Mr. Glen E. Robards, Jr.
Associate Director
Employment and Training Division
Oklahoma Employment Security
Commission
2401 North Lincoln
Will Rogers Memorial Office Building
Oklahoma City, Oklahoma 73105

Dear Mr. Robards:

I am pleased to offer Job Training Partnership Act (JTPA) waiver approvals to the State of Oklahoma in response to Governor Keating's 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, NW.
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. The effective date of this modification is September 30, 1997.

We applaud Oklahoma'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 the State 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,

Joseph Juarez
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 the State 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 Oklahoma. They do not necessarily constitute an endorsement of the examples in Oklahoma'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 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) when indicated as appropriate in the assessment and individual service strategy for youth on-the-job training. The State shall assure that the OJT positions for youth have substantial training content and that the training time is correctly determined. In addition, the State should issue policies to assure that youth OJT opportunities reflect positions with career potential and avoid the introduction of the abuses in the development of youth OJT slots in low wage, low skill positions which precipitated the enactment of the provisions for which this waiver is requested.

B. As requested, the Secretary waives JTPA § 108(b)(1), (4) and (c); the 15% administration cost limitations under JTPA §§ 253(a)(3) and 315(a), (b) and (c) and 20 CFR 627.445(a), (b)(3) and (d); 631.14(a), (b), (c), (d), (f), and (g), eliminating all cost limitations for titles II and III [except for title III national reserve account (NRA) grants]; and will apply JTPA § 108(b)(2) and (3) and 20 CFR 627.440(c) 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. The Department has no objection to the State establishing its own uniform limitation on Administration expenditures if it desires to do so. 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 Secretary waives the requirements at JTPA § 264(d)(3)(A) and 20 CFR 628.804(d) and (f) that prohibit pre-employment and work maturity skills training as a stand-alone activity for youth in cases where the objective assessment and individual service strategy indicate it is the appropriate intervention.

D. The State's request to waive the Ratio of Out-of-School to In-School Youth service requirements at JTPA § 263(f)(1) and 20 CFR 628.803(h)(1) has not been granted. This appears to be an eligibility requirement and, as such, is excepted under the Secretary's waiver authority granted in the 1997 DOL Appropriations Act. Moreover, the Department believes that it is important to provide services to out-of-school youth, and the ratio requirement is the only statutory provision that guarantees services to this target population. Since funding for title II-C youth services has decreased in recent years, the Secretary is not prepared to permit further reduction of services to out-of-school youth by waiving the ratio requirement.

E. The request for a waiver of the requirements for incentive grants for model out-of-school programs and placement in jobs with employer-assisted benefits is not necessary and, therefore, has not been granted. Training and Employment Guidance Letter (TEGL) No. 4-95, Change 1, dated May 3, 1996, announced that for Program Years 1996 and 1997, Governors are encouraged (not required) to reward successful out-of-school programs and placements in jobs providing employer-assisted benefits.

F. The Secretary waives 20 CFR 631.2 which defines "substantial layoff" for the purpose of determining a worker's eligibility for title III pursuant to § 301(a)(1)(B). This administrative regulatory waiver is being granted for a period of four years under the provisions of 20 CFR 627.201 from the effective date of this Grant Modification.

G. It is not clear that the Secretary has authority to waive her statutory responsibilities for formula allotment and reallotment, including the requirements under JTPA § 303 for the recapture and reallotment of unexpended Title III formula funds. Moreover, except as described below, the State's request to waive JTPA § 303(b) and 20 CFR 631.12(a) is not approved for the following policy reasons:

• It is the Secretary's responsibility to judiciously manage scarce federal resources nationally, and to ensure that funds are allotted and reallotted to States where they are most needed. The fluidity of movement of dislocated workers within and outside of traditional labor markets; the unpredictability of most layoffs; the ability for workers to access reemployment services quickly in order to maintain the principle of early intervention; and the access of eligible dislocated workers to JTPA services regardless of where they reside increase the need to move funds within the system.
  
  

• Each Governor has a similar requirement under JTPA § 303(d) to obligate and deobligate formula funds, at both the State and Substate area levels, to permit the funding to be available where it is most needed within the State--and to preclude the necessity for the Secretary to recapture funds from a State. In addition, there are several safety nets in place for ensuring that Title III resources are available where and when they are needed:
  
  
  • a Governor may retain up to ten percent of a State's annual allotment for allocation to Substate areas based upon need (JTPA § 302(c)(2));
    
    
  • a Governor may utilize a portion of the State's reserve funds (up to forty percent of annual allotment) as a discretionary allocation to Substate areas to provide additional assistance to areas that experience substantial increases in the number of dislocated workers (JTPA § 302(c)(1)(E));
    
    
  • a Governor may request Secretary's National Reserve funds to supplement resources that are available in a State to provide services resulting from mass layoffs, closures, natural disasters, etc. (JTPA § 323); and
    
    
  • a Governor may request from the Secretary additional financial assistance for the State's and Substate areas' formula programs (JTPA § 323(a)(7)).

As requested, however, the Secretary waives for a period of four years the regulatory provision at 20 CFR 631.12(a)(1)(ii). This will permit the State to expend title III funds in the year of allotment plus two following years, provided the State expends at least eighty percent of allotted funds in the year of allotment.

In response to the State's request to recapture/reallocate substate formula funds based upon obligations rather than expenditures, DOL believes a State's policy can accommodate obligations to serve dislocated workers who require assistance across program years. The statute at JTPA § 303(d) does not preclude a Governor from permitting Substate areas to carryover obligated funds providing the State's expenditures (Governor's Reserve and Substate allocations) represents at least eighty percent of its allotment in the year of allotment. For example, a State policy could allow in an equitable manner for substate areas to carryover into the following program year amounts to cover obligations that were made to support participants' enrolled in longer-term training contingent upon the ability of the State as a whole to meet its expenditure requirements. However, if a State as a whole does not expend 80 percent of its funds in the year of allotment and such funds are recaptured by the Secretary, all unexpended prior year carryover funds will also be subject to recapture.

H. The State's request to eliminate subsets of programs (titles II-A, II-B, II-C, Older Worker set-aside, title III Formula, Governor's Reserve) and combine into one adult and one youth program has not been granted because it amounts to commingling of appropriated funds. The Training and Employment Guidance Letter (TEGL) No. 6-96, dated April 1, 1997, clearly indicated that waiver requests for such commingling of funds could not be granted. Moreover, a waiver to permit a single adult program would be contrary to the eligibility exception to the Secretary's waiver authority granted under the 1997 DOL Appropriations Act , which may not be waived.

I. 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). 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 (The Common Rule). References elsewhere in JTPA to § 164(a)(3) will be understood to apply to State and local procurement provisions. The Circular/Common Rule 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.

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. Section 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 JTPA §164(a)(3)(I) has been waived, the requirements contained in 20 CFR

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.

J. The State's request to waive the requirement found at JTPA § 263(g)(1)(A) and 20 CFR 628.803(g)(3), that schools eligible for schoolwide projects for low income schools be located within an eligible poverty area, has not been granted. The 1997 DOL Appropriations Act does not grant the Secretary authority to waive such eligibility requirements. The Secretary has granted to other States a waiver to interpret the definition of "poverty area" found at JTPA § 263(g)(2) and 20 CFR 628.803(g)(3) as including "one or more contiguous census blocks" with a poverty rate of 30 percent or more, as defined by the Bureau of the Census. Such a waiver may address the State's concerns, and the Secretary will gladly entertain a similar request from Oklahoma.

K. The State's request to waive the separate programs under titles II-B and II-C by combining them to create a single year-round program for youth is not granted. A waiver may not be granted that would apply the JTPA title II-C ten percent eligibility window to the title II-B program, since eligibility is among the statutory provisions that cannot be waived. Moreover, the Department believes that many of the State's objectives of program consolidation can be accomplished by using the one hundred percent transfer authority that exists between the title II-C and title II-B programs.

L. As requested, the Secretary waives the requirements at JTPA § 141(k) which prohibits subsidized employment with private for-profit employers, to permit work experience with private for-profit employers, in cases where the objective assessment and individual service strategy indicate it is the appropriate intervention, and when:

1. It is used in the private-for-profit sector, as in the public and private non-profit sector, for those participants who need to build and demonstrate labor market skills or undertake career exploration, in jobs for which there is a demand in the community and which are within the skills of the participant. This authority shall be administered so as to preclude the reintroduction of abuses where participants are placed in low skill, low wage paying jobs as a subsidy to the employer;
   
   
2. It is used when on-the-job training is not available or is inappropriate;
   
   
3. The worker protections under JTPA § 143 are in place, particularly health and safety standards and workers' compensation, and no displacement or reduction in hours of regular employees occurs; and
   
   
4. It is provided as a temporary activity of limited duration. The State agrees to set a policy for the maximum duration.

Additionally, the title III prohibition on work experience, at 20 CFR 627.245(e), where such strategy is supported by an individual assessment, and the combination requirements at 20 CFR 627.245(d) and 628.804(e) and (f) are waived.

M. The State's request for a waiver of the requirement that to be acceptable substitutes for disallowed costs, stand-in costs come from the same title and program year, and not result in a violation of the cost limitations is not granted. Although the State's request also cites JTPA § 165(g) and the implementing regulation at 20 CFR 627.425(b)(2)(iii) which relate to the requirement to record and report stand-in costs, the focus of the request is on the provision at 20 CFR 627.480(f). The approved waiver eliminating the cost limitations for funds available for expenditure during PY 97 would also apply to stand-in costs. However, waiving the requirement that stand-in costs be from the same title and program year as the disallowed costs amounts to commingling of appropriated funds and is contrary to the prohibition on such commingling of funds included in the TEGL No. 6-96 guidelines for these waivers.

N. The State's request to waive the substate allocation requirements for funds allotted to States as a result of recaptured funds at JTPA § 303(c) and (d) has not been granted. The 1997 DOL Appropriations Act specifically excluded requirements for allocation of funds to local areas.

However, existing flexibility under JTPA may achieve the same result. The substate allocation requirements relate to the total amount a State is allotted annually, e.g., initial allotment plus any amount allotted as a result of reallotments pursuant to JTPA § 303. Therefore, of the 60% of a State's allotment that must be allocated to substate areas, a minimum of 50% of the State's allotment must be allocated by formula within 30 days of the date received by the Governor; a maximum of 10% of the State's allotment may be reserved for allocation to substate areas based upon need not later than nine months after the beginning of the program year. We believe there is flexibility in the substate allocation process to avoid the type of situation used in the example in the State's waiver request. If the State were to retain an amount less than the 10% maximum at the beginning of the program year for distribution based upon need, then it would be able to add to the amount that it does retain any additional funds received through the reallotment process. ETA will be happy to work with the State on this issue should such assistance be required.

O. As requested, the Secretary shall apply the requirements in Training and Employment Information Notice (TEIN) No. 26-96, dated April 22, 1997, transmitting the "Guide to JTPA Performance Standards for Program Years 1996 and 1997," such that title III performance standards calculations exclude participants terminating after receiving objective assessment only, consistent with title II. ETA will provide revised Standardized Program Informaton Report (SPIR) title III reporting instructions to separately identify those receiving objective assessment only from those receiving other Basic Readjustment Services.

P. The State's request to waive the definition of "employment" at JTPA § 106(k) for performance standards purposes to include employment of less than 20 hours per week for title II-A (adults), title II-C (youth) and § 204(d) (older workers) has not been granted. Consistency for this term and these standards is needed across multiple programs under JTPA and with welfare reform, and to bridge the reporting challenges posed by States that are transitioning to UI wage-record follow-up. The State may be able to address this situation using the Governor's adjustments to the performance standards models (see Guide to JTPA Performance Standards for Program Years 1997 and 1997, transmitted by TEIN 26-96, dated April 22, 1997).

Q. The Secretary will apply the definition of "family income" in 20 CFR 626.5 such that ". . . such income shall also exclude Social Security Disability Income for an individual with a disability. . . ." This administrative regulatory waiver is being granted for a period of four years under the provisions of 20 CFR 627.201 from the effective date of this Grant Modification.

R. The Secretary will apply the definition of "family income" in 20 CFR 626.5 such that ". . . . The Governor may, for the purposes of determining income eligibility for services under title II of the Act, exclude up to 50 percent of Social Security and Old Age Survivors' Insurance benefit payments. . . from the definition of family income." This administrative regulatory waiver is granted under the provisions of 20 CFR 627.201 for a period of four years from the effective date of this Grant Modification.

S. The Secretary has not waived the basic requirements for the Youth Employability Enhancement termination: to meet the definition of "Attained PIC-Recognized Youth Employment Competencies", the youth's proficiency in two or more skill areas must be demonstrated. Therefore, attainment of just one Youth Employment Competency, even if it is through participation in a School-to-Work or other activity, is not sufficient. However, the Secretary has granted a waiver to another State--and hereby offers the same to Oklahoma--that modified the criteria regarding youth employability enhancement (YEEN) termination set forth in TEGL 4-95, Change 1, "Job Training Partnership Act (JTPA) Title II and Title III Performance Standards for PY's 1996 and 1997" and in TEIN 5-93, Change 1, "Standardized Program Information Report Instructions", provided that 1) the SDA/State demonstrates that the youth did not need training in all competencies (for example, pretests indicate no need for basic skills or preemployment/work maturity or training in one of the two required competencies was provided by a funding source other than JTPA); and 2) in cases where a youth participant needs only one additional competency to qualify for the YEEN, training for that competency must be provided (not necessarily funded) by JTPA. SPIR reporting requirements will continue, and ETA will issue revised reporting instructions to accommodate this waiver.

T. In consideration of the waivers contained in this grant modification, the State agrees to a performance improvement of four percent (4%) at the State level 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. In order to meet this performance improvement, the State is expected to require that each SDA/SSG make some improvement in performance and that those SDAs/SSGs which demonstrate comparatively lower levels of performance be required to make greater performance improvements. States will take into account the SDA's performance improvement targets in determining the receipt of title II incentive grant awards for PY 1997. In considering whether the State has 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 Program 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 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.