This paper examines the response of the workforce system to the needs of workers during the recent recession and the American Recovery and Reinvestment Act (“Recovery Act”) funding period. The Recovery Act provided funds so that states could respond to worker needs both by expanding the short-term capacity of the workforce system to meet the surge in demand for reemployment services and training and by improving. Using state-level administrative data, this paper examines the response of state workforce agencies in providing public workforce and unemployment insurance services to unemployed workers before, during and after the recent recession. It tracks participant flows, service receipts, expenditures, and outcomes of the major workforce programs during this period. It also compares changes in the flow of services with changes in expenditures. In particular, it analyzes total expenditures and expenditures per participant, highlighting the reduced level of expenditures both with and without Recovery Act funds before and during the Recovery Act funding period. The dataset used in the analysis covers participant and expenditure data for the three largest federally funded workforce programs--Unemployment Insurance (UI), Wagner-Peyser Act Employment Service (ES), Workforce Investment Act (WIA) Adult and WIA Dislocated Worker (DW) programs. The data are collected for each state, the District of Columbia, and territories.

This paper supplements the analysis of administrative data with the results of two new surveys of state UI administrators and workforce administrators fielded during the fall of 2012. The surveys queried the administrators about how they adapted during the two-year period beginning in July 2010 – a period of declining resources. The survey results indicate that state agencies used varying combinations of approaches in response to declining federal grants. While few states supplemented federal funding with their own funds, most states increased automation, changed the mix of services they provided, and decreased the number of unemployed workers served.