Ms. Julie Gibson

Director
Division of Job Development and Training
Department of Economic Development
2023 St. Mary's Boulevard
P.O. Box 1087
Jefferson City, Missouri 65109-1087

Dear Ms. Gibson:

I am pleased to offer Missouri JTPA waiver approvals in response to Governor Carnahan's April 30, 1997 request. This could not have been done without the vision, strategy and planning that was produced by the local, State, and Federal (national and regional staff) partnership, of which it has been our pleasure to be a part. I thank you for your and your staff's hard work and patience.

The State's request was considered under the special appropriations act provision granting the Secretary of Labor authority to waive certain requirements of Titles I-III of JTPA, and Sections 8-10 of the Wagner-Peyser Act. This authority was granted to the Secretary in the Department of Labor's (DOL) Appropriation Act for 1997 (Pub. L. 104-208, section 101(e)).

This is a one-year authority and applies only to JTPA funds available for expenditure during the period July 1, 1997 through June 30, 1998, and, therefore, could affect the JTPA Grant Agreements for Program Year (PY) 1997, 1996 and 1995 funds, depending on fund availability during the waiver period. Enclosed you will find an overview and our disposition with regard to each of your requests, as well as copies of our formal response to the Governor. Enclosed also is a grant modification (3 copies) that will require signature by the Governor or the State's JTPA signatory official. Please check off the applicable JTPA grant agreements (PY 97, 96, 95) that the statutory waiver modification will affect. We ask that the documents be signed by the appropriate official and returned to the Grant Officer at the address indicated below:

Mr. James C. De Luca
U.S. Department of Labor - ETA
Office of Grants and Contract
Management - DAA
200 Constitution Avenue, N.W,
Room - South 4203
Washington, D.C. 20210

Upon execution by the appropriate USDOL grant officer, we will return an executed copy for the State's official files. This modification is effective July 1, 1997.

We applaud Missouri's efforts to focus on a workforce vision and the development of a strategy to meet that vision. Waivers, of course, are only a small part of this strategy. We will continue to work with Missouri to reach these goals. We expect that these reforms will continue to reflect the Department of Labor's guiding principles: individual opportunity and customer choice; leaner government; greater accountability; State and local flexibility; and strong private sector roles.

This is a living document. As we continue our partnership be sure to let us know if additional waivers or other action would be beneficial.

Sincerely,

William Hood
Regional Administrator

Enclosures

OVERVIEW

The applicable JTPA Grant Agreements between the State and the Department will be modified upon execution of the enclosed Modification. Unless specified otherwise, these waivers are authorized for the period beginning July 1, 1997 and ending June 30, 1998. In exchange for these waivers Missouri is expected to meet the agreed upon performance improvements.

Requests to waive program design components were honored except in the case where the request conflicted with the Secretary's statutory waiver authority, the Department's guiding principles for waivers and the One-Stop Career Centers and School-to-Work Systems principles. Administrative waivers were granted in such a manner as to maintain fiscal responsibility and accountability.

These waivers are based upon the Governor's request, meetings and discussions among staff, and the Department's familiarity with the program in Missouri. They do not necessarily constitute an endorsement of the examples in Missouri's waiver request. In several instances, the Department would recommend against the interventions proposed. For example, most research would caution against general use of stand-alone work experience, job search or on-the job training interventions, particularly for youth without a high school diploma or its equivalent. The Department continues to strongly encourage educational components for youth participants.

WAIVERS

A. As requested, the Secretary waives 20 CFR 628.505(b)(2) which provides guidance on eligibility documentation related to the utilization of the Title II Eligibility Documentation TAG. During the developmental process of designing the State's customer friendly system, the Department recommends that the State, at a minimum, include elements that are provided at JTPA § 454(a),(b) and (c), and 20 CFR 628.505(b)(2) which pertains to the guidance and contents on eligibility verification.

B. The Secretary waives JTPA §§ 108(b)(4)(B) and 315(a), and (b) and 20 CFR 627.445(a)(1)(i), and (a)(2)(i) and 631.14(a) and (b), eliminating the non-administration cost limitations for titles II and III [except for national reserve account (NRA) grants]; the 20% administration limitation for titles II-A and II-C, at JTPA § 108(b)(4)(A) will remain in effect; and the 15% limitation for title III, at JTPA § 315(c), as well as the 15% limitation for title II-B at JTPA § 253(a)(3) and 20 CFR 627.445(b)(3) will be waived and replaced by the same 20% administration limitation as for titles II-A and II-C at JTPA § 108(b)(4)(A). The provisions at § 108(b)(1) and (c), and all references in the JTPA regulations that address the cost limitations under titles II-A, II-B, II-C, and III [except for national reserve account (NRA) grants] shall refer only to the 20% administration cost limitation. The Secretary will apply JTPA § 108(b)(2) and (3) and 20 CFR 627.440(b), (c)(1) and (d) and 631.13(a)(1) to reduce the number of cost categories to two: Administration and Program Costs. The costs of Administration shall be those defined at 20 CFR 627.440(d)(5) for title II and 631.13(f) for title III. Program Costs will consist of all other costs including those defined at 20 CFR 627.440(d)(1), (2), (3), and (4) for title II and at 631.13(c), (d), and (e) for title III. The costs of Rapid Response activities identified at JTPA § 314(b) and 20 CFR 631.13(b) shall continue to be separately reported. Reporting instructions for the two cost category reporting method have been developed and are attached for use by the State.

C. The State's request to waive the JTPA procurement requirements and the implementing regulations is approved. As requested, the Secretary waives the JTPA procurement requirements and the implementing regulations at §164(a)(3) and 20 CFR 627.420(a)(1), (2), (3), and (4), (b), (d)(1), (e)(1), (2), (3), and (5); (g) and (h). By signing the modification, the Governor agrees to use State and local procurement procedures consistent with Office of Management and Budget (OMB) Circular A-102 as codified in the DOL regulations at 29 CFR 97.36. References elsewhere in JTPA to § 164(a)(3) should be understood to apply to State and local procurement provisions. The Circular requires the State to follow the same policies and procedures it uses for procurements from its non-Federal funds when procuring property and services under a grant.

In particular, the State indicates that collaborative planning and service delivery will be facilitated. We believe that collaboration is bringing various organizations to the table who bring with them more than minimal funding or other tangible resources to the collaborative effort. Where JTPA, the Employment Service, the Unemployment Insurance system, the Vocational-Educational system, and others collaborate and bring monies to the table, these entities (whose legislative mandate is to provide specific types of services/programs) can provide those legislatively mandated services/programs in an integrated or cooperative setting. We do not believe that collaboration is bringing various organizations to the table in order to divide the available JTPA funds among themselves. The JTPA procurement rules do not preclude the former type of collaborative effort.

Section 627.420 of the JTPA regulations includes rules implementing statutory provisions other than JTPA § 164(a)(3). As a result, the waiver of this section is not all encompassing. The 20 CFR 627.420 subsections which are not being waived follow (the sections of JTPA which they implement, where applicable, are listed in brackets): (a)(5) [§141(h)], (a)(6) [§107(a)], (c), (d)(2), (e)(4), (f) [§163], (i) [§144] and (j) [§107(e)(2)].

Subsection 627.420(c) of the regulations deals with conflict of interest. Even though OMB Circular A-102 also has a section that deals with conflict of interest, it is a generic requirement. Section 627.420(c) of the regulations was written specifically to cover the unique relationships that JTPA created with the formation of Private Industry Councils. Therefore, this subsection is not being waived.

Subsection 627.420(d)(2) provides the State and its SDAs/SSGs with pass through authority to any unit of State or local government. This requirement is being retained for the State since the Circular does not provide this authority.

Section 627.420(e)(4) is based on financial requirements contained in the Act and requires that costs be charged according to the allowable cost provisions at 20 CFR 627.435.

Although §164(a)(3)(I) has been waived, the requirements contained in §627.450, Program Income, still apply. The section being waived requires that procurement transactions between units of State or local government, SDAs/SSGs, et. al., be conducted on a cost reimbursement basis. The Program Income section of the regulations, in summary, requires that program income earned be used for purposes of the program.

We would like to note that §107(a) of the law, which requires the consideration of demonstrated performance in selecting entities to deliver services, and which calls for giving proper consideration to community-based organizations (CBOs), is not being waived. In the case of demonstrated performance, ETA considers this to be an important component in the selection of service providers. In the case of CBOs, historically they have provided integral employment and training services. The State is expected to not only take into consideration the demonstrated performance of entities being considered for funding, but also to include CBOs in the pool of entities being considered for funding.

Although the JTPA procurement requirements, as cited above, are being waived, this does not relieve the State from awarding JTPA monies through competitive processes. Competition has a positive impact on the services provided with JTPA monies, by leading to the selection of service providers with the capabilities to provide the services and by resulting in competitive pricing for the purchased services. The State may have concerns about undertaking competitions in rural areas, where historically there may only be one qualified service provider. There are examples of ways to ease the administrative burden in these areas. For example, if historically competitions have resulted in only one qualified and eligible applicant, the SDA should document this. It is then reasonable for the SDA to procure the services on a sole-source basis (documenting this process) in future years. Since the life of these monies is three years at the local level, it would be reasonable for the SDA to fund these services non-competitively for a period of up to three years. After three years, the SDA should then re-test the market by either undertaking another competition or advertising in various forums that the SDA is interested in purchasing these services. If the response is the same as before, the SDA can again procure the services non-competitively for up to three years.

D. The Secretary waives the matching requirement for the 20 percent funds for coordination activities at JTPA § 123(a)(3) and 20 CFR 628.315(e)(1).

E. The Secretary waives JTPA § 141(g)(2) and 20 CFR 627.240(b) to the extent that they limit the maximum duration of on-the-job training to not more than 6 months. The State agrees to develop a policy that addresses the circumstances under which the limit of 6 months may be exceeded and the maximum duration, if any, that will apply to on-the-job training.

F. As requested, the Secretary waives the prohibition on stand-alone work experience, job search assistance, job search skills training, and job club, for both youth and adults, in instances when an individual service strategy substantiates its use as appropriate, by waiving JTPA § 204(c)(2)(B)(ii) and 20 CFR 628.535(b)(2) and (c)(1)(ii) and applying JTPA § 264(d)(3)(A) and (B) as if they read ". . . shall be accompanied by . . . additional services . . . unless the individual service strategy demonstrates such additional services are not warranted." (JTPA § 204(c)(2)(A) was not waived as it was unnecessary to do so since (B)(i) already provides an exception.) We wish to point out to the State that there is research suggesting that work experience provided in a stand-alone mode is not as effective as when combined with other needed services and that, as suggested in the request, this authority will be used sparingly.

G. As requested, the Secretary waives the time limits in JTPA § 314(c)(15) for title III and shall apply JTPA § 204(c)(4) and 20 CFR 628.610(b) to title III to enable title III participants to receive post-termination services, except for financial assistance and training, for up to one year consistent with title II. Additionally, the Secretary will apply JTPA §§ 204(b)(2) and (c)(4), 264(d)(5) and 314(c)(15) and 20 CFR 628.610(b), and 628.804(k) to authorize training-related services as a post-termination service across all adult and youth programs. In addition, the provision within 20 CFR 627.310(e) which prohibits the use of financial assistance as a post-termination service is not waived. Therefore, needs-based and needs-related payments are not post-termination options under this waiver for both title II and III.

H. As requested, the Secretary waives the youth OJT wage requirement at JTPA § 264(d)(3)(C)(i)(I) and the related regulations at 20 CFR 628.804(j)(1)(i) so that the State may establish an absolute minimum wage for youth in on-the-job training that is equal to 70 percent of the average wage at placement for adults served under title II-A as long as wages are equal to or greater than the higher of the Federal minimum wage law or the applicable State/local minimum wage law.

I. The State's request to waive provisions at JTPA §4(31) and 20 CFR 628.515(c)(2) has not been granted. Assessment of participants' reading and math skill levels determines whether individuals are included in the "basic skills deficient" category, one of the hard-to-serve categories targeted in the law for title II. The term "basic skills deficient" is defined in JTPA §4(31) as individuals whose reading or math skills are at or below the 8th grade level on a standardized or criterion-referenced test. The provisions of JTPA §§ 203(b) and 263 (b) and (d) require that not less than 65 percent of participants in the program shall be individuals who are basic skills deficient and/or in other named hard-to-serve categories. The Secretary is not prepared to waive the test component of the definition of "basic skills deficient," because it ensures that this category of hard-to-serve individuals is served.

Reporting of reading and math skills grade level or raw test scores is required for both Title II and Title III by JTPA Standardized Program Information Reporting (SPIR) instructions in Training and Employment Information Notice 5-93, Change 1, dated June 23, 1994. It should be noted that certain individuals and groups are already excluded from the SPIR reporting requirement; they include college graduates, the learning disabled, non-English readers, and those who refuse testing. Further exclusions would compromise the State's ability to determine its value in serving an important targeted subgroup in Title II, as well as inhibit the State's ability to assess its compliance with the eligibility provisions of the law for Title II.

However, since eligibility requirements for Title III do not include targeting to individuals deficient in reading and math skills, the State may adopt a more flexible policy for Title III only. The State should ensure that there is a consistent policy for the collection of reading and math skills data. If there is any question about the basic skills of a participant, testing for reading and math skills should be conducted and the information reported in the SPIR. We wish to point out to the State that such testing is a reliable method for determining an individual's need for basic skills training."

J. As requested, the Secretary waives the requirement at JTPA § 106(b)(7)(E) that limits the amount of incentive funds that can be applied to performance standards established by the Governor to 25 percent. The State may use not more than 50 percent of the incentive grants for new performance standards established by the Governor.

However, the State's request to waive JTPA § 106(d)(1), which requires the Governor to adjust performance standards, has not been granted. We recommend the State develop adjustment models for all standards that have incentives or sanctions attached, whether they are DOL core standards or State-developed standards, especially in a State of Missouri's size and economic diversity. Adjustment models are for the purpose of leveling the playing field for all local programs and, thus, are an essential component of an equitable performance standards system. The adjustment models can be State-developed and, indeed, would have to be for the additional, new measures that Missouri proposes.

K. The State's request to waive the composition requirements for establishing a Human Resource Investment Council (HRIC) at JTPA § 702 has not been granted. The Secretary's statutory waiver authority under the DOL 1997 Appropriation Act is limited to the provisions of JTPA titles I, II and II. The provisions pertaining to the establishment of an HRIC are set forth at title VII of JTPA, and, therefore, are outside of the Secretary's waiver authority. Further, it is not possible for the Department to determine whether the proposed State legislation would conform to the requirements of the JTPA. To be in conformance, the HRIC must meet the requirements of title VII of the JTPA.

L. As requested, the JTPA Standardized Program Information Report (SPIR) instructions in Training and Employment Information Notice (TEIN) 5-93, Change 1 that require follow-up by participant contact for the 13th week after termination are waived on the condition that Missouri adopt the provisions in the Department's "JTPA Statutory Waiver Guidelines: Substitution of Wage Record Follow-Up for Survey Follow-Up in JTPA Performance Standards" and future implementing guidance.

These provisions were developed to provide some uniformity in systemwide measurement for the limited number of States that receive such waivers. The guidelines make provisions pertaining to: universal reporting; reporting elements, formats, and electronic media; reporting deadline; out-of-state placements; required core performance measures; adjustments to performance standards; alternative incentives and sanctions policy; sampling or baseline data for national follow-up measures; performance improvement; and other provisions deemed appropriate. The revised reporting instructions are attached for use by the State.

M. In consideration of the waivers contained in this grant modification, the State agrees to a performance improvement of at least five percent at the State and local levels measured at the conclusion of Program Year 1997 using actual performance in PY 1996 as the baseline for improvement. Performance improvements will apply to all the Secretary's performance measures, or to their approved equivalents, for Titles II-A, II-C, and III. States will take into account the SDAs' performance improvement targets in determining the receipt of Title II incentive grant awards for PY 1997. In considering whether the State and the SDAs have attained the agreed upon performance improvement for PY 1997, the Department will apply the Secretary's Adjustment Models, exclusive of Governor's Adjustments, to the performance improvement goals. Program Year 1996 and Program Year 1997 performance will be calculated in the same way for both years.

The Standardized Participant Information Report (SPIR) instructions in Training and Employment Information Notice 5-93, Change 1 (dated June 23, 1994), as modified by Training and Employment Information Notice 5-93, Change 2 (dated January 24, 1997), remain in effect where not specifically waived or modified in this Agreement. Also in effect unless specifically waived are the Performance Standards Status Summary Report requirements put forth in Training and Employment Guidance Letter 2-95 (dated August 10, 1995). This requires Governors to report each SDA's final standard and actual performance for each of the Secretary's Title II core standards, with required technical assistance plans and reorganization plans attached.

These waivers are open for modification and the Department will also entertain additional requests for waivers during this program year. These waivers apply to the title II and the title III formula programs. However, ETA will consider requests to apply specific waivers to individual title III Secretary's National Reserve Account (NRA) grants which are active during Program Year 1997. In addition, ETA will consider requests to incorporate specific waivers into new individual NRA grants, as appropriate.