(a) Administrative Requirements. The Employment Security Manual
shall not be applicable to funds appropriated under the Wagner-Peyser
Act. Except as provided for in paragraph (f) of this section,
administrative requirements and cost principles applicable to grants
under this part 652 are as specified in 41 CFR part 29-70 and 41 CFR
part 1-15.7.
(b) Management systems, reporting and recordkeeping. (1) The State
shall ensure that financial systems provide fiscal control and
accounting procedures sufficient to permit preparation of required
reports, and the tracing of funds to a level of expenditure adequate to
establish that funds have not been expended in violation of the
restrictions on the use of such funds (section 10(a)).
(2) The financial management system and the program information
system shall provide federally required records and reports that are
uniform in definition, accessible to authorized Federal and State staff,
and verifiable for monitoring, reporting, audit and evaluation purposes
(section 10(c)).
(c) Reports Required. (1) Each State shall make reports pursuant to
instructions issued by the Secretary and in such format as the Secretary
shall prescribe.
(2) The Secretary is authorized to monitor and investigate pursuant
to section 10 of the Act.
(d) Special Administrative and Cost Provisions. (1) Neither the
Department nor the State is a guarantor of the accuracy or truthfulness
of information obtained from employers or applicants in the process of
operating a labor exchange activity.
(2) Prior approval authority, as described in various sections of 41
CFR part 29-70 and 41 CFR 1-15.7, is delegated to the State except that
the Secretary reserves the right to require transