Ms. Cynthia P. Eisenhauer
Administrator
Division of Workforce Development
Iowa Department of Economic Development
1000 East Grand Avenue
Des Moines, Iowa 50319-0209



Dear Ms. Eisenhauer:

I am pleased to offer JTPA waiver approvals to the State of Iowa in response to Governor Branstad'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, 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 September 30, 1997.

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We applaud Iowa'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 Iowa 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 to the State.

Sincerely,





William H. 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 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 Iowa. They do not necessarily constitute an endorsement of the examples in Iowa'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 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 under 20 CFR 627.201 for a period of four years from the effective date of this Grant Modification.

B. As requested, 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 being granted under the provisions of 20 CFR 627.201 for a period of four years from the effective date of this Grant Modification. The State's request to exclude 100 percent was declined since it would have the effect of circumventing the eligibility requirement that participants be economically disadvantaged.

C The Governor agrees to continue to require an objective assessment and individual service strategy (ISS) at entry and on an on-going basis for all participants under titles I, II, and III that is tailored to the background and needs of the participant and where services identified in the individual service strategy will be secured for the individual. The Secretary waives 20 CFR 628.515(a) and 628.520(a), and will apply JTPA §§ 204(a)(1) and 264(b)(1), and remaining sections of 20 CFR 628.515 and 628.520 as providing non-binding guidance for the alternative state policy that the Governor shall implement.

Until such time as the alternate policy is in place for title II adults and youth, the requirements specified in the preceding sentence will continue to apply to any decision to provide the standalone activities permitted in paragraph D. and F. below (i.e., work experience, job search assistance, job search skills training, job club for both youth and adults, and pre-employment and work maturity skills training for youth) which rely on the objective assessment and ISS.

D. 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." 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. We wish to point out to the State that there is research suggesting that work experience provided in a standalone mode is not as effective as when combined with other needed services and that this authority should be used sparingly.

E. As requested, the Secretary will apply the provisions of needs-based payments at JTPA § 204(b)(2)(I) and (c)(3), and 20 CFR 627.305(b)(1) to title III participants. However, in order to preserve the principle that training is most effective if individuals are enrolled in training early in the adjustment process and pursuant to eligibility requirement exclusion contained in the Appropriations Act of 1997, JTPA § 314(e)(1) and 20 CFR 631.20(b)(1) are not waived , and shall apply to dislocated workers in order to receive needs-based payments as well as needs-related payments. Therefore, in order to be eligible for needs-related payments or needs-based payments, a dislocated worker must be enrolled in training by the end of the 13th week of the worker's initial unemployment compensation benefit period (following title III qualifying layoff), or if later, the end of the 8th week after an employee is informed that a short-term layoff will in fact exceed six months. This also means that JTPA § 314(e)(2) and 20 CFR 631.20(c) and (d)

are not waived.

The Secretary will, however, consider an alternative definition of "enrolled in training or education" at 20 CFR 631.20(b)(2) to be used in extraordinary circumstances if Iowa wishes to propose such a policy. Any alternative policy should preserve the principle that training is most effective if individuals are enrolled in training early in the adjustment process.

F. As requested, 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 in cases where the objective assessment and individual service strategy indicate it is the appropriate intervention. We note that the State has neither asked for nor received a waiver of the definition of the Youth Employability Enhancement performance standard, which requires as one of five options that two out of three youth employment competencies (pre-employment/work maturity, basic skills, and occupational skills) be obtained. (A waiver of 20 CFR 628.520(e) is unnecessary since this requirement applies only if the assessment indicates that a service is needed. This provision is also applied as non-binding guidance pursuant to waiver C.)

G. 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) and the participation requirement at JTPA § 264(d)(3)(C)(iii) and the related regulation at 20 CFR 628.804(j)(2), when indicated as appropriate in the objective 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.

H. The State's request to waive the requirements of JTPA § 141(k) to allow subsidized employment with private for-profit employers (limited internships) for non-economically disadvantaged youth has been granted subject to the conditions described below:

The Secretary waives the requirements at JTPA § 141(k) that prohibit subsidized employment with private for-profit employers, to permit limited internships with private for-profit employers for youth who do not meet the economically disadvantaged requirements at JTPA §§ 264(a)(2) or (c)(2), in cases where the objective assessment and individual service strategy indicate it is the appropriate intervention and when:

  1. 1. The provision of services under this waiver are subject to the requirements at JTPA § 264(e) for services to the non-economically disadvantaged under the "10-percent window," which may not be exceeded;

  2. 2. It is used in the private for-profit sector, as in the public and private non-profit sectors, 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 skill goals of the participant. This waiver authority shall be administered so as to preclude the reintroduction of the abuses where participants are placed in low skill, low wage paying type jobs as a subsidy to the employer;

  3. 3. It is used when on-the-job training is not available or is inappropriate;

  4. 4. The worker protections under JTPA § 143 are in place, particularly health and safety standards and workers compensation and that no displacement or reduction in hours of regular employees occurs; and

  5. 5. It is provided as a temporary activity, of limited duration. The State agrees to set a policy governing duration of such employment with private for-profit employers.


