as in on-the-job training of various kinds, in developing systems of labor-market information.

All of these things are completely separate and distinct.

Mr. PUCINSKI. You are aware, though, that one-third of those in this country are taking vocational educational courses are adults? Secretary SHULTZ. Yes.

Mr. PUCINSKI. I hope you do not ever try to bring vocational education back to that dark era when it was for the dingalings and dumdums who were the dropouts, and that is what we would do if we put vocational education in the Labor Department.

Secretary SHULTZ. We have no desire to have the vocational education system in the Labor Department.

At the same time. I also don't subscribe to the notion that the only place anybody can learn something, and I say this as a person who has spent his life in education, I think it is untrue that the only place a person can learn something is in school.

He will learn a lot of things on the job. There is a lot of training to be done there.

Mr. PUCINSKI. I am in agreement on that.

Mr. DANIELS. I have one final member. I would like to call on him if he has any comments. Mr. Steiger.

Mr. STEIGER. Thank you, Mr. Chairman.

I would like to pay tribute to the Secretary. I apologize I was not here for your statement, though I have read it in detail. I would hope, Mr. Chairman, what happens is that we have a chance to get the Secretary and Mr. Weber and Mr. Lovell back as we have other witnesses who come in to discuss what I consider to be one of the most important pieces of legislation that we can act on in this Congress.

There are some differences in approach. There are some different points of view and emphasis. The Secretary's impetus and leadership have made it possible for the Administration to come out with a very, very important and good bill.

I also think it is important for all of us to remember that what has happened has been so eloquently stated by the Secretary in terms of the reliance upon the categorical approach and the fact that the system that we have today just doesn't work; we have to make a change.

I salute you, Mr. Secretary, I thank you for coming and I look forward to having you back.

Secretary SHULTZ. Thank you, Congressman Steiger.

Mr. DANIELS. Mr. Secretary, the Chair has prepared a number of questions to present to you today but time will not permit me to ask those questions at the present time, so I shall write you a letter and submit the questions to you, and you may respond to them at your convenience.

This committee intends to have extensive hearings. We would like to hold as many as possible. I would like to call on Mr. Ford again. Mr. FORD. Thank you, Mr. Chairman.

The portion in the bill that is for distribution of the funds, subject to 10 percent matching by the States, states that apportioning criteria shall be prescribed by the Secretary and shall include the number of individuals in the labor force, number of unemployed, and estimated number of disadvantaged individuals in the State as compared with such individuals in the Nation. I assume that these two previous criteria would be measured against the total number of unemployed in the country and the number in the labor force.

I assume, as we do when we are trying to work out formulas, that you have made some projection of how this would distribute the funds among the several States.

Do you have available to the committee or could you submit to the committee your estimates of where the money will go and what the approximate proportions or amounts are, assuming appropriation at the level asked for in your bill. Where would we distribute that money; how would this formula as you view it spread it out?

Secretary SHULTZ. We could do it. There are difficulties in doing it. We need to develop data, for example, on the disadvantaged better than we now have. We are working on that. Of course, a formula like this is designed to change as circumstances change in various parts of the country.

So we are a little hesitant about putting that kind of information out because if gives people an idea of rigidity.

Mr. FORD. In our experience this committee takes a beating on formula as much as anyone else because we do try to use the flexible criteria.

Our experience has been that you can't sell a formula to a legislative body like the Congress unless you take the pragmatic approach, being able to give some projection of who gets what under that formula.

They have some idea of what they are getting now and if the formula is going to produce any drastic shifts, it will face some real difficulties. I personally think these are the criteria that ought to be the center of a formula with room for such other things as experience with educational formulas shows that you have to crank in because you can't sit here in Washington and visualize the special problems all over the country.

I would appreciate whatever you can give us in the way of a projection of how this formla would work.

Secretary SHULTZ. We will do that.

Mr. DANIELS. Mr. Secretary, I want to thank you on behalf of myself and the members of my committee. I want to thank you and Mr. Weber and Mr. Lovell for giving us your opinions on this legislation. The material you submit will be inserted at this point in the record. (The material referred to follows:)

The following information regarding distribution of funds under the proposed MTA was requested by Congressman Ford. Because the specific method of apportioning funds has not been determined, we have used one of the alternatives under consideration as a basis for making the requested estimate.

The attached table presents an illustration of one possible method of apportioning funds under the Manpower Training Act. The 1970 Manpower budget request was used as the base for the illustration, with 75 percent of $1,065.7 million distributed among the states.

The formula used for the distribution is one of a number of possible formulas under consideration. The primary difference in the various formulas is in the determination of the numbers of disadvantaged. Since there exists no statistical series on the disadvantaged, it is necessary to use other indications as a proxy, such as family income, number of poor persons, or income tax data. Many of

the factors considered provide an indication of poverty but are of limited use because they are not available on a current, regularly published basis. Because of these problems, work is continuing on the development of a suitable formula and the one used in this illustration should not be considered as necessarily representative of the final formula.

The formula used in the illustration is based on the following factors:

A. Average annual state work force as percent of the U.S. Work force (1968).

B. Average annual state unemployment as percent of U.S. unemployment (1968).

C. State estimates of the numbers of disadvantaged persons as percent of U.S. total. These estimates were prepared by state employment agencies as part of an experimental program to develop annual manpower planning data. Factors A, B, and C were summed and the total for each state expressed as a percent of the U.S. total to yield the apportionment factor.

TABLE 1.-EXAMPLE OF POSSIBLE APPORTIONMENT UNDER PROPOSED MTA
USING SELECTED FACTORS 1

1 Based on work force, unemployment, and estimated numbers of disadvantaged persons.

1.07

11.4

2.10

22.4

17

1.8

Note: The apportionment formula used in this table is one of a number of alternative formulas under consideration and

is used for illustrative purposes only.

44-425-70-pt. 1——————6

U.S. DEPARTMENT OF LABOR, Washington, D.C., January 29, 1970.

Hon. DOMINICK V. DANIELS,

Chairman, Select Subcommittee on Labor, Committee on Education and Labor. House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: Enclosed are our responses to the questions submitted by the Subcommittee in your letter of December 10. I understand that a copy has already been forwarded informally to your staff so that you might have the benefit of our responses for the hearings currently underway.

In addition, we have enclosed a copy of the Employment Service Task Force Report (December 1965), as requested by Congressman O'Hara and some illustrative estimates of the possible distribution of manpower funds under the Manpower Training Act, as requested by Congressman Ford.

I would like to underscore the fact that these budget estimates are merely illustrative and are based on the FY 1970 budget request. There are several significant statistical problems which must be resolved, including how the disadvantaged are to be identified and what weights are to be given to the three apportionment factors. Of course, the actual level of funds received State by State under the Manpower Training Act will be governed far more by the level of Congressional appropriations than by the apportionment factors.

We have tried to provide full answers to your questions without being unnecessarily exhaustive. If there are any points which require further clarification, please do not hesitate to contact us.

Sincerely,

MALCOLM R. LOVELL, Jr.,

Deputy Assistant Secretary for Manpower and Manpower Administrator. RESPONSE TO QUESTIONS RAISED BY SELECT SUBCOMMITTEE ON LABOR, COMMITTEE ON EDUCATION AND LABOR

Question No. 1. Under what circumstances could a Governor fail to establish or designate a State Comprehensive Manpower Agency? (Sec. 102 (a) (1)) Answer. The proposed Manpower Training Act of 1969 provides the States the opportunity to plan and administer a comprehensive manpower program. It does not require them to do so.

A basic objective of the MTA is decentralization of planning and operation of manpower programs to the States and areas. However, the bill recognizes that existing institutions at the State and local level are not immediately adequate to assume full responsibility for a program of such vital concern to many sectors of our economy, most particularly the disadvantaged members of the labor force. Accordingly, the bill proposes a phased decentralization during which planning and administrative capacity will be progressively developed. Thus, a State can decide that it will not participate in the decentralized administration of manpower programs at all; it can participate at the first 25% level; or it can move toward full participation by establishing a State comprehensive manpower agency and meeting the other requirements for phase 2 and ultimately phase 3 decentralization. In any circumstance where the State does not put into place the necessary institutional reforms to participate fully in management of the decentralized program, the Department of Labor will administer the amount apportioned to that State (or the balance not administered by the State) in a manner comparable to that through which the present manpower programs are now operating.

Question No. 2. It is not inconsistent to deny the Governor two-thirds of his al lotted fund for failing to designate a Comprehensive Manpower Agency; then permit payment of 25% of the allotment after the Secretary and Governor have designated a State agency to administer the State plan? (Sec. 103(a)) Shouldn't either the incentive be offered to the Governor to create a Comprehensive Manpower Agency, with funds denied if one is not established, or there should be no requirement at all concerning the designation of the State agency?

Answer. The three-stage decentralization process envisioned in the proposed MTA recognizes that there will be different situations in the different States. The MTA seeks a major restructuring of State agency responsibilities in the manpower field, as well as development of effective local manpower institutions. This is a long-term process. Providing an opportunity to the States to participate directly in the administrative control of the manpower programs at a modest level in the beginning (albeit at a level higher than the current fragmented pro

grams provide) is a calculated step to help the States begin to develop the kind of manpower planning and administrative capacity required to run the full program. Each State could move up to exercise administrative control over twothirds of its apportionment when it accomplishes the organizational reforms in its manpower institutions prescribed in the bill; namely, establishment of (1) a comprehensive manpower agency, (2) a State manpower planning organization, (3) area program jurisdictions (normally SMSAs) and area prime sponsors (normally the Mayors of the central cities), and (4) area manpower advisory bodies. When this stage of decentralization is reached each State will be responsible for administration of a substantial part of the resources apportioned to it. It may secure administrative control over the total of apportioned funds upon meeting objective standards of exemplary performance. Thus, the 25% State control at the first stage of decentralization process is essential to the long-run development of the State's manpower capacity. It is a significant element in the MTA strategy to change existing institutions by working with and through them and offering meaningful incentives to secure the changes required.

Question No. 3. General thrust of the legislation is to provide for greater State and local control of programs. However, Sec. 104(a) would require the Governor to submit the State plan he develops to the Secretary for approval. The Secretary could therefore exercise a measure of control over program content, since the plan must provide for the conduct of programs according to rules, regulations and guidelines established by the Secretary to carry out general purposes of the program. How can this provide for greater State and local role in the management of programs?

Answer. The MTA seeks to establish in the manpower field, a new concept of State grant program-one that provides for significant State and local discretion and control over allocation of resources and performance of services but which also preserves effective Federal stewardship. Accordingly, the Act reserves ultimate Federal control over program content both to assure that State and local administrators are properly responsive to client needs and to make possible a national manpower program. The rules, regulations and guidelines established by the Secretary are for the purpose of carrying out the general purposes of the program. The State and local authorities would fill in this framework and would manage the programs. This is unlike the present varied operations in which State and local authorities' relationships to the Federal Government, where they exist, approximate the relationship of agent to principal on a project-byproject basis. The proposed change would substantially increase the State and local roles, making them responsible for the whole program, albeit, with close Federal scrutiny and approval of annual plans and continual monitoring during the operating year.

Question No. 4. Section 104(a) (1) states that the Secretary of Labor would determine those elements necessary for providing coordinated, comprehensive assistance, and would require that the State plan provide increased occupational opportunities for “eligible" individuals. Who is to be an “eligible” individual is unclear, and who has the authority to determine eligibility is not clearly resolved in the draft bill as among the Secretary of Labor, the State or local officials.

Answer. Section 107 specifies that participants in MTA programs are to be "unemployed, underemployed, low income, or otherwise disadvantaged persons 16 years of age or over who are not adequately prepared for suitable employment in their area of residence: Except that the Secretary may authorize the participation of other persons . . ." State plans and area plans included in them would be required to serve only those individuals specified as eligible in Section 107, unless the Secretary authorizes, in advance, other persons to be considered eligible for specific purposes in order to achieve efficient utilization of manpower resources. The vehicle for such advance authorization by the Secretary of other individuals deemed to be eligible would be the annual planning guidance developed by the Secretary and issued to States and areas in accordance with which their comprehensive manpower plans would be developed. In some instances it is conceivable that the Secretary would approve a State plan which makes provision (with appropriate justification) for providing manpower services to some persons not established in advance as among the eligible individuals.

Question No. 5. The legislation provides in Section 102(a)(2) that area plans prepared by prime sponsors, and not included in State Comprehensive Plans, could be so included, if the prime sponsor requested and obtained the determination of the Secretary (after consultation with the Governor) that the area plan was consistent with the requirements of Section 104 of the Act.