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.

J. 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.

K. The State's request to waive the relocation requirements of JTPA § 141(c)(2) has not been granted. Under the DOL Appropriations Act of 1997, the Secretary does not have authority to waive requirements relating to wage and labor standards, or workers' rights, participation and protection. Even though the State is requesting an exemption for intrastate movement, this exception precludes approval of this waiver request.

L. The Secretary waives the requirements of 20 CFR 627.240(b), which provides maximum time limits during on-the-job training, provided the training time during the OJT is correctly determined, taking into consideration the necessary occupational skills, and the time required to acquire such skills, for the participant to function in the job for which the OJT is contracted. The Secretary also waives that portion of 20 CFR 627.240(f)(3) which precludes OJT with a participant's "current employer" in "an upgraded job" for title II eligible participants. This waiver will permit OJT with a title II eligible participants' current employer on condition that the OJT results in the acquisition of new skills and higher pay by the participant. The remaining provisions at 20 CFR 627.24(f)(3) which preclude OJT with a participant's "previous" employer in the same, a similar, or upgraded job is not waived.

The State's request to waive the prohibition on upgrade training as a component of on-the-job training with the current or layoff employer under title III at 20 CFR 627.240(f)(3) is not granted. Further, the expansion of the definition of "eligible dislocated worker" at §§ 301(a), 314(h) and 20 CFR 631.3 to permit skills upgrade training for employees with their current or layoff employers is not granted. The Appropriations Act does not give to the Secretary the authority to waive these eligibility requirements. Furthermore, the request to permit upgrade training for title III eligible dislocated workers with their current or layoff employers is not granted for policy reasons, including--

• limited title III resources cannot be used to replace employers' responsibilities for upgrading the skills of current employees;
  
  
• current safeguards must be maintained to ensure that employers do not receive federal funding for training/retraining (including upgrade training) laid off and subsequently recalled/rehired employees.

M. 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. However, in any event 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.

N. 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 activity, is not sufficient. However, the Secretary has granted a waiver -- and hereby offers the same to New Jersey -- 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.

O. 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.

P. 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 ISS 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 stand-alone activities permitted in paragraphs O. and R. (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.

Q. For titles II and III, current authority permits participants to continue to receive services following placement so long as the participants have not been terminated. Instead of terminating at placement, termination occurs at the completion of planned services. ETA encourages such a policy and is willing to work with New Jersey to develop reporting procedures to take credit for job placements occurring prior to termination.

Nevertheless, as requested, the Secretary will apply JTPA § 204(b)(2)(J) and (c)(4) and 20 CFR 627.310(e) to title III to enable title III participants to receive post-termination services, excluding financial assistance, for up to one year consistent with title II. Additionally, as requested, the Secretary will apply JTPA §§ 204(b)(2)(J) and (c)(4), 264(c)(2) and (d)(5), 314(c)(15), and 20 CFR 627.310(e) to authorize training as a post-termination service and contingent upon the Governor:

However, 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 titles II and III.

R. 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.

S. 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 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 New Jersey 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.

T. 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) of the JTPA regulations 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 NRA grants] shall refer only to the 20% administration cost limitation. The Secretary shall apply this waiver to permit the State to have flexibility to increase the 20% limitation to 25% on a case by case basis when additional administrative costs must be incurred to support the activities of a local Workforce Investment Board and promote the one-stop system.

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.

U. The State has requested a waiver that would permit a combined JTPA and Wagner-Peyser administrative cost pool that does not require the distribution of costs to the benefitting program or cost objective based upon benefits received as required by 20 CFR 627.440(a) of the JTPA regulations. It is felt that to allow such a joint cost pool or even a joint cost pool for accumulating the costs of the various JTPA titles without distribution of the costs based on benefits received by the various programs or titles amounts to commingling of appropriated funds, and is contrary to the prohibition on such commingling of funds included in the TEGL guidelines for these waivers. Moreover, the pooling of administrative costs without the separate tracking, reporting, and allocating to the various grant programs in accordance with the benefit received by each is a violation of generally accepted accounting principles (GAAP). GAAP is a requirement of § 164(a)(1) of JTPA as well as a requirement of the OMB Circulars which are applicable to Wagner-Peyser and cannot be waived for Wagner-Peyser funds. Therefore, the requested waiver has not been granted.

V. 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. In addition, 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 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 (§ 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 that it meets the eighty percent expenditure requirement in the year of the allotment. Also, DOL believes a State's policy for recapture and reallocation of title III funds within a State can accommodate plans to serve dislocated workers who require assistance across program years.

W. The State's request indicates that it would like a waiver that would allow it to track and report on the allotments which it receives without regard to year of appropriation. The request identifies JTPA § 164(a)(1) which requires the State to establish fiscal control and accounting procedures to assure the proper disbursal of and accounting for the JTPA funds it receives, and JTPA § 164(a)(2) which requires the Secretary to establish uniform cost principles that will be applicable to recipients of grant funds. It is JTPA § 165(f) which requires quarterly financial reports identifying all program costs by cost category and by year of appropriation. As previously indicated, ETA has developed and is providing revised reporting instructions for the approved waiver which allows simplified reporting for only two cost categories. However, to ensure consistent reporting across states and the ability to compile comparable data for reports required by and for the Secretary, ETA will continue to require reporting by year of appropriation. Also, the State has indicated, in its waiver request related to cost limitations, that it intends to continue to impose an administrative cost limitation. Those cost limitations are calculated separately for each year's funds. Thus, the requested waiver will not be granted.

X. 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 (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.