I. The State's request to waive the prohibition at JTPA § 141 (p) on the use of JTPA title II funds for public service employment (PSE) has not been granted, nor has the Secretary waived the provisions at JTPA § 314(c)(2) prohibiting PSE as a service strategy for title III dislocated workers. The Department believes that there are sufficient services available to address the employment needs of participants through the use of work experience in the public and private non-profit sectors and OJT with private for-profit employers without PSE. In addition, the Secretary has, under certain conditions, waived the prohibition at JTPA § 141(k) on the use of funds for subsidized employment with private for-profit employers for adults in response to requests from a few States, and will consider such a request from Iowa, if it wishes to submit one.

J. The State's request to eliminate the 90- and 30-day periods of inactive status for adults and youth who are on break from Institutional Skills Training or who are temporarily unable to participate in a scheduled activity may not be necessary. Training and Employment Information Notice (TEIN) 5-93, Change 2, dated January 24, 1997, revised the guidance on periods of inactive status. Under the revised guidance, multiple periods of inactive status are allowable for title II-A, II-C, and III programs as long as substantial and frequent services are provided. Substantial services are those cited in the Act, and frequent is defined as no less often than every 90 days, and all services should be planned for in the Individual Service Strategy or individual readjustment plan. The Department will not further modify the policy in TEIN 5-93, Change 2, to accommodate the State's special circumstances, because we believe the policy is adequate for those circumstances. Individuals on break from an Institutional Skills Training Activity or who are temporarily unable to participate in a scheduled activity should receive a substantial service from JTPA no less frequently than every 90 days to maintain and strengthen their attachment to the work world that is their end goal. The cost and duration of such services need not be substantial, as the cited services include, among others, job counseling, career counseling, case management services, training to develop work habits to help individuals obtain and retain employment, and use of advanced learning technology for education, job preparation, and skills training.

K. The State's request to permit follow-up data to be collected through other means (family members, employers, other administrative records) as well as direct participant contact has not been granted. However, the Secretary is willing to allow the State some flexibility by waiving the JTPA Standardized Program Information Report (SPIR) instructions in TEIN 5-93, Change 1 that require follow-up by participant contact for the 13th week after termination, on the condition that the State 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" (copy attached) and in 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 State's request to collect follow-up data for performance standards purposes from family members or employers has not been granted because the data would not be statistically comparable to data collected and reported to the Department by all other recipients and subrecipients. Uniformity of definitions and statistical calculation methods are key to the Department's ability to collect and report statistically reliable program performance information to Congress and the public. The alternative method using administrative wage records does provide flexibility to States while also maintaining uniformity and statistical integrity.

L. The Secretary accepts Iowa's request that the Governor be given the flexibility to develop the content and format of plans for the State's workforce development services. Such State policies must provide for:

a. An inclusive planning process;

b. Review and comment of local plans consistent with JTPA § 105; and

c. Plans with sufficient information to demonstrate to the Secretary that the services and
the activities reflected in the plan will ensure quality, integrity and accountability.

ETA will work with the State to identify the specific contents of the State and local plans required for JTPA titles II and III, as well as the time lines for the publication and submission of the plans contained in JTPA §§ 104(b), 205(a), 121(b), 311(a) and (b) and 313(b); 20 CFR 628.205(a)(2), 20 CFR 628.420(b), 20 CFR 631.36(b), 20 CFR 631.36 (b) and 20 CFR 631.50(b) and (c); and Training and Employment Guidance Letter No. 4-95, "Instructions for Submission of State Plans Under title II and III of the Job Training Partnership Act." Once this is accomplished, the Secretary will entertain a request for any waivers needed to implement the revised planning process.

M. The State's request for waiver of the provision at JTPA § 107(e), and the JTPA regulations at 20 CFR 627.420(b)(1) and (d)(1)(iv) has not been granted. The text of the State's request suggests that it wants to eliminate competitive procurement and to rely to the greatest extent possible on sole source procurement. It is ETA's position that 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. Where we have agreed to a waiver of procurement requirements, we have required states to abide by the provisions found in the Office of Management and Budget (OMB) Circular A-102 as codified in the DOL regulations at 29 CFR, Part 97 (The Common Rule), to ensure financial accountability. The JTPA requirement to minimize the use of sole source procurement to the extent practicable has a comparable provisions in OMB Circular A-102. While the State has not indicated an intention to follow the OMB Circular A-102 (The Common Rule) requirements the Secretary would gladly entertain such a request.

The State's request suggests that its system envisions that all willing local service providers with whom a one-stop workforce center wants to contract will be invited to become community partners, and that the participation of these partners will enhance service coordination and collaboration. 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.

N. The State's request to waive JTPA § 105(a)(2) (80 day plan publication requirement) has not been granted. This section requires States to publish the types of training and employment opportunities being made available for participants and provides that such plans shall be reasonably available to the general public through such means as public hearings and local news facilities. In the Department's view, waiver of this provision does not serve the best interest of the client population to review and comment on services being offered in the area covered by the plan. Furthermore, this request seems to come under the "review and approval" of plans exception which is beyond the Secretary's authority to under the 1997 DOL Appropriations Act waiver provisions and, as such, may not be waived.

O. 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.

P. The Secretary is not prepared to approve the use of a funds contributed and/or budget based cost allocation system. Such a system is contrary to generally accepted accounting principles and does not adequately ensure accountability. When costs are allocated based on appropriated funds contributed rather than on an after the fact determination of benefit received by each program, funds have effectively been commingled. This is contrary to the guidance issued in the TEGL related to this waiver process. We note that the State does not identify or request a waiver of any provisions associated with this issue. The Department agrees with the State's assessment that the bases for cost allocation used by its subrecipients are not typically relevant to or appropriate for the allocation of state level costs. The Department is willing to work with the State to develop a less burdensome appropriate cost allocation system.

Q. The State's request to allow unlimited intra/inter-title transfer of title II and title III funds has not been granted. The Secretary does not have authority to increase the amount of money that may be transferred between titles beyond that already provided in JTPA. Congress appropriates to DOL a specific amount of funding to be spent on each year-round program, while the statute gives the states and SDAs limited spending flexibility. If we permit the states to transfer more than the percentage allowed by JTPA, then that portion of money, appropriated for a specific purpose (title II-C for example), will be improperly expended for other than that purpose.

Furthermore, the Department believes that it is important to maintain services to out-of-school youth, and title II-C funding provides the only guarantee of 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 inter-title transfer requirements.

R. The State's request for a waiver to create a new and different two cost category system has not been approved because the Department must ensure consistent reporting across states and must maintain the ability to compile comparable data for reports required by and for the Secretary. As a result of consultation between the ETA regional office and the State, however, the Secretary has agreed to waive JTPA § 108(b)(1), (4) and (c); the 15% administration cost limitation 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. 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.

S. It appears that the State is requesting approval for JTPA § 123 8-percent funds to be spent on items other than the provision of services to eligible individuals in projects described at JTPA § 123(a)(2)(A), (B) and (C). The State's request, as submitted, has not been granted. Such a waiver would be contrary to the purpose for which the 8-percent funds are allotted to the State education agency responsible for education and training and cooperative agreements and may not be waived. Subject to JTPA § 123(e), these funds are to be used for JTPA § 123 activities described in JTPA §123(a) & (b) and 20 CFR 628.315.

T. The State's requested waiver of the records retention period required at JTPA § 165(e) and 20 CFR 627.460 of the JTPA regulations has not been granted. These requirements are imposed to ensure accountability but are for more than just financial and audit reasons. Applicant and participant records also need to be retained for Civil Rights Act purposes. In the Department's view the record retention period is not excessively long.

U. The State's request to eliminate terminations due to illness or death from performance standards calculations is granted. The State should develop a policy that details the conditions under which terminations due to illness should be excluded; all terminations due to death should be excluded. The State may exclude from both the numerator and the denominator of the Title II-A, Title II-C, Title III, and § 204(d) performance standards calculations terminations due to illness or death. ETA will provide revised SPIR reporting instructions.

V. The State's request to exclude work-study payments and income from all scholarships, grants, fellowships, and assistantships from the definition of "Family income" for the purposes JTPA income eligibility determinations has not been granted. The existing definition of "Family income" addresses much of what the State requested without the need for a waiver. Educational financial assistance received under title IV of the Higher Education Act is excluded from the calculation of family income, as are other (non-title IV) needs-based scholarships. Any assistance which consists of students receiving wages is considered income and is included for income eligibility purposes. For other types of financial assistance, if it is considered income for other federally assisted programs, then, unless specifically excluded, it is considered income for JTPA purposes.

W. The State's request to waive the provisions of JTPA § 102 of the Act pertaining to the establishment (membership composition) of the private industry council has not been granted. This is an area excepted from the Secretary's waiver authority under the 1997 DOL Appropriations Act (Pub. L. 104-208). The Secretary does not have authority to waive statutory or regulatory requirements relating to "the establishment and functions of service delivery areas and private industry councils."

X. The State's request to revise the definition of "Family income" to match the definition of income in title V of the Older Americans Act for JTPA eligibility determinations for services to older individuals has not been granted. The Secretary has no authority to substitute the title V Older Americans Act income eligibility provisions for JTPA income eligibility requirements. This is an area excepted from the Secretary's waiver authority under the 1997 DOL Appropriations Act. The Secretary does not have authority to waive statutory or regulatory requirements relating to JTPA eligibility.

Y. 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 National Reserve Account 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.