[Excerpt from Federal Register / Vol. 59, No. 170 / Friday, September 2, 1994 / 45815 (amendments to JTPA regulations)] Subpart E--Grievance Procedures at the State and Local Level The new part 627, subpart E, sets forth the grievance procedures required at the State and SDA and SSG levels, including State review, that were generally found at 20 CFR 629.52. A commenter suggested that the reference to the handling of complaints alleging discrimination in Sec. 627.500(a) be made a separate paragraph. The Department agrees with the suggestion and Sec. 627.500 is revised to redesignate the last sentence in paragraph (a) as a new paragraph (b), Handling of discrimination complaints. In addition, paragraphs (b) and (c) are redesignated as paragraphs (c) and (d), respectively. A commenter observed that under the previous regulations, complaints involving fraud, waste, abuse, or criminal activity were to be reported to the Secretary, and that Sec. 627.500(b) of the interim final regulations now provides that such complaints are to be reported to the DOL OIG. The commenter's concern was that ETA might not be aware of, but had a need to know of, such complaints, and recommended that the regulations be amended to also include notification to ETA for such complaints. Another commenter suggested that complaints be reported concurrently to ETA and the OIG. The purpose of the interim final regulations was to ensure that criminal activity was directed to the OIG for resolution. Other processes set forth in the regulations for the handling of complaints are designed for non-criminal JTPA complaints. The provision at Sec. 627.500(b) is amended to provide for reporting criminal activity to the OIG, Office of Investigations through the Department's Incident Reporting System, with a copy simultaneously provided to ETA. Other non-criminal complaints will continue to be handled under the procedures set forth at part 627, subparts E and F, and through the Department's Incident Reporting System. A commenter recommended deleting Sec. 627.500(c)(2) concerning a private right of action with respect to alleged violations of JTPA statute or regulations in pursuing non-JTPA remedies since there is no statutory authority for the provision. The provision at Sec. 627.500(c)(2) is not a new provision. Prior to the interim final rule, it was set forth at 20 CFR 629.51(b)(3) since the March 15, 1983 regulations implementing JTPA. It does not preclude a private right of action if one exists, but rather indicates that nothing in the Act or in the regulations creates such a right. No change is made to the final rule. A commenter recommended that States, SDA's, and SSG's be required to develop their grievance procedures in such a way as to broadly inform participants under the JTPA system of their rights. The Department believes that the Act and regulations clearly set out the broad outlines of the grievance, hearings, and appeal rights under JTPA for interested parties. The specific complaint and grievance procedures to be followed are appropriately developed at the State and local level in accordance with the provisions of the Act and these regulations. Such procedures are routinely made available to participants upon entering the program, and to subrecipients and other interested parties. No change is made to the final rule. A commenter recommended that States should be required to establish timeframes for resolving complaints and recommended a 60-day time period. The Department expects that State, SDA and SSG grievance procedures already address this issue as an integral and necessary part of their procedures. In any case, the regulations already include a 60-day time period at Secs. 627.502(c) and 627.503 (a) and (c) of the interim final rule. Therefore, no change is made to the final rule. A commenter recommended that a neutral third party be included in the grievance processes at the State level under Sec. 627.501, and the SDA and SSG level under Sec. 627.502, to hear and act upon complaints. In addition, the commenter suggested that programs should be encouraged to take advantage of recent Federal initiatives related to mediation of disputes. The interim final regulations already provide for the use of neutrals in the JTPA grievance process in certain situations. For instance, such use is included in binding arbitration proceedings under the alternate procedure for handling labor standards violation under section 144 of the Act, and the alternative dispute resolution provisions at Sec. 627.805 available to parties to a complaint under Sec. 627.801, Procedures for filing a request for hearing. The regulations also provide for an independent review of complaints at the State level pursuant to the provisions at Sec. 627.503. No change is made to the final rule. A commenter recommended increased DOL participation in monitoring and handling complaint processes at the State and SDA and SSG levels, including regular participation in grievance hearings. The grievance procedures established pursuant to section 144 of the Act, and set forth at Secs. 627.501 and 627.502 of the interim final rule, are intended to ensure due process and to provide for the timely and orderly processing of JTPA complaints at the State and local levels. The regulations also provide for a State-level review of local grievances, as set forth at Sec. 627.503. There is also provision for Federal-level review of State and local-level complaints without decision at Secs. 627.601(a) and 627.605. It would be premature and improper to interject the Department into a State or local grievance process before it is completed. It would also create problems in the event that the Department was subsequently requested to review a complaint in which it had participated. The Department believes that the regulations set forth in the interim final rule are appropriate and consistent with the legislative provisions. Therefore, no change is made to the final rule. A commenter recommended that the time period for requesting a State-level review of a local complaint, provided under Sec. 627.503(c) of the interim final rule, be increased from 10 and 15 days to 30 days. Under the statutory provisions at section 144, and the regulatory provisions at part 627, subparts E, F, G and H, the grievance procedures established at the various levels are intended to provide the speedy processing of filed complaints. The Department believes that the timeframes established in the regulations are consistent with the statutory scheme. No change is made to the final rule. A commenter recommended including examples of independent reviewers at Sec. 627.503(b) pertaining to State level review of complaints. The Department does not believe that it is appropriate to include a laundry list of examples of possible independent reviewers in the regulations, but agrees that some clarification in this area is warranted. Section 627.503(b) is amended in the final rule to indicate that independent review should be conducted by a reviewer who is not connected with the JTPA program. A commenter recommended amending the employer-level grievance provisions at Sec. 627.504 to indicate that if an employer is required to use grievance procedures under a covered collective bargaining agreement, then those should be the operative procedures for the handling of JTPA complaints at that level. In addition, it was recommended that if no collective bargaining agreement exists, participants should be made fully aware of their rights to file a grievance either by using the employer's grievance procedures or the SDA's JTPA grievance procedures. The Department agrees that where the employer is required to follow a certain grievance procedure under the provisions of a collective bargaining agreement, those procedures should be followed for complaints pertaining to the terms and conditions of employment of JTPA participants, therefore, Sec. 627.504(b) is revised accordingly. The regulations provide that recipients, SDA's and SSG's shall ensure that employers have grievance procedures available to their JTPA participants. Some commenters suggested that participants be permitted to choose a grievance procedure under which to process a complaint. The regulations indicate that employers of JTPA participants may elect to operate their own grievance procedures or use the recipient's, SDA's or SSG's grievance procedures established pursuant to section 144 of the Act. The employer must inform participants of the procedures they are to follow when they begin employment. The choice of which grievance procedure to follow does not extend to the individual participants. Since the relationship exists between the employer and the JTPA entity in the first instance, it is important that all of the procedures and provisions applicable to a given employer, including grievance procedures, are clearly established in the agreement. The Department believes that the existing regulatory provision is consistent with the provisions of the Act, avoids potential confusion that could result from the recommended change, and provides for the consistent treatment and processing of JTPA complaints at the employer level. No change is made to the final rule. Subpart F--Federal Handling of Non-criminal Complaints and Other Allegations A commenter recommended that the reference to the handling of discrimination complaints at 20 CFR 627.600 be made a separate paragraph. The Department agrees with this recommendation and is amending the final regulations to redesignate the first two sentences of Sec. 627.600 as paragraph (a), and the last sentence, pertaining to discrimination complaints, as paragraph (b). A commenter recommended revising Sec. 627.601, noting that section authorizes the receipt of complaints at the Federal level without mention of the statutory preconditions for such acceptance that are partially explained in paragraphs (a)(2), (a)(3) and (a)(5) of that section. Further, the commenter argued that although some of the preconditions for acceptance of a complaint at the Federal level appear in later sections of the regulations, Sec. 627.601, as written, is unauthorized by the Act and is misleading. The provisions at Sec. 627.601 are not intended, by themselves, to spell out all of the preconditions that apply to the various complaints and allegations that may be filed at the Federal level, but rather are intended to indicate the types of such complaints that may be received and the options available to the Secretary for the handling of such complaints. The provisions that apply to the Federal handling of non- criminal complaints and other allegations are set out in all of subpart F and must be viewed in their entirety to determine how they apply. The various sections in subpart F either include the preconditions for filing a complaint or cite other provisions of the Act and/or JTPA regulations which spell out such preconditions. The Department believes that the regulatory provisions are consistent with, and accurately reflect, the provisions of the Act. No change is made to the final rule. A commenter suggested that, under the provision at Sec. 627.601, the Governor does not have final determination authority in any complaint because the regulations specify that Federal level reviews may include all of paragraph (a), which includes any violation of the Act, and recommended that the final rule provide clarification in this area. The regulations, at Sec. 627.503(d), provide that, with the exception of complaints alleging violations of the labor standards at section 143 of the Act, the Governor's decision is final unless the Secretary exercises the authority for Federal-level review set forth at Sec. 627.601 of the interim final regulations. The provisions at Sec. 627.601(a) reserve the Secretary's authority to receive and review complaints alleging a specific violation of the Act and/or JTPA regulations, notwithstanding resolution of a complaint under procedures at a lower level. Upon receipt, the Secretary may handle such complaints, as set forth at paragraph (b) of that section. The Department believes that the regulations accurately reflect the Secretary's and Governor's authority in this area and that further clarification in the regulations is not needed. No change is made to the final rule. A commenter noted that, in the remedies available for labor standards violations, Sec. 627.603(c)(3) refers to ``back pay,'' and paragraph (d)(2) of that section refers to ``lost wages'' and asked for a definition of these terms. The interim final regulations incorporated the statutory language pertaining to remedies for labor standards violations at section 143(f) of the Act, which includes these two terms. The Department believes that, from a practical standpoint, there is no difference in these two terms. Both terms refer generically to ``compensation'' in the context of appropriate remedies; under paragraph (c)(3), wages are not an available remedy, while they are an available remedy under paragraph (d)(2). In applying a remedy, these terms would refer to the amount of compensation (excluding benefits which are separately provided for) that a person would have received had the violation not occurred. The Department believes that the regulations are sufficiently clear and that further clarification is not needed. No change is made to the final regulations. A commenter disagreed with the provision at Sec. 627.603(b)(4) which provides that there is no ALJ review of the Secretary's decision upholding the Governor's decision in complaints alleging section 143 labor standard violations. The Act, at section 144(d)(2), specifically provides that the Secretary may modify or reverse the Governor's decision on a complaint alleging a labor standards violation, or issue a decision if no decision has been issued, only after an opportunity for a hearing before an administrative law judge of the Department of Labor. The opportunity for an ALJ hearing is limited to actions by the Secretary to change a Governor's decision or to issue a decision as provided for at section 144(d)(2) of the Act. The provisions at section 144(d)(3), pertaining to the Secretary upholding the Governor's decision, specifically state that the Secretary's decision ``shall become the final decision of the Secretary.'' The Department believes that the regulations accurately reflect, and implement, the provisions at section 144(d) of the Act. No change is made to the final regulations. No comments were received on Sec. 627.604 and no change is made to the final rule. A commenter recommended that under the provisions at Sec. 627.605, Special Federal review of SDA and SSG-level complaints without decision, where there has been no action on a complaint at the local level the Department should not only act on the individual complaint, but also conduct a thorough review of the administrative capabilities of the SDA/SSG. In addition, the Secretary should be prepared to impose more than just a sanction for failing to issue a complaint decision, but also impose corrective actions up to and including reorganization of the SDA/SSG. The provision at Sec. 627.605 pertains to actions that may be taken against the Governor for failing to provide a decision as required at Sec. 627.503(a) of the regulations. These actions may include imposing a sanction for failing to issue a decision pursuant to the provisions at Sec. 627.605(b). The right of the Secretary to review SDA/SSG operations for compliance with the Act and applicable JTPA regulations is reserved at Sec. 627.601(b) of the regulations. The Department believes that the regulations provide adequate and appropriate procedures for the handling of complaints alleging violations of the Act and JTPA regulations at the Federal, State, and SDA/SSG levels, consistent with implementing the provisions of the Act. No change is made to the final rule. A commenter indicated that there were two paragraphs (d) in Sec. 627.606. The second is now redesignated as paragraph (e). Another commented that the correct reference in Sec. 627.606(d)(2)(vii) should be subpart H. The final rule is corrected. Also, the heading of Sec. 627.606(c) is changed to read, ``Informal resolution''. Subpart G--Sanctions for Violations of the Act Liability of Units of Local Government A few commenters objected to the Department's singling out units of local government for bearing liability for funds misexpended by their SDA/SSG. It is not the Department's intent to single out units of local government to bear liability, but it is the Department's intent to make clear that neither a separately incorporated administrative entity (e.g., a PIC) nor a local unit of government can insulate (liability- proof) itself from responsibility for misexpended funds. This is a more clearly expressed statement of the Department's position, and does not constitute a change in policy or position. One commenter expressed full support for the provision while another thought it should be made even stronger by requiring local government units to be held liable. The provision is not changed. The Department encourages incorporated PIC's to be active participants in the delivery of JTPA services. To this end, the provisions of Sec. 628.415(b) indicate that the Governor's requirements on responsibility for JTPA funds may not, on their face, preclude the selection of an incorporated PIC as the grant recipient. Waiver of State Liability As a result of a comment concerning Sec. 627.480(f), discussed above, the second sentence of Sec. 627.704(a) is removed. It is replaced with two new paragraphs, (b)(1) and (b)(2), which address the timing of requests for waiver of State liability. The remaining two paragraphs are redesignated as paragraphs (c) and (d), respectively. A few commenters suggested that SDA's should be allowed to request waivers. Some indicated that such requests should be made in conjunction with States, while others seemed to imply that such requests could be made directly, bypassing the State. However, as indicated at Sec. 627.702(e), it is the recipient that is held liable by ETA. Therefore, the only liability that ETA can waive is the recipient's liability for the sanction imposed on it. Several commenters suggested that the provision should be revised to permit a waiver in those instances where the fraud was perpetrated against the recipient/subrecipient so as to avoid penalizing entities which discover, report, investigate and prosecute the perpetrator of such fraud. Both this provision at Sec. 627.704 and the provision at Sec. 627.706 Process for advance approval of a recipient's contemplated corrective actions are revised for such situations. Offset Process A few commenters expressed the belief that States would not request ``offset'' if it were limited to State-level administrative funding. A commenter also indicated that most misexpenditures occur at the subrecipient level and that, if it is not a section 164(e)(1) violation, offset should be allowed at the level where the misexpenditure occurred. Another suggested the need to be flexible after considering all of the circumstances in the individual case. Section 164(d) of the Act indicates that offset may be ``against any other amounts to which the recipient is or may be entitled * * *.'' (Emphasis added) Under title II, the recipient must allocate 77 percent of the funds to SDA's and is entitled to retain 23 percent of the funds allotted for specifically identified activities. It is the Department's position that a reduction in the funds available through the ``offset'' process should not adversely impact the delivery of training and services to participants, nor the incentive grant and capacity building activities. Therefore, the Department believes that only the title II five percent (5 percent) administrative funds to which the recipient is entitled should be available for offset. Similar reasoning applies to the Department's restriction for title III funds. The Department fully expects that recipients will seriously consider their options, and the consequences thereof, and will not make frivolous use of this provision. A commenter indicated that use of the phrase, ``amounts chargeable'', in Sec. 627.708(b), conveys the implication that the administrative costs must be incurred before they can be ``offset''. This was not the Department's intent. The provision is rewritten to indicate that ``offset'' may be against amounts allotted that are expected to be used for recipient-level administrative costs. Subpart H--Hearings by the Office of Administrative Law Judges A commenter recommended amending the regulations at Sec. 627.800(a) to include Grant Officer Final Determinations made pursuant to Sec. 627.606 under the ALJ hearing process in addition to those specified at section 166(a) arising in connection with alleged violations of sections 141(c), 144 (d) and (e), 164(f) and 167 of the Act. Section 166(a) of the Act provides that an ALJ hearing may be requested by any recipient upon whom a corrective action or sanction has been imposed by the Secretary. By definition this would include final determinations made by the Grant Officer. The Department believes that the general provision included in section 166(a) of the Act is sufficiently clear in establishing the jurisdiction of the ALJ and that further clarification is not needed. No change is made to the final regulations. A commenter objected to the restrictions placed on the jurisdiction of the OALJ regarding specific sections of the law which the commenter believes will reduce the opportunity for complainants to have full redress of their grievances at the highest levels. The OALJ coverage is as provided for at section 166 of the Act, and set forth at Sec. 627.800 of the interim final regulations. As noted in the response to the preceding comment, the OALJ's jurisdiction includes more than just the specific sections cited at section 166(a) of the Act. No change is made to the final rule. A commenter raised some concerns regarding the entities specified at Sec. 627.801(a) that may request an ALJ hearing based on a Grant Officer's final determination which imposes a sanction, a corrective action, or denies financial assistance. It was correctly suggested that the Grant Officer might issue a sanction upon a ``vendor'' and paragraph (a) is amended to cover such situations. A commenter recommended that the provisions at Sec. 627.801(a) pertaining to procedures for filing a request for an ALJ hearing could be made clear that a request for a hearing must be submitted by certified mail, by changing the words ``may transmit by certified mail'' to ``must transmit by certified mail.'' The Department agrees that the provision at Sec. 627.801(a) of the interim final regulations seems to indicate that the use of certified mail to transmit a request for a ALJ hearing is discretionary, which was not intended. The provision at Sec. 627.801(a) is amended to indicate that the Grant Officer's final determination to impose a sanction or corrective action, or to deny financial assistance may be appealed to the OALJ within 21 days of receipt of the final determination, and that a request for a hearing shall be transmitted by certified mail, return receipt requested to the Chief Administrative Law Judge. The Department has reviewed Sec. 627.802(e) in light of the recent Supreme Court decision in Director, Office of Workers' Compensation Programs v. Greenwich Collieries, 114 S.Ct. 2251, 62 U.S.L.W. 4543 (June 20, 1994) which addresses the allocation of burden of proof in cases governed by Sec. 7(c) of the Administrative Procedure Act and has concluded that no change in this section is required. In Greenwich Collieries, the Supreme Court concluded that a claimant for benefits under the Black Lung Benefits Act was the ``proponent of a rule or order'' under section 7(c) of the APA and, as such, carried the burden of persuasion. Section 627.802(e) of these regulations is predicated on the fact that in appeals from Grant Officer Final Determinations the grantee is the proponent of the rule since, in the absence of an appeal, the Final Determination would represent a final debt due and owing the United States. The grantee seeking to avoid this outcome is clearly the ``proponent of the rule or order.'' This construction is also consistent with section 165 of the Act which places on grantees the affirmative obligation to maintain adequate documentation to prove the allowability of costs incurred. While the grantee has the burden of persuasion, in our desire to ensure orderly presentation of evidence, the Grant Officer retains the obligation to prepare and present the administrative file. In addition, a few of the commenters noted typographical errors or incorrect statutory and/or regulatory citations in part 627, subparts E, F, G, and H which are corrected in the final rule. Subpart I--Transition and Implementation On June 3, 1993, the interim final rule was amended to revise the transition provisions at part 627, subpart I (58 FR 31471). Those requirements are restated in the final rule, along with the addition of a definition of ``initiation of procurement'' (Sec. 627.904(e)) and a provision for the transfer of summer program funds (Sec. 627.904(k)(2)). A number of general comments were received on the difficulties and uncertainties of the transition to the new program to be implemented on July 1, 1993 and whether the contents of the interim final rule adequately addressed a range of questions on the transition. Subsequent to the publication of the interim final rule on December 29, 1992, the Department conducted implementation training for the States in February and March of 1992, provided transition guidance in Training and Employment Guidance Letter 7-92 on March 8, 1993, and issued two sets of questions and answers on the transition and interim final rule to the Department of Labor regional offices by Field Memorandum that were widely circulated throughout the JTPA system. The Department believes that these mechanisms with the additional guidance reflected in the June 3, 1993 Federal Register document, referenced above, substantially answered the various transition questions and issues that were raised and that a further discussion here is not required. Part 628--Programs under Title II of the Job Training Partnership Act Nontraditional Employment for Women (NEW) Act (Pub. L. 102-235) The Nontraditional Employment for Women (NEW) Act includes a series of amendments to the JTPA. NEW's purposes are to provide a wider range of training opportunities for women under existing JTPA programs; to provide incentives for the establishment of programs that train, place, and retain women in nontraditional fields; and to facilitate coordination of JTPA and vocational education resources available for training and placing women in nontraditional employment. Further, the NEW Act is consistent with the overall goal of JTPA programs to increase participants' employment, earnings, educational and occupational skills. This separate discussion of the NEW Act is provided as a reminder to States and SDAs of the importance of efforts to train and place women in nontraditional employment and the emphasis the Department places on such efforts. There are contained in the final rule various references to the requirements pertaining to nontraditional employment for women, especially as they pertain to planning and setting goals, the assessment process and development of the individual service strategy, and to the various reports required by the Act. ``Nontraditional employment'' is defined in the NEW Act as occupations or fields of work where women comprise less than 25 percent of the individuals employed in such occupation or field of work. Although nontraditional occupations are usually thought of only as construction or skilled trades, these occupations encompass a much broader spectrum of jobs, including those in technical and other fields. Nontraditional occupations have the potential for greatly improving the economic status of women, particularly when they are growth occupations with increased wage potential. Nontraditional training for women also provides benefits for the States and the SDA's. The Department believes that this kind of training expands the occupational mix available to all customers, and can enhance coordination with other education and training programs, as well as with labor and apprenticeship programs. It helps advance efforts by the States and/or SDA's to be a valuable source of trained individuals for employers and unions. Through the implementation of NEW, it is the Department's intent that changes will occur throughout the job training system so that training in nontraditional occupations becomes institutionalized in each State. The GCSSP and the job training plan prepared by each SDA were required to include goals, actions, and accomplishments for the training and placement of women in nontraditional employment for the 2- year period beginning July 1, 1992 and beyond. NEW does not establish specific numerical goals by SDA or State. However, using General Accounting Office data (GAS/HRD-89-152FS, September 1989), the Department estimates that the proportion of women currently trained by JTPA in nontraditional occupations nationwide is about 9 percent. Therefore, at their option, States and SDA's may use this figure as a substitute for a particular State's baseline until they can collect data specific to that State. States should strive for a goal for training and placing more than 9 percent of women participants in nontraditional occupations. The Department expects that the GCSSP and the SDA's job training plan will reflect specific measurable activities to train and to place women in nontraditional employment and apprenticeships, as required by the statute. As mentioned earlier, SDA's may wish to consider using the national figure of 9 percent as an indication of the pre-NEW level of nontraditional training until geographic-specific data becomes available. Sections 104(b)(6) and (13), 121(b)(3) and 122(b)(5)-(7) of the Act require the States and SDA's to set goals and report on program accomplishments. The Department intends to look closely at these activities to ensure compliance with requirements of NEW. Further, the Department expects that each State's and SDA's plans and activities will reflect the development of outreach and promotional materials and/or activities aimed at making women aware of the programs and the services available through JTPA, particularly of nontraditional training and placement opportunities. Examples of outreach materials include, but are not limited to, nontraditional career information modules, video and print materials on nontraditional career options (for counselors), recruitment brochures targeted at both the customer and the employer, and dissemination of preexisting resource materials and/or model curricula. States may also wish to undertake statewide public education campaigns, similar to those conducted for literacy programs, on nontraditional training and employment opportunities. The Department expects statewide dissemination of model programs/approaches to serve as a method of encouraging the replication and institutionalization of nontraditional training in the State. The Department encourages the States to disseminate to SDA's and service providers the SJTCC's summary report on promising programs funded by JTPA or the Carl Perkins Vocational Education and Applied Technology Act. Most of the comments that pertained to NEW sought to add to the regulations a number of specific requirements regarding services to women and focussed on nontraditional employment. These suggested requirements ranged from language to requiring OJT goals for women in nontraditional employment, as well as standards for OJT contracts, to specific procurement requirements as they pertain to women-owned businesses, and specific monitoring requirements. The Department believes that many of these ideas have merit but does not believe that it is appropriate to establish them as Federal regulatory requirements beyond that which would otherwise be required by the provisions of the Act--particularly as the Federal Government looks to reduce administrative requirements. On the other hand, a commenter suggested that the regulations ought to reflect the statutory requirements. The Department is persuaded that the NEW's requirements should be emphasized by referencing them, as appropriate, in the regulations and has done so in appropriate sections, including: Sec. 627.455, for the annual report to the Governor that is to be described in the job training plan; Sec. 628.205, pertaining to the State goals for the training and training-related placement of women in nontraditional employment and apprenticeships; Sec. 628.210, for the responsibility of the SJTCC to review and analyze the annual reports of SDA's and to distribute them in the State and to the Secretary; and Sec. 628.420, for the SDA's local goals for the training and training-related placement of women in nontraditional employment. These are not new regulatory requirements; rather they are reflections of statutory requirements. Specific changes in PART 628--Programs under Title II of the Job Training Partnership Act are as follows: Governor's Coordination and Special Services Plans Several comments were received on the Governor's coordination and special services plans. Section 628.205(c) of the interim final regulations required the States to provide their respective SDA's prior to December 31 of the year preceding the program years for which the plan is developed, information on its plans to undertake State activities in program areas, including education coordination and services to older workers, and capacity building. Several commenters requested removal of the December 31 date. The commenters suggested the language be revised to say that the State should issue this information to SDA's in sufficient time for them to be able to take it into consideration in developing plans. The Department agrees with the commenters and this change is made to the final regulations in a new paragraph (c)(2). State Job Training Coordinating Council One commenter suggested that there should be a representative of the JOBS program on the Council. The Department agrees that this would be a good step. However, since JOBS representatives can be included within the meaning of ``representatives of state public assistance agencies'', as set forth at section 122(a)(3)(b)(i) of the Act, no change is made in the final regulations. State Human Resource Investment Council Several commenters were concerned that the regulations did not require, or at least encourage, that membership on the SJTCC or the HRIC include the State Agency on Aging or a designee to ensure that the needs of older workers are addressed. It was stressed that such representation on these councils would improve the commitment to older workers and promote the development of integrated service systems for older workers. The Department agrees that the needs of older individuals should be addressed in the provision of JTPA services; however, in interpreting requirements of the Act at sections 122(a)(3)(B)(i)(SJTCC) and 702(b)(5)(HRIC), the Department believes there is already sufficient latitude and flexibility for the Governor to appoint a representative from the State Agency on Aging and further regulation is not necessary. A commenter noted that it would be helpful to clarify in paragraph (a) of the regulation that, when the State Council on Vocational Education (SCOVE) is incorporated in the HRIC, the HRIC is responsible for carrying out the functions of the SCOVE. The Department believes that this is clear in the provisions of the Act and in Sec. 628.215(e) of the regulations. No change is made to the final rule. A commenter suggested that, when the SCOVE is included within the HRIC, it would be beneficial to include the State Director of vocational education on the HRIC since the State Director plays an important role in education within each State, especially in coordination and improvement of educational services. The Department agrees and the final rule at Sec. 628.215(c) encourages the Governor to consider appointment of the State Director to the HRIC. A few commenters questioned the accounting basis for funds that are made available to the HRIC. Some wished to ensure that when funds are made available to the council the statutory activities for which they are intended are accomplished. Another commenter pointed out that the requirement to allocate funds on the basis of ``benefits received'' goes beyond the requirements of the Act and the Conference Report, which simply specified that State agencies were encouraged to provide funds in a manner consistent with their representation on the council and that no agency's contribution be disproportionate. The Department has examined this issue and believes that the Act contemplates some flexibility in terms of how the costs of the activities of the Council relate to the various applicable programs. This is particularly true under circumstances in which there is a reasonable contribution on behalf of an applicable program. The Department has determined that, as specified in the Conference Report, the costs of the Council may be allocated upon the basis of the relationship of each funding source to the total funding of all applicable sources or programs that are represented on the Council. Finally, on the condition that there is a reasonable contribution from other involved Federal and State programs, the various activities of the council fall within the overall coordination mandates of the Act and the related costs are allowable JTPA costs to the extent that JTPA funds are available from applicable JTPA sources. The final rule is revised accordingly in paragraph (d). In order to clarify the requirement of paragraph (g) regarding the certification of the HRIC by the Governor, the final rule is changed to indicate that the certification is to be in writing with a copy provided to the Secretary of Education. Education Coordination and Grants A number of comments were received on State education coordination and grants found at Sec. 628.315 of the interim final regulations. In addition to the specific areas discussed below, the comments suggested confusion about the administrative framework for the development of the section 123 program and the need for a general description of the program. The section 123 program is to be a partnership between the JTPA program and the education system in the State. The Act provides a strong role for the State education agency by requiring that funds be allocated to the agency, and that the agency have a central role in planning and in the operation of the program. In order to foster coordination at the State level, the Act requires that the Governor and the State education agency agree on the use of funds as part of the joint development of the education part of the GCSSP. If there is no agreement, the regulations provide that neither party may use the funds. To foster coordination at the local level, the Act requires the State education agency to enter into agreements with the JTPA SDA administrative entities. If there is no agreement with the administrative entity, the Act indicates that the amount of funds specified for the SDA in the State-level agreement may be unilaterally used by the Governor for meeting the goals of section 123(c). Several commenters raised concerns regarding the definition of State education agency. The commenters requested that the final regulations specify that the Governor may allocate the 8 percent funds only to the State Education Agency, as defined by the Elementary and Secondary Education Act of 1965. The Department believes that clarification is needed. The commenters argued that the definition of ``state educational agency'' in section 4(23) of the Act specifically refers to the agency defined in the Elementary and Secondary Education Act as the state education agency for JTPA purposes. The Department interprets the Act differently. The term ``state educational agency'' is a different term from the term ``state education agency,'' which is used in section 123(a) of the Act. The term defined in section 4 of the Act is used in section 122(a)(3)(B)(1) of the Act to describe membership on the SJTCC. Support for the view that the terms used in sections 4 and 123 of the Act are intended to be different is found in the use of the phrase ``any State education agency'' in section 123(a). If the Department were to read this phrase to mean a single agency, the reading would render the word ``any'' redundant. The Department reads section 123(a) to mean that, at a minimum, the Governor may consider as the State education agency that agency responsible for primary and secondary education, or responsible for vocational education programs under the Carl Perkins Vocational and Applied Technology Education Act and the Adult Education Act. In addition, the Department finds that a number of States have consolidated a number of education functions and agencies into various cabinet arrangements. For this reason, the Department has determined that the regulations should retain the statutory language ``any education agency,'' but some changes are made in Sec. 628.315(a) of the final rule. The phrase ``or agencies'' is removed from the final rule because the Department does not intend to cause confusion or appear to encourage the designation of multiple agencies; however, the rule should not be read to absolutely prohibit this practice under justifiable circumstances when significant parts of the education function are not within one agency. As previously reflected in the interim final rule, the Governor is not permitted to designate any agency for which ``education'' is not the primary and operational function, which means that the entity must actually be responsible for the operation of educational programs. A commenter questioned the conditions under which the State JTPA entity can be found eligible to be a subrecipient of the 8-percent monies. The Act envisions the state education agency as receiving and using the section 123 funds. The State JTPA entity is only eligible to be a subrecipient if the agreement with the Governor and State education agency stipulates this as a part of the agreement. In response to the question of whether a portion of the funds may be used for certain administrative functions (i.e., audit, oversight) the Department has stated in previous guidance that limited funds may be set aside for this purpose. This would be described in the joint agreement. A commenter raised a concern regarding the time limit for negotiation between the Governor and the State education agency when negotiating the joint agreement in accordance with the provisions found at Sec. 628.315(b) of the interim final regulations. While there is no specific time limit, the Department expects that the agreement would be in place in time to allow for the expenditure of funds allotted for the designated program period. No change is made to the final rule. A few commenters questioned whether the State JTPA entity or the State education agency was responsible for the development of the plan for the use of funds. The Department believes that the State education agency has the primary role in development of the plan, but that the plan is to be developed jointly or in consultation. In practice, most arrangements for development of the plan which are satisfactory to the parties will be accepted by the Department, so long as there is joint agreement. Several commenters raised concerns about the provision of the interim final rule that stipulates that when the Governor and the State education agency fail to agree to develop a joint plan for use of the Education Coordination and Grants funds ``the Governor shall not allocate funds under section 123(a)(1) to such education agency, nor shall such funds be available for expenditure by the Governor''. The purpose of the rule is to indicate that neither party should benefit from a failure to agree on the use of education coordination funds. The Department believes that this position is consistent with the provisions of the Act that call for joint agreement between the Governor and the State education agency and, therefore, no change is made to this section of the regulations. The Department wishes to clarify that this agreement between the Governor and the State education agency is not the same as specified in section 123(e) between the State education agency and the SDA. A commenter requested that the barriers discussed in Sec. 628.315(d) be defined. The barriers discussed in this section are the same barriers that are specified under title II-A and II-C of the Act or any additional barriers the Governor may specify. No changes are made to this section. A commenter pointed out that Sec. 628.315(d)(1)(i) of the interim final rule did not contain a citation to the provision of title II-C authorizing funds for section 123 programs. The Department agrees and the final rule contains that citation. Some commenters inquired whether youth who are in compensatory education programs under chapter I of title I of the Elementary and Secondary Education Act of 1965, who are found to meet the eligibility requirements for free lunch under the National School Lunch Act, or who are in school-wide projects would fall within the meaning of economically disadvantaged to satisfy the requirement to serve the disadvantaged. The Department believes that they do, and has drafted the regulations to reflect the applicability of the eligibility criteria from one section or part of the Act to other parts wherever practicable. So, for example, the final rule is revised, in Sec. 628.315(d)(1)(ii), to indicate that the criteria discussed above apply to the education coordination grant program. A few commenters questioned whether Sec. 628.315(d)(1)(iii) should refer directly to the non-economically disadvantaged. Additionally, the commenters expressed concern that priority for these funds should be given to in-school projects as opposed to Title III eligible participants. The interim final rule referenced non-economically disadvantaged. The final rule is revised to reflect the statutory language, although the meaning is not changed. No change is made to the regulations regarding the priority for Title III eligible participants since that priority is statutory. Several commenters thought that the regulations should allow for direct allocation of State education coordination and grants funds to the SDA. No change is made in the regulations since the Act is specific as it relates to the Governor allocating funds to the State education agency and the State education agency being the entity that determines how and where the funds will be distributed. Several commenters were concerned with the State matching requirements which changed the requirement from an 80 percent to a 100 percent match for Federal funds received for the State education coordination grants. These comments do not appear to have recognized the change in statutory language wrought by the amendments. Prior to the amendments, section 123(c) of the Act required only that matching funds be provided for three of the four kinds of projects specified in section 123(a). The amended law, in section 123(a)(3), requires matching funds for all the kinds of projects specified. Thus, while the matching requirement originally applied only to the kinds of projects to which 80 percent of the funds available under section 123 were allotted, the law has been changed so that all funds are required to be matched. Similarly, the language in section 123 describing the ``20%'' projects has been changed. The original language was that Federal funds could be used to pay the cost of ``20%'' projects based on JTPA section 123(c)(2)(A). The new language is that Federal funds may be used to pay the Federal share of ``20%'' projects based on JTPA section 123(d)(2)(A). The final rule is revised to clarify that the matching requirement for the State is for an amount equal to the total of section 123 funds. Further, the rule clarifies that if there is no agreement between the State education agency and the administrative entity in the SDA, the matching requirement does not apply. Services to Older Individuals The State set-aside program for older workers was incorporated into section 204(d) of the Act. Requirements for the older workers program are set forth in Sec. 628.320 of the interim final rule. The Governor continues to be responsible for carrying out these programs pursuant to agreements with public agencies, PIC's, SDA's, non-profits or private businesses. The Amendments require that, in entering into these agreements, the Governor is to give priority to organizations which have a record of demonstrated effectiveness in serving older individuals. During the development of the final rule, the Older Americans Act was amended by Public Law 103-171 to revise the eligibility criteria as they pertain to older workers served in JTPA programs. It provides, as had been the case for the regular title II program (and as is reflected at Sec. 628.605(e) of this rule), that older individuals participating in joint programs with sponsors under title V of the Older Americans Act who are eligible under title V are deemed to satisfy the requirements of section 203(a) of the Act. A new paragraph (d)(2) is added to Sec. 628.320 to reflect this amendment. It is important to recognize that a purpose of the Older Americans Act Amendments is to enable Senior Community Service Employment Program participants who are in joint programs to participate in JTPA activities. In response to questions concerning the nature of an agreement for a joint program between JTPA and the title V program sponsor, the Department notes that, for purposes of both Secs. 628.320(d)(2) and 628.605(e), the written agreement that sets forth the joint program should be structured so that both the JTPA and the title V program provide services to participants consistent with the objective of the participant and the resources of the participating program. For JTPA participants, services will be provided under the ISS. Several commenters were concerned that the inclusion of Social Security and Supplemental Security Income in the definition of ``family income'' severely limits the number of older individuals who are eligible for the program. This issue is addressed under the definition of ``family income'' in Sec. 626.5 of the final rule. The revised definition clarifies the treatment of Social Security income and that Supplemental Security Income is not considered in the calculation of family income. No change is made in this section of the final rule. A few commenters recommended the removal of limitations on job search assistance in Sec. 628.535 as they might apply to older workers. Job search assistance, including the application of the job search limitation restrictions as they apply to older workers, is covered in the discussion of the job search limitations under Sec. 628.535 elsewhere in this preamble. A few commenters recommended that the Department define ``equitable basis'' as it relates to fund availability for older worker services. The Department's view is that the definition of ``equitable basis'' will vary from State to State based upon local circumstances and, therefore, the Governor should determine the basis upon which funds will be distributed, taking into account the population of eligible older workers, their distribution throughout the State, and the availability of resources for this population. However, in considering the question of whether funds are distributed on an ``equitable basis'', the Department does not believe that all circumstances require that each SDA or area within the State receive funds under this set- aside. Each State is to develop some reasonable measure, including older individuals' share of the population or share of the labor force, in determining how these funds and services will be provided throughout the State. No change is made to the final rule. Several commenters expressed concern that the performance standards for the older worker set-aside should be specifically tailored to the unique needs of this population. As noted earlier in the discussion of the performance standards section, the Department has convened a technical work group on the development of the new performance standards which includes representatives of older workers, and will take these and other comments under consideration in developing performance standards. Capacity Building and Technical Assistance The JTPA has been amended to include capacity building and technical assistance as priorities at the national, State and local levels for JTPA and other related human service programs. Section 453 of the Act calls for the creation of a national Capacity Building and Information and Dissemination Network and a Replication Grant Program. State and local priorities are established through sections 202(c)(2)(A) and 262(c)(2)(A) of the Act, which make available up to 33 percent of the 5 percent incentive funds for capacity building and technical assistance activities. Section 121(a)(3) of the Act, requires that capacity building and technical assistance plans be included in the GCSSP. Greater emphasis is placed on general technical assistance activities for the development and training of State, SDA, and service provider staff. The majority of comments received on the interim final regulations supported the use of incentive funds for capacity building and technical assistance activities and supported the need to develop the capacity of JTPA personnel at all levels. Commenters requested that Private Industry Councils and other job training councils, as well as those who administer JTPA, be included in capacity building activities. It was also requested that the inclusion of front-line staff be made more evident. It is the Department's intent that capacity building and technical assistance activities be targeted to all personnel who staff and administer JTPA at all level of the system. Section 628.325(c)(1) is revised to include PIC's and other councils, as well as other related human service systems provided for in section 205(a) of the Act. The word ``administer'' is added to the definition of capacity building at Sec. 626.5, and ``front-line'' staff are included in Sec. 628.325(c)(2)(ii). Comments were received requesting further clarification on the use of funds for the upgrade of Management Information Systems (MIS). Section 628.325(c)(2)(iii) provides for the use of the 33 percent of the 5-percent incentive funds authorized under the JTPA amendments for the purchase of hardware and/or software only if directly related to capacity building and technical assistance activities of the National Capacity Building and Information Dissemination Network (Network). These 5-percent funds may not be used exclusively for MIS; Sec. 628.325(c)(2)(iii) sets forth specific guidance on the purchase of hardware/ software. Funding for MIS redesign is addressed in Training and Employment Information Notice 2-92, which provides for the use of PY 1992 6-percent incentive funds for MIS upgrading and re-design. Some commenters continued to express concern that the non- duplication provision in section 202(c)(3)(B) of the Act could seriously hamper State and local flexibility in developing products and delivering training. Section 628.325(c)(2)(iv) of the final regulations specifies that State and local capacity building efforts are to be coordinated and integrated with the National Capacity Building Information Dissemination Network (Network), pursuant to sections 202(c)(3)(B) and 262(c)(3)(B) of the Act. In order to maximize funds available, the Network will build, to the extent possible, on what already exists in the system. Through its clearinghouse, it will make information accessible to the JTPA system on current and planned Network products so that duplication of effort may be avoided as States and SDA's plan their capacity building agendas. Non-duplication should be viewed by the system as a means for maximizing scarce resources and not as limiting the flexibility of States and SDA's to tailor Network products to their own needs and/or to produce and train on similar or related products when local circumstances so dictate. Some commenters requested that the regulations mandate that the 33 percent of 5 percent incentive grant funds available to the States for capacity building be passed to the SDA level for capacity building and technical assistance activities. The final regulations continue to strongly encourage Governors to use these funds for the development of staff capabilities at all levels, and particularly for front-line staff, through a comprehensive capacity building and technical assistance strategy. While neither the Act nor the regulations require that funds be passed directly to the SDA's, the final regulations, at Sec. 628.325(c)(2)(ii), offer a variety of State options for ensuring coverage of SDA and front-line staff. Section 628.205 encourages Governors to share capacity building plans in advance with SDA's and requires that capacity building plans be included in the GCSSP. More specific information was requested as to what related human service programs are covered under section 453 of the Act. Section 628.325 (c)(1) and (d) includes those programs listed in section 205(a) of the Act among those human service programs. Several commenters requested clarification on the allowable uses for incentive funds by SDA's, specifically asking if there is any limit on the amount of incentive funds used for capacity building and if incentive funds can be used solely for administration. One commenter suggested a maximum limit of 30% on the use of incentive funds for administration in order to insure that their primary use focuses on training and capacity building. The Department intends to allow the SDA's flexibility in determining how their incentive funds are best utilized. Section 627.440(c)(2) specifies that incentive funds may be used without regard to cost limitations. However, a new paragraph (5) is added to Sec. 628.325(b) specifying that SDA's should use incentive funds for capacity building, technical assistance and services to eligible participants. The former paragraphs (3) and (6) in Sec. 628.325(b) which dealt with this topic are removed; the remaining paragraphs are redesignated accordingly. Further clarification on SDA capacity building responsibilities is also found in Sec. 628.420, the Job Training Plan. A technical correction is made at Sec. 628.325(c)(1) to include the citation of section 262(c)(1)(B) of the Act. SDA Designation Process The interim final regulations, at Sec. 628.405, clarified the SDA designation process. The language in the supplementary information section indicated that SDA designations are to occur every 2 years, consistent with the preparation of the 2-year GCSSP and the SDA job training plan. This information is incorrect and will be addressed in the context of discussing the comments received in this area. The regulations also: established minimum criteria to be used by the Governor in considering discretionary SDA designation requests under the provisions at section 101(a)(4)(B) of the Act; provided clarification on the handling of competing SDA designation requests under section 101(a)(4)(A) of the Act; and defined the terms ``substantial portion'' and ``substantial part'' of a labor market area for the purposes of SDA designations under section 101(a)(4) (A)(ii) and (B) of the Act. A few commenters noted that there was nothing at section 101 of the Act nor Sec. 628.405(a) that indicates that SDA designations are required to occur every two years, as indicated in the preamble of the interim final rule. The concerns expressed in the comments were that to mandate that SDA's be designated every two years would be disruptive and would serve to increase the number of SDA's rather than decrease them as intended. The commenters are correct that there is nothing in the Act nor the regulations that requires that SDA's be designated by the Governor every two years. The preamble did not clearly convey the intent of the interim final regulations. The intent of the preamble was to indicate that SDA designations, when they occurred, were to coincide with the 2- year cycle for the GCSSP and the local job training plan. This was to clarify that SDA designations could not be made for an off year of a 2- year period covered by the approved GCSSP and local job training plans. Section 628.405 is amended to more clearly convey this requirement. A commenter indicated that SDA designation, under Sec. 628.405(a)(3) of the interim final rule, should not be required for a previously designated SDA which has complied with all of the JTPA mandates and has successfully operated good training programs. There is nothing in the Act or interim final regulations that requires existing SDA's to formally apply for designation or redesignation by the Governor when such designations are to be made within the State. Section 628.405(a)(3) only indicates that the Governor should address the treatment of existing SDA's in the procedures developed to govern the SDA designation process within the State. Thus, the Governor may choose to require reapplication for each designation cycle or to permit existing SDA's to continue without the need for a new application. Section 628.405(a)(2) of the interim final regulations is redesignated, in part, as (a)(3), and is amended to clarify this issue. A few commenters took exception to the requirement that the Governor establish standards by which to evaluate discretionary SDA designation requests under section 101(a)(4)(B) of the Act which, at a minimum, must include the criteria set forth at Sec. 628.405(d). These requirements are viewed as overly prescriptive, limiting the Governor's discretion in making SDA designations and establishing a higher standard than that provided for in the Act. The Department believes that neither the provisions of the Act nor the interim final regulations, at Sec. 628.405(d), inhibit the Governor from making discretionary SDA designations, pursuant to section 101(a)(4)(B) of the Act. The Department does not believe that the regulatory provisions are overly prescriptive in establishing some uniform minimum standards for the Governor to evaluate such designation requests. With approximately one-third of the over 640 current SDA's being discretionary designations, it is necessary to ensure the viability of such SDA's to adequately administer and promote effective delivery of JTPA services to a substantial portion of the eligible population in the area to be served. The regulations simply formalize the minimum standards that Governors would need to consider and, in most instances, probably already have established, in making discretionary SDA designations consistent with the provisions at section 101 of the Act. The Department believes that the regulations in this area are consistent with the provisions at section 101 of the Act and the Secretary's authority to promulgate regulations to implement the provisions of the Act. No change is made to the final regulations. Several commenters took exception to defining ``substantial part'' and ``substantial portion'' of a labor market area (LMA) for the purposes of SDA designations under section 101(a)(4) (A)(ii) and (B) of the Act, respectively. These commenters argue that the requirement that the prospective SDA serve 10 percent of the population of an LMA is arbitrary, artificial and exceeds the language in the Act, unduly limiting the Governor's flexibility to determine SDA's for the State. The commenters recommended that the 10-percent provision be withdrawn from the final rule. A few of the commenters suggested including a ``grandfather'' provision for existing SDA's in the regulations, if the 10-percent provision is not removed in the final rule. The Act provides that prospective entities seeking SDA status under the provisions of section 101(a)(4) (A)(ii) and (B) of the Act serve a substantial portion/part of an LMA as a statutory criteria for designation. In the past, the Department has deferred to the Governor's definition of ``substantial'' for the purposes of such designations, which has resulted in a wide range of thresholds being established, from levels significantly below the 10 percent provided for in the regulations, to a majority of an LMA. The Department reached the 10- percent figure taking into consideration the need for a rational figure which would assist the Governors in the SDA designation process and still ensure the statutory mandate for serving a substantial portion or part of an LMA, as appropriate. The regulations still provide that the Governor defines these terms, with the 10 percent floor as a minimum requirement. The Department believes that the 10-percent figure is reasonable and consistent with the provisions of the Act and the Secretary's authority to promulgate regulations implementing the Act, while still maintaining the Governor's flexibility in designating SDA's. No change is made to the final rule. On the suggestion that existing SDA's be ``grandfathered'' notwithstanding the 10-percent requirement, part 627, Subpart I, Transition Provisions, of the interim final rule addresses this issue. The regulation, at Sec. 627.904(l), indicates that, at the Governor's discretion, SDA's designated prior to July 1, 1992, need not be subject to the provisions at Sec. 628.405. The Department does not believe that further clarification is needed. No change is made to the final rule. Private Industry Council Section 628.410 of the interim final rule set forth requirements relating to the establishment and functioning of the PIC. Comments on the provisions of this section fell mainly into three areas: PIC recertification, joint agreement on the plan for Wagner-Peyser activities of the employment service and PIC representation. A number of commenters questioned the requirement of Sec. 628.410(a)(2) that the Governor recertify the PIC biennially, one year prior to the date of submission of the job training plan. The commenters indicated that this requirement was an undue administrative burden and appeared to go beyond the provisions of section 102(g) of the Act, which states: ``The Governor shall certify a private industry council if the Governor determines that its composition and appointments are consistent with this subsection.'' In response to this concern, Sec. 628.410(a)(2) is amended to require the Governor to review the PIC certification biennially rather than to formally recertify the PIC. The review process is intended to afford the Governor a continuing role in ensuring that the PIC is an effective local policy making body. The requirements specified in Sec. 628.410(a)(3) encompass three areas: the PIC membership and the nomination process, the PIC/chief elected official agreement, and the responsibilities of the PIC to carry out its role. Several commenters indicated that the requirement for a new PIC/CEO agreement was beyond the requirements of the Act and was potentially disruptive of agreements and arrangements that had been carefully and delicately worked out at the inception of JTPA. There is no requirement to negotiate or renegotiate an otherwise satisfactory agreement which is in place. The regulations only require the Governor to review the sufficiency of the PIC/CEO agreement in terms of the requirements of the Act. In response to comments on Sec. 628.410(a)(3) of the interim final rule which requested clarification of the meaning of paragraph (a)(3)(iv), this paragraph is removed in the final rule, since it is largely redundant of the contents of the PIC/CEO agreement and the material that follows in paragraph (b) which the Governor may review in the course of normal oversight. A few commenters asked for clarification on the components of the Wagner-Peyser plan which were applicable to SDA's. The SESA agreement requirements are set forth in the Wagner-Peyser Act, at section 8(b)(1). These requirements generally deal with employment service operational plans for carrying out the provisions of the Wagner-Peyser Act which must be developed jointly with the PIC and local chief elected official. Regarding PIC membership selection, a few comments touched on the selection process for representatives of organized labor. One comment asked that the regulations define ``labor federation'' to mean the AFL- CIO at the State and local levels and that a process be instituted for the Chief Elected Official (CEO) to ensure PIC representation by the local AFL-CIO rather than by individual workers. As provided in section 102(c)(3) of the Act, CEO's are to consult recognized State and local labor federations for recommendations for the labor representatives to the PIC and not an individual labor organization. For this reason, a description of the nomination process is specifically required to be included in the PIC certification to be reviewed by the Governor. The Department agrees, however, that there is a need for clarification as to what constitutes a labor federation and is adding language in the final rule, at Sec. 628.410(a)(3), to indicate that a labor federation is an alliance of two or more labor unions, an example of which is the AFL-CIO. With respect to PIC representation in general, several commenters stressed the importance of ensuring that the nomination process is opened up to balance important interests in the community, including the interests of older individuals and women. The Department recognizes the importance of balanced demographic and community interest representation and sensitivity to the diverse populations being served. This sensitivity is best displayed at the local level where the composition of the community is known. While the Department strongly encourages CEO's and PIC's to make every effort to assure that PIC membership is broadly representative of the community, the Department does not believe it is appropriate to require this result through national rules. Thus, the Department has decided not to impose membership requirements beyond those enumerated in section 102 of the Act. In communities with public housing agencies, given the similarities in target populations, the Department does, however, encourage chief elected officials to include such representation in their PIC membership under the category of ``public assistance agency''. A few commenters were concerned that appointing representatives of certain kinds of organizations to the PIC would represent an inherent conflict of interest. Conflict of interest rules for PIC members are discussed in Procurement (Sec. 627.420(c)(4)). Selection of SDA Grant Recipient and Administrative Entity One commenter indicated that the intent of this section was unclear. The Department believes that the lack of clarity may pertain to the kinds of criteria that the Governor may establish that would affect the PIC's and CEO's selection of a grant recipient and administrative entity. The Act, at section 103(b)(1)(B), specifies entities that may be selected as grant recipient and administrative entity, which may be the PIC, a unit of local government or a non- profit organization. While the Governor may establish criteria for the selection of grant recipients and administrative entities, the criteria may not specifically exclude a type of entity specified in the Act from being selected. Job Training Plan Sections 628.420 through 628.430 deal with the submission, review and approval of the job training plan. There were a few comments regarding the contents of the job training plan which are addressed in Sec. 628.420(b)(1), through a reference to the requirements of section 104(b) of the Act. There were requests for certain specific references in the text of the regulation. One comment requested that the requirements of the NEW Act be specifically referenced. As previously discussed in this supplementary information section, the Department agrees and has added a reference to the requirements of section 104(b)(7) in Sec. 628.420(b)(1). Another commenter requested that a specific reference be made to consultation with public housing agencies. While these agencies are not specifically referenced in section 104 of the Act, they are included among those agencies with which the SDA is to develop the coordination and linkage arrangements that would be described pursuant to section 104(b)(4) of the Act. A few commenters raised concerns about the requirement in paragraph (e) of Sec. 628.420 that modifications are to be submitted jointly by the PIC and chief elected officials (CEO's) to the Governor. These commenters appear to be confusing modifications to the SDA job training plan with contract modifications. The commenters stated that the procurement regulations in Sec. 627.420 require that every contract change order, such as a decrease of one participant, necessitates a contract modification. The procurement process requirements in Sec. 627.420 do not apply to the plan and plan modification process, and Sec. 628.420(e) addresses the requirements for the modification of the job training plan, not contract modifications. Language is added to paragraph (e) to clarify that a ``major'' modification is to be specified by the Governor. In so specifying, the Department suggests that the Governor consider conditions which result in a variance of 20 percent from the approved plan in the budget, level of participant services, number of participants served, participant outcomes, or other core elements. Further, there was an inadvertent oversight in the interim final rule in Sec. 628.420(d) and (e), concerning the submission of local plans or plan modifications to the Governor. The interim final rule indicated that the plan or plan modifications must be jointly submitted but omitted the statutory requirement that such plans or plan modifications also must be jointly approved as a condition for submittal to the Governor. Paragraphs (d) and (e) of Sec. 628.420 are amended to more accurately reflect the statutory provisions of section 103(d) of the Act. One commenter requested that the time limit provided in Sec. 628.426(b) for chief elected officials and the PIC to correct any deficiencies the Governor identifies in disapproving a job training plan be changed from 20 days to 30 days to allow SDA's adequate time. This change is incorporated into the final rule. Finally, a commenter requested that the final rule clarify that the references in the Act and regulations refer to ``working days''. In fact, this is not the case and the references, as is the practice, refer to consecutive calendar days. No change is made in the final rule. Subpart E--Program Design Requirements for Programs Under Title II of the Job Training Partnership Act In response to a few comments, the final rule is revised in a few introductory statements to clarify that references to title I refer to programs undertaken pursuant to sections 121 or 123. General Program Design Requirement The Act contains significant requirements in the front-end operations for most SDA's, which will cause major alterations in the intake structure and will necessitate revisions in the appraisal of each participant's capabilities, needs, and occupational goals. In the final regulations, the Department has provided necessary direction based on the Amendments and has clarified and highlighted significant changes from the ``old'' statute. Eligibility Determination and Intake Two major criteria must be considered in the process of determining which applicants are eligible for title II JTPA program services. As set forth in Sec. 628.505, the first criterion is age. The second is economic disadvantage. The standard for determining economic disadvantage will be income as described in the annual Department of Health and Human Services poverty guidelines. The use of these guidelines provides a standardized income determination across federally funded programs. The Department's approach to the eligibility determination process has been to attempt to minimize the amount of documentation necessary to establish an individual's eligibility for services, while maintaining the necessary safeguards to prevent misuse of program funds. A number of commenters encouraged a streamlining of the eligibility documentation process, including use of self-attestation. Several requested guidance on what documentation would be required for barriers. The Department has issued, in February 1993, and provided training on an eligibility documentation TAG to be used by SDA's in the eligibility determination process. This should provide clarification of these issues. The procedures in this title II, Eligibility Documentation TAG, if followed by the SDA's, will protect them from audit disallowances based on inadequate documentation. In response to several comments that the Department should stick by its guidance, the final rule clarifies the intent of the interim final rule that when it is determined that the State, SDA or service provider followed the Department's written guidance, the Grant Officer will not disallow costs related to required documentation of an individual's eligibility. Section 628.510 describes the requirements for intake, targeting and referral of applicants. During the intake process, personal data on individuals are collected and a preliminary determination regarding suitability for title II services is made. A number of commenters expressed the need for clarification of the suitability issue. Suitability for program participation is a determination, based on preliminary information, of which eligible applicants should be considered for JTPA program services. This determination is made against the backdrop of the limited availability of JTPA resources and services and the practical necessity that the JTPA program must decide which individuals fall within the 5 to 10 percent of the eligible population that can be served. It includes a determination whether an individual falls within a category targeted for service by virtue of having a ``barrier'' to employment and whether there are other programs and services reasonably available to an individual within the community. The JTPA title II program is not intended or structured to remove all barriers to employment that applicants for services may have. Therefore, the suitability determination also should consider which eligible applicants, with the provision of locally available supportive services, can best be served and benefit from JTPA participation by acquisition of educational and occupational skills or competencies and eventual employment. The regulations provide that some limited assessment activities may be undertaken, the results of which may be used in connection with a determination of suitability. A determination that an individual may be eligible but not suitable results in referrals to other sources of assistance, provision of information on other programs, or in the case of a service provider, in referral to the SDA for further consideration. In making suitability determinations, SDA's should keep in mind their obligations under applicable civil rights and equal opportunity laws. SDA's should consider advising applicants of the process and possible results of intake, assessment and suitability determinations and, particularly, that not all eligible applicants can be served. In order to focus program services on harder to serve individuals, not less than 65 percent of participants must have one or more barriers to employment, as specified at section 203(b) of the Act. SDA's may also specify an additional barrier for each of the title II-A and II-C programs. An example of an appropriate ``additional barrier'' under section 203(b)(7) of the Act was requested. In response to this request, the Department is providing several examples, however, SDA's are not limited to these and are encouraged to develop ``additional barrier'' guidelines tailored to local population and labor market needs. For communities with public housing, the Department believes that ``public housing assistance recipients'' who are otherwise income eligible would constitute an appropriate ``additional barrier''. An employment-authorized refugee might be included, as well as a displaced homemaker, or substance abuser. Finally, the Department counsels that a member of a group protected under the civil rights statutes may not be designated as having a barrier to employment solely on the basis of the characteristics that cause them to fall under the civil rights legislation. So, for example, a racial group could not be designated under the additional barrier provisions. Several commenters requested clarification of the documentation requirements for referrals in Sec. 628.510(d). The Department describes the minimum required documentation at Sec. 628.510(d) and at Sec. 628.530(c). The Department expects that SDA's will develop standardized information on programs and services available in the community. This information may be provided in written form to the eligible applicant. A record of the referral will be maintained and may take the form of an incomplete ISS. No further followup is required beyond referral. Section 628.510(d) is revised to incorporate this principle. The idea is that the SDA must assume some limited responsibility to eligible applicants who come for services even though the Act recognizes that not all will be served. The SDA should be in a better position than an individual applicant to be aware of the services available within the community and to make referrals so that the applicant can benefit from these other sources. In part, this is a principle behind recent initiatives by States, SDA's and the Department to facilitate a concept of ``one-stop'' service. In addition, Sec. 628.510(d) is amended to specifically mention referrals to Job Corps to parallel the amendment to Sec. 628.803(d)(2). This change is made to foster JTPA/Job Corps coordination. Section 628.510(e) describes the requirement for service providers to refer eligible applicants or participants who cannot be served by its program back to the SDA for further assessment, if necessary, and suitable referral to other appropriate programs. Several commenters questioned whether there is a requirement for centralized intake. There is no such requirement. The requirement is that the SDA put in place a system that works independently of an individual service provider. This ``system'' would also cover situations described by commenters in which the SDA administrative entity does not perform intake. In other words, an SDA must have some mechanism by which an eligible applicant or participant can be considered for enrollment in all of the services available through the SDA, not just those of a single service provider. The Department believes that this is a program design issue for local discretion and that there will be a number of effective approaches to meet these requirements. The intent of the regulation is simply to assure that participants will be exposed to the full range of available services and that they will have a fair opportunity to receive services appropriate to their individual needs. The States and/or SDA's will establish procedures to ensure compliance with the targeting requirements of sections 203 and 263 of the Act and to determine actions to address noncompliance with the requirements. Many commenters questioned how compliance would be calculated. Some noted that a strict reading of the Act would provide that any ``participant'' (i.e., any individual who has been determined eligible and received a service, including objective assessment) could be included in the calculation to meet the targeting requirement. Others observed that while assessment was an important activity, it did not necessarily constitute a training or employment service that would result in a measurable outcome of the effectiveness of the program. In considering the comments, the Department recognizes that, at the suggestion of individuals identifying implementation issues, it was determined that only individuals enrolled in an activity subsequent to objective assessment would be included in performance standards calculations. The rationale for that decision was that many individuals had not made a final decision to participate in the program and have dropped out before any meaningful intervention. Therefore, for consistency, the Department has determined that the 65-percent requirement also is to be calculated on those participants who receive services or training subsequent to the objective assessment. Section 628.510 is revised to add a new paragraph (f)(2) to this effect. Objective Assessment Objective assessment should be a continuous, customer-centered and flexible process. The objective assessment should not be viewed as a discrete activity that begins and ends early in the stages of program participation, but rather as one that will continue throughout participation in JTPA. Several comments received on the front-end design of the JTPA program discussed the assessment process. All supported the concept and the intent of individualized program services. A few commenters expressed concern over staff development needs for implementing assessment. Many commenters requested guidance in the development of assessment and service strategies. While the Department expects that States and SDA's will retain authority for program design, technical assistance has and will continue to be provided on assessment and development of the ISS. The Department encourages use of funds for the capacity building of staff (see Sec. 628.325), including staff training in objective assessment techniques; however, the Department declines to establish credentialing standards as one commenter suggested. The Department believes that staffing and standards should be a State and local decision. A few commenters addressed confidentiality issues arising in the intake, assessment and referral processes. The same kinds of concerns over disclosure of information were expressed in connection with the discussion of Sec. 627.463. The Department has not addressed confidentiality in Sec. 627.515 because confidentiality issues are not new. The Department thinks that traditional standards of professional conduct on confidentiality issues should be continued. Further, the Department expects that protections against the disclosure of information that would constitute a clearly unwarranted invasion of personal privacy, as permitted by section 165(a)(4)(B)(i) of the Act, will protect the confidentiality of customer information. A number of commenters expressed confusion over the determination of when an applicant becomes a participant, how much assessment could be provided at the intake/ eligibility stage prior to enrollment of an eligible applicant and to which cost category this would be charged. Costs incurred on behalf of an applicant, including intake, eligibility and suitability determination (which may include some limited assessment of an applicant), and any assessment necessary to facilitate the eligibility determination, consistent with the provisions of Sec. 627.440(d)(3)(i) are to be charged to the training-related and supportive services cost category. Once an applicant is determined to be eligible and the decision made to enroll the applicant, a full objective assessment may begin and the applicant may receive other program services. As specified in Sec. 627.440(d)(1)(i), assessment at this stage may be charged to the direct training cost category. Receipt of objective assessment or other services would confer participant status consistent with the definition of participant in section 4(37) of the Act. The Department believes that the preoccupation with participant status may be misplaced because the principal issue of program credit has been addressed in the context of when the performance standards are to be applied. The Department expects assessment of eligible applicants to be used only in those cases when an eligible applicant's suitability for enrollment is unclear. While the regulations afford an opportunity to charge the costs of preliminary assessment functions to the training- related and supportive services cost category to aid in the determination of an applicant's suitability, the Department expects the restriction on the cost categories to act as a natural control on SDA's while still allowing the flexibility for individual decisions. The Department would like to emphasize that the limited availability of funds will restrict over-use of preliminary assessment as part of the decision to enroll. SDA's are expected to finance intensive services expected to enable participants to complete successfully the longer term JTPA service strategies within this cost category. Section 628.515 sets forth the requirements of the objective assessment. The scope of the objective assessment should not be limited to only services or training programs already available in an SDA. A few commenters questioned whether basic skills evaluation was required as part of the objective assessment. The Department intends the evaluation to be of both basic and occupational skills. The definition of ``objective assessment'' in Sec. 628.515(b)(1) is revised, therefore, to include basic as well as occupational skills evaluation. The objective assessment is ongoing and should not be viewed as a one-time event. It should be a multi-faceted process which includes a full array of options including items such as structured interviews, paper and pencil tests, performance tests, behavioral observations, interest inventories, career guidance instruments, aptitude tests, and basic skills tests. From these options, and others, assessment staff may select the most appropriate tools for each participant to measure skills, abilities, aptitudes, interests, supportive service and financial needs, and to counsel participants on how their assessment results relate to local labor market demands. SDA's are strongly encouraged to prudently select appropriate measuring tools that will provide necessary information for the reasonable development of an individual service strategy leading to a realistic employment goal. JTPA resources are limited and JTPA is not an entitlement program. The Department expects SDA's to develop practical applications for career counseling and assessments for basic skills and occupational training. The objective assessment process should be sensitive to the testing and evaluation environment and the comfort and confidence level of the participant. The temptation to over-test or over-evaluate, providing excess information for which there is no immediate application, does not serve the customer's best interest, is detrimental to the customer/ counselor relationship, and is costly to the SDA. The objective assessment is to be revisited regularly and the resulting information used to amend the ISS, as appropriate, when additional needs are identified or goals achieved. Assessments recently conducted by other human service programs or schools are viable options and their use is encouraged, where appropriate, rather than requiring the customer to undergo additional assessments that duplicate information already obtained. Finally, the Department notes that the objective assessment process for title II-B may be different in scope than that for the regular title II-A and II-C program, as indicated in Sec. 628.515(b)(2). This may also be the case for limited function programs (such as literacy programs) mounted under section 123, although this is clearly an exception to the normal expectation in conducting an assessment. Individual Service Strategy Section 628.520 establishes the requirements for the Individual Service Strategy (ISS). The ISS is an individual plan that is developed based on information obtained through the objective assessment. It is the framework within which decisions regarding individual participants are recorded. It should be considered a living document that reflects decisions concerning the appropriate mix and sequence of services to be provided leading to, and including, a realistic employment goal. Several commenters requested clarification of the outcomes to be sought in the development of the ISS for youth. The Department agrees that there is a need to focus on youth returning to or remaining in school and, thus, that the ISS should focus more on education as it relates to a long term career. In title II-B and II-C, the employment goal should be interpreted broadly for those individuals returning to school and may reflect long-term career goals. A few commenters asked for clarification of what had to be listed in the ISS. The ISS should briefly note any need for financial resources or supportive services and record the amount of each. The expected outcome of each activity should be indicated with a notation of the provision and schedule for each. Referral to other programs, and referral out of title II must be noted on the ISS. The rationale or justification for other decisions may be referenced in the ISS, but need not be recorded there. The Department provides further clarification of the use of the ISS for recording referrals out of title II by revising Sec. 628.530(c), as was requested by several commenters. This section now states that further tracking or follow-up is not required for referrals out of title II. This section is also revised to correct language in the interim final regulations that indicated referrals out of title II would not be calculated in performance standards only if an ISS had not been completed. Since, as commenters noted, an ISS is to be developed for each participant, this section now allows recording the referral in a partial ISS without any effect on performance standards. Several commenters indicated confusion over counseling and the development of the job goal in the ISS. The provisions of this section reflect the need for program-related application of career counseling, but the Department cautions program operators to prudently provide career counseling related to the realistic goals of the JTPA program. While the objective assessment/individual service strategy process is customer-centered, JTPA services are expected to guide participants toward realistic employment goals for which training and job demand are available in the community. Pure career counseling for its own sake should be left to other, more appropriate, sources. Development of a final employment goal may be delayed where the objective assessment indicates a need for further career exploration or assessment. In this case, a career cluster should temporarily be indicated in place of the employment goal. The ISS should be revised to reflect the employment goal prior to the start of specific occupational skills training. The employment goal may be revised if the continuing objective assessment indicates a need to do so. A number of comments were received concerning participant signatures on the ISS. This requirement was perceived as an unnecessary administrative burden. Section 628.520(c) is revised to indicate that there is not a requirement for a participant signature. However, the decisions reflected in the service strategy about goals, objectives and services to be provided are to be made in partnership with the participant and are to be determined in conformance with applicable civil rights provisions. Participant signatures on the ISS may be requested, but are not required to indicate the joint development of the document. The Department encourages communication with participants and reminds program operators, especially program monitors and auditors, that the intent of the ISS is to be a program tool and not a compliance document that forms the basis for cost disallowance. The Department does not doubt that participant records, including the ISS, will be reviewed to determine whether SDA's and others have adhered to certain requirements of the Act. This is unavoidable. However, for the ISS to have the anticipated value as a program tool, it must not be developed and used with compliance in mind, but rather with the needs of the customer as its focus. One commenter suggested that if documentation is required, e.g., to document a payment decision, that it be recorded elsewhere in the participant record so that the ISS and compliance documentation can be kept separate. While somewhat artificial, if this concept helps, the Department has no objection to using it. Ultimately, however, the decision on how much detailed information to record on the ISS is one for States and SDA's. The final rule is revised by adding a new paragraph (h) in Sec. 628.520 to emphasize that the ISS is a working record of progress and references to ``documentation'' are revised to read ``record.'' The ISS, to be effective, must be regularly reviewed and adjusted to reflect the progress and to meet the continuing needs of each participant. The ISS will serve as the basis for the entire case management strategy. Case management is an allowable direct training activity and the Department encourages its use as an effective strategy for providing quality services to the participant. A few commenters indicated confusion over the application of case management to the JTPA program. The Department encourages application of case management principles to participant services. In section 4(32) of the Act, the term case management is defined to mean the provision of a customer-centered approach in the delivery of services, designed to prepare and coordinate comprehensive employment plans to ensure access to the necessary training and supportive services, and to provide job and career counseling during program participation and after job placement. The Department expects SDA's to make every reasonable effort to provide the services and training indicated by the assessment and ISS and, where possible, to apply standard case management principles. The Department recognizes, however, that JTPA is not an entitlement program and that not all services and training will be available regardless of the level of coordination in an area. Case management is an administrative management tool, not an individual service to be delivered to participants. There is no change in the final rule. A few commenters expressed concern over the ability to provide all services indicated by the objective assessment and the ISS. Section 628.520(e) recognizes that an SDA may not always be able to provide the full array of services indicated by the objective assessment and recorded in the ISS. In arranging for the mix and sequence of appropriate services, it is fully expected that SDA's will refer participants to other programs for certain specified activities as part of the JTPA service strategy. In those cases, particularly in rural areas, where services required are indicated on the ISS and not available from any source in the SDA, such information is to be recorded in the ISS and an alternate plan developed which may include referral to another program. SDA's are expected to make every reasonable effort to make available the recommended training or services to each participant; however, consistent with Sec. 628.525, it is understood that the objective assessment and ISS do not give legal or entitlement rights to participants for services. JTPA is not an entitlement program and available resources are limited. Some commenters thought that language in the preamble to the interim final regulations authorized States and SDA's not to serve the disabled or other hard-to-serve persons, if they needed substantial supportive services. The Department acknowledges that it may have inadvertently suggested that an individual, with excessive supportive service needs, such as a person with a disability, could automatically be referred out of the program to other sources. This is not the case. Such decisions must be made on the basis of the individual's and the program's circumstances. While JTPA is not required to directly serve every person, including every person with a disability, it is intended to focus more on the hard-to-serve. The fact that an individual may be difficult or costly to serve should not, in itself, preclude serving that person. Consistent with Sec. 628.520(f), service providers and contractors may conduct the objective assessment and develop the ISS. It is the responsibility of the SDA administrative entity to ensure that the objective assessment and the development of the ISS reflect the customer-centered approach required by law are provided to each participant whether they are provided in-house or by service providers. Limitations In response to comments on the provisions of Sec. 628.510 and Sec. 628.530, Sec. 628.525 is also revised for further clarity to indicate that neither eligibility nor participation create a right to JTPA services. Referrals of Eligible Applicants and Participants to Other Programs The final regulations further clarify the subject of referrals of both eligible applicants and participants due to confusion expressed by a number of commenters. The regulations, at Sec. 628.510(d) and at Sec. 628.530(c), specify the requirements for referral of eligible applicants and participants for whom available title II services are not deemed suitable or adequate to appropriate human service programs in the community. Section 628.510(d) deals with the situation in which an eligible applicant is referred to non-title II services during the intake process. Section 628.530 refers to referrals of participants, those individuals who have been determined to be eligible and have begun to receive objective assessment or other services. In the final regulations, both provisions are revised for clarity and to reduce the burden of documenting the referrals. Section 628.510(d) allows the SDA to conduct limited assessment of eligible applicants as a part of a determination of suitability, before they are enrolled as participants. The purpose of this pre-participation assessment is to enable SDA's to make more precise judgments as to the suitability of the applicant for participation in JTPA and/or additional services. The responsibility of the SDA at this point in the intake process is to assure that eligible applicants not suitable for title II participation are ``provided information on the full array of applicable or appropriate services that are available.'' (Section 204(a)(2)(A) of the Act) and that necessary arrangements are made for individuals to make contact with those services. Section 628.530(c) addresses referral of participants out of title II services. A number of commenters indicated concern over burdensome paperwork requirements for referral of participants to other than title II programs. The Department has addressed these concerns by amending Sec. 628.320(c) to permit referral decisions for participants with whom there will be no continuing relationship to be recorded in a partial ISS. No further tracking of such referred participants is required. Of course, where there will be a continuing relationship with the referred participant, Sec. 628.530(a) provides that the referral decision should be recorded in the ISS and that the participant's progress should be tracked. In the case of service providers who discover that an eligible applicant cannot be served by its program, Sec. 628.510(e) requires that service providers refer such individuals to the SDA for further assessment and referral. Clarification of referral responsibilities was requested by a number of commenters. In addition to the above explanations, Sec. 628.510(d) and Sec. 628.530(c) are revised to specify that no follow-up is required for referrals of eligible applicants or participants with whom there will not be a continuing relationship. Further, the Department wishes to point out that either an applicant or a participant may be referred out of JTPA at any time, if warranted by customer need or preference. Some commenters seemed to think that both an objective assessment and ISS ``must be completed'' prior to referral outside the program. Since both assessment and the ISS are presumed to be continually reviewed and evolving during participation, this assumption is not warranted. Job Search Limitations A fundamental change in section 204(c)(2) of the Act regarding program design is the requirement that job search, job clubs, and work experience activities be accompanied by other services that increase a participant's educational and occupational skills. This change reflects evidence that, in some cases, suggests that quick turnaround placement programs have minimal long-term impact when provided in isolation from other more comprehensive and intensive services. The Department's Inspector General, in a 1988 report, concluded that the number of JTPA participants on public assistance was only slightly reduced after completion of JTPA programs. On the other hand, The National JTPA Study found a 39% earnings gain for adult women from the provision of stand alone job search services. This new limitation reflects an overall thrust of JTPA to provide quality services to participants. For example, short-term job search assistance alone might result in a job placement for low-skilled individuals, but job retention is not likely without concomitant services aimed at increasing participants' needed basic or occupational skills. Accordingly, Sec. 628.535 codifies section 204(c)(2)(B) of the Act which limits the provision of stand- alone job search assistance, job search skills training, and job club activities to title II participants. ``Job search assistance'' itself is defined in Sec. 626.5. Comments generally addressed two issues: Interfacing with the Employment Service (ES), and the preference of older individuals for immediate job placement. With regard to the Employment Service, many questioned the ability of the local ES office to provide adequate services to JTPA participants. They were concerned that ES may lack in- house expertise to provide sufficient assistance for groups with special needs. Citing the provisions in the Act governing the determination of duplicative services, several commenters believed that the ability of the ES office to provide assistance to special needs groups should be a criterion for this determination. Others pointed out that, since job search activities are a critical part of any ISS, and service providers have already established successful networks of employer contacts, ES offices should not be the presumptive deliverer for providing adequate job search activities for all participants. These commenters suggested that Sec. 628.535(d) be either deleted or revised to permit SDA's to determine whether to use the ES to provide job search services. On the other hand, several commenters stated that allowing SDA's to determine unilaterally whether adequate job search assistance is available through the local ES office (Sec. 628.535(c)(2)) defeats one of the basic goals of the Amendments: To focus JTPA on providing more training and less stand-alone job placement. Unless there is a mechanism for ES input into the determination as to whether job search services are available, the concern is that an SDA could simply assert that services are not available to avoid coordinating with the ES, leading to duplication. One suggestion was that the Governor decide the criteria for the availability of job search assistance. Another commenter stated that any requirement to document that job search services are unavailable from the ES for each participant or training program should be done only once per program year or Job Training Plan cycle. Another commenter pointed out that because job search assistance was defined as a service ``designed to give a participant skills in acquiring full-time employment,'' and the local job service office was considered the appropriate purveyor of these skills (Sec. 628.535(d)), this provision should be removed because ES offices may not always be able to provide such services. The Department decided not to remove Sec. 628.535(d) because it interprets section 204(c)(2)(B)(ii) of the Act to accord the employment service a special status in terms of providing job search. Also, this provision of the Act is not substantially different from the provisions of sections 107 and 141 of the Act which prohibit duplication of services. It remains to be determined whether job search assistance is universally available within each community from the Employment Service. The SDA may look at whether local employment service resources are sufficient to provide the job search assistance for all potential JTPA referrals. The final rule, at Sec. 628.535(d), is amended to indicate that a determination is to be made by the SDA in active consultation with the employment service and other public agencies. These determinations must be documented in the SDA's job training plan since the employment service is on the PIC and coordination with the employment service is among the topics to be included in the plan. Standardized inquiries regarding local job search assistance availability from the employment service may be developed by the Governor in consultation with the State ES Director. A number of commenters representing older workers recommended either a waiver of the stand-alone job search limitations for this population or a provision allowing the Governor to request a waiver when sufficient evidence demonstrates that the interests of older workers would not be well served by these limitations. These commenters recognized the priority placed on training for younger individuals but expressed doubts that career training was a realistic and relevant goal for older workers who, generally are not attracted to long-term assistance that mandates skills training, who do not thrive in classroom training designed for youth and young adults, and who do not tend to seek assistance from the ES or other public agency environments. For these reasons, several commenters asked that older workers, or the older worker set-aside program, be exempted from this section altogether and that job search assistance be a service strategy for this population without justification in the ISS. The Department considered these comments carefully and has decided that, like all title II-A participants, older worker participants require assessment and need a justification in the ISS for stand-alone job search activities. However, a new Sec. 628.535(e) is added in the final regulations to recognize the preference of older individuals for immediate job placement and to provide some flexibility in recognition of the special characteristics of older workers. The Department's view is that this provision should not establish a routine practice to avoid the provision of needed training services. The intent of the JTPA program remains to provide needed services to the hard to serve, including older workers. A few commenters noted an ambiguity in the interim final regulations, that Sec. 628.804(d) and (e) limit the provision of preemployment and work maturity skills training and work experience, in addition to job search assistance, unless they are accompanied by additional services; while Sec. 628.535(b)(2) states, as an example, that work experience can be combined with job search training. Accordingly, Sec. 628.535(b)(2) is revised to specifically exclude this example as well as other services which may not be used to meet the combination requirement. Additional services which may be provided in conjunction with job search may include the training services specified in JTPA section 204(b)(1), except stand-alone skill assessment, counseling, work experience and case management, and the direct training services listed in 264(b) of the Act excluding tutoring, stand-alone skill assessment, counseling, work experience and case management. Commenters also pointed out that the title II-C program does not contain an ``exceptions'' provision to this requirement as section 204(c)(2)(B)(ii) of the Act does for the title II-A program. To address this inconsistency, Sec. 628.535(c) is amended to state that the exceptions are not applicable to title II-C. On the other hand, it is important to note that, for the purposes of this section, because title II-C in-school youth are enrolled in educational programs, they meet the requirement of being enrolled in ``other additional services'' (Sec. 628.804(d) and (e)). The Volunteer Program Several commenters felt that the requirements at Sec. 628.540 were too restrictive and burdensome. In response, and in consideration of the principle that a volunteer program should, in fact, be voluntary for former participants, the Department is removing the goals, objectives and documentation requirements in the final rule. Section 628.540, as revised, merely repeats the statutory requirement which the Department believes is self-explanatory. The Department encourages the SDA's to work with former participants to have them share their experiences in the program and in the workplace with current participants. The Department also advises the SDA's to document any use of JTPA funds for this volunteer program. Linkages and Coordination Sections 205 and 265 of the Act require that SDA's operating adult and year-round youth programs establish appropriate linkages with other Federal human resource programs, including Department of Health and Human Services' (HHS) JOBS program, the Department of Housing and Urban Development's (HUD) Comprehensive Modernization Program, the Department of Energy's (DOE) Low Income Weatherization Grant program and programs under the National Service Act. Other linkages may also be established with appropriate State and local educational, social service, and public housing agencies, including CBO's, business and labor organizations, volunteer groups and others, such as women and older worker organizations, to avoid duplication and to enhance the delivery of services. In addition, youth programs are required to establish linkages with appropriate educational agencies which include formal agreements for procedures for referring and serving in-school youth, methods of assessment, notification when students drop out of school, and arrangements with educational agencies for services for in-school and out-of-school youth. These provisions are reflected in Sec. 628.545. Several commenters urged that coordination should begin at the Federal level. The Department agrees and has begun discussions with a number of other Federal agencies to increase coordination at the Federal level and, as the commenters requested, to seek ways to develop common definitions and procedures applicable across program lines. The commenters were concerned that all the responsibility for coordination rests on the JTPA system. It is, of course, true that the Act and these regulations, since they focus on the JTPA system place a burden on the system to be a prime mover in the process of developing coordinated program relationships. A State or SDA is required to make good faith efforts to seek coordination and cooperation where it is possible to do so. Several commenters questioned the ability of SDA's to establish appropriate linkages if other agencies are not operating under similar mandates. Some comments recommended that the Governor encourage coordination efforts through the SJTCC and, where feasible, develop agreements at the State level which would provide the basis and authority for local agreements and ensure the best utilization of funds between agencies. The Department agrees that these recommendations are a good way to establish effective and systematic coordination and language to this effect is added to Sec. 628.545(a). The new language recognizes both the SJTCC and the HRIC, whichever is in place in a State, as useful focus points for coordination efforts. In addition, a few comments referred to the importance of the SDA's documenting instances of attempted coordination efforts and of sharing this information with the Governor's office. This provision also is included in Sec. 628.545(a) to link State coordination agreements with local achievements by means of the job training plans. In addition, to emphasize the importance of ``one-stop shop'' career centers and seamless ``single point of contact'' delivery systems, which was the concern of several commenters, a new Sec. 628.545(b) is added. SDA's are encouraged to facilitate such delivery systems in coordination with other agencies, which may include both the development of ISS plans and of a common program application, as well as a unified job development effort and comprehensive program design. Such linkages may provide for a JTPA entity jointly funding or administering a program with funds from another agency, such as an SDA jointly funding aspects of a public housing agency's Comprehensive Modernization Program or the local JOBS program. Alternatively, when appropriate, the SDA could earmark funds to be spent within public housing areas for services to residents. Other coordination issues discussed were the difficulty of defining and receiving information on dropouts from some local educational agencies and the fact that agreements should be limited to those education agencies which plan in-school activities. With regard to obtaining information on school dropouts, the Department has initiated discussions with the Department of Education with the goal of working out a common definition and systematic approach for identifying and serving dropouts. In the meantime, States are encouraged to negotiate agreements with State educational agencies to facilitate this task. With regard to limiting the agreements required at the local level with educational agencies, Sec. 628.545(c) is amended to reflect these concerns by the addition of the qualifying terms ``appropriate'' and ``which participate in JTPA programs.'' Transfer of Funds A few commenters raised questions concerning timing issues not addressed in Sec. 628.550 of the interim final rule: whether transfers must occur at the beginning of the program year; whether they may occur at any time during the 3-year funding period; and whether the provisions are applicable to the 1993 title II-B program. The Department does not address these issues in the final rule, leaving the first two issues to be addressed at the Governor's discretion. In response to the third issue, the provisions are applicable to the 1993 title II-B program; this issue is addressed in the transition provisions at Sec. 627.904(k)(2) of the final rule. In addition, paragraph (b) is revised to permit transfers of up to 20% of the title II B funds allocated to an SDA under section 252(b) of the Act to title II C. This change is consistent with the amendment made to section 256 of the Act by the Goals 2000: Educate America Act, Pub. L. 103-227. [click on ''Back'' to return to Index; then click on ''Continuation of discussion of comments (IV)'' to continue]