DOE Has Spent Over $1 Billion on Its Downsizing Efforts

For fiscal years 1994 through 1998, DOE obligated and spent about $1.033 billion to provide benefits to contractor workers and communities affected by its downsizing efforts. At the end of fiscal year 1998, DOE had not used all workforce restructuring funds, resulting in a carryover balance of $72 million. These funds included $10 million that was unobligated and $62 million that was obligated but not yet spent (called uncosted balances). Combined, these programs spent about $853 million on worker assistance, and the remaining $179 million went to community assistance. Of the $1.033 billion spent on worker and community assistance, about $460 million was provided by the Office of Worker and Community Transition. DOE offered its separated contractor workers severance packages that were relatively consistent with the types of public and private sector benefits we analyzed. Of the 5,469 contractor workers separated during fiscal years 1997 and 1998, 4,788 received separation benefits. The Value of Benefits Varied Widely

While DOE generally offered its separated contractor employees the same types of benefits, the value of these benefits varied because of the differences in the packages among sites and employees’ length of service and base pay (which reflects employee job and skill level). DOE’s Criteria Do Not Ensure That Most Assistance Goes to the Communites Most Affected by Downsizing or Those With the Highest Unemployment

The use of DOE’s criteria does not result in the most assistance going to the communities most affected by DOE’s downsizing or those with the highest rate of unemployment. Furthermore, because most DOE assistance went to communities with relatively strong economies, the extent to which DOE’s assistance aided in the creation or retention of jobs is not clear. In addition to DOE’s written guidance, the Director of the Office of Worker and Community Transition told us that DOE formally uses four criteria prior to submitting a recommendation to the Secretary: (1) economic distress measured by unemployment and the loss of income; (2) job loss relative to the size of the community affected as a measure of economic dependence on DOE; (3) the diversity of employment within a community and the impact of job loss on the economic base; and (4) the overall size of the workforce reduction. In contrast, the communities surrounding Richland had more than twice the unemployment rate and nearly twice the job loss of Rocky Flats during this same time but received only about $18.5 million in community assistance. Some Community Assistance Would Have Been Ineligible Under Other Criteria

Applying EDA’s job loss and unemployment criteria to DOE’s community assistance funding decisions for fiscal years 1995 through 1998, we found that some communities that received assistance under DOE’s criteria would not be eligible under EDA’s criteria. Conclusions

DOE’s criteria for assessing community assistance requests focus on the merits of individual projects and not on a community’s relative economic need. DOE’s comments and our evaluation of them are provided in appendix V.

	Scope and Methodology

To determine the amount of funds DOE has obligated and expended in support of its worker and community assistance program for fiscal years 1994 through 1998, we reviewed budget records and talked to officials in DOE’s Office of Worker and Community Transition and the Office of the Chief Financial Officer. However, we did not attempt to compare the value of DOE’s benefits with the value of the benefits provided by other federal and private organizations. To examine the results of DOE’s criteria for determining which communities should receive assistance, we interviewed officials in DOE and the Department of Commerce’s Economic Development Administration. 2. 3.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reviewed the Department of Energy's (DOE) community assistance program for minimizing the impact of downsizing its contractor workforce, focusing on: (1) how much funding DOE had committed to spend and spent in support of its worker and community assistance program for fiscal years (FY) 1994 through 1998; (2) who received benefits during FY 1997 and FY 1998; (3) comparing DOE's separation benefits with the benefit packages of other federal and nonfederal organizations; and (4) what effect DOE's criteria had on determining which communities received assistance.

What GAO Found

GAO noted that: (1) DOE's assistance to separated contractor workers is reasonably consistent with the types of benefits offered by other government and private sector employers; (2) however, its community development assistance funds did not necessarily go to those communities most affected by downsizing or with the highest unemployment; (3) for FY 1994 through FY 1998, DOE obligated and spent about $1.033 billion on benefits for the contractor workers and communities affected by its downsizing; (4) about $853 million was spent on worker assistance and the rest on community assistance; (5) about $460 million of the $1.033 billion was provided by DOE's Office of Worker and Community Transition and the remainder by other DOE programs; (6) at the end of FY 1998, DOE had a carryover balance of $72 million, including $10 million in unobligated funds and $62 million in funds that were obligated but not yet spent; (7) most of the contractor workers separated during FY 1997 and FY 1998 received benefits under DOE's workforce restructuring program; (8) while DOE generally offered its separated contractor employees a large range of benefits, the value of the benefits varied widely, primarily because of the differences in benefits packages among sites and in the employees' length of service and base pay; (9) these benefit packages are reasonably consistent with the types of benefits offered by public and private employers; (10) DOE's community assistance criteria, which focus on the merits of individual projects and not on relative economic need, do not necessarily result in the most assistance going to the communities most affected by its downsizing or with the highest unemployment; (11) for example, for FY 1995 through FY 1998, the communities surrounding DOE's Richland, Washington, facility had more than twice the unemployment rate and nearly twice the DOE job loss of those surrounding the Rocky Flats, Colorado, facility, but Richland received $18 million less than the $24 million that Rocky Flats received; (12) had the Department of Commerce's Economic Development Administration unemployment and jobs lost criteria been used to evaluate the request for community assistance, Rocky Flats would have been ineligible for funding, given the strength of its employment; (13) in addition, 5 of the 8 DOE sites that received community assistance would have been ineligible under these criteria; and (14) furthermore, because most DOE assistance went to communities with relatively strong economies, the extent to which DOE's assistance aided in creating or retaining jobs is not clear.