Stephen A. Wandner Senior Economist U.S. Department of Labor Michael Wiseman Research Professor George Washington University

 What can the European Social Fund learn from the American experience with operation of training programs under the Workforce Investment Act?  This question has many facets  WIA attempts to increase effectiveness and efficiency through performance “bonuses”  This paper (in progress!) expands the perspective to include the TANF and SNAP High Performance Bonuses

 Federal-state program, operated by the states through local “one-stop career centers”  Supported by formula-based grants to states  Beyond the formula allocations, “High Performance Bonuses” are paid states on the basis of measures of achievement  Bonuses are small and, over time, have gotten smaller

 Performance targets are set through negotiations between the (6) federal government regional offices and the states  Final targets depend on negotiation techniques and skills of regions and states  Performance targets cover many program outcomes  States have some control over measurement implementation

 Regional DOL office strategies, capabilities, and enthusiasm differ  States vary in analytical capabilities for response to regional targeting proposals.  Measures adopted offer numerous opportunities for “gaming” by states  Results have been uneven, regionally and by state  Connection of HPB accomplishment to actual achievement challenged by research

▶ Negotiation may be useful, but attention must be paid to leveling playing field ▶ Should start with control for variation in characteristics of clients served, economic environment ▶ Addressing problems of motivation essential Bottom line: No evidence of significant positive effects  Watch developments with reauthorization

 TANF famously replaced Aid to Families with Dependent Children beginning in 2007  Enabling legislation called for “high performance”  Employment targets—job entry, job retention, earnings gain—have “face validity”  Goals multiplied over time, as did winners  Like WIA, stakes were small  Program died, unmourned, in 2005

 Began with data available to states, but it was clear procedures were not uniform and states lacked access to some data  Introduced a new resource, the “National Directory of New Hires”  Ultimately major measures wholly computed at federal level, with substantial lag between reference “performance year” and award  Federal computation not always intelligible, reliable

 What to measure  How to measure  Control for context  Strategic response  Missing feedback

 Give thought to the objectives  Be cautious about statistical inference  Plan for improvement  Institutional development may be an important by-product of performance assessment effort

 SNAP is a national negative income tax operated outside of the tax system. Does not purport to be adequate for minimum subsistence  Delivered by electronic benefits transfer (EBT) and collected when recipients purchase food  Arguably the nation’s most important means- tested benefit  Plays a significant role in economic stimulus

 SNAP is operated by states  Benefits are wholly federally funded; administration costs are split between states and federal government  Incentive problems addressed by sample- based quality control system  States liable for cost of errors, but attempts made to reduce emphasis on penalty and shift to rewards  Result (2002) was --

 Based on QC audit, other sources  Four bonus categories: o Payment accuracy o Negative error rate o Application processing timeliness o Program access  Only $48 million (total state administrative costs were about $3 billion in FY 2007)  Awards delivered by September of following year

 Assessing sample-based penalties  Program access measures  Change versus levels  Technical assistance  Net effect

 Link to ground-level operations  Audit the outcomes  Take care with statistics  Link to better practice But don’t get carried away:  Task is relatively simple: Deliver a well- defined benefit to a target population each month  Outcome immediate  Broad political support

 Take in the museums  Keep watch  Get back to the “Open Method”  Start on the ground  Reward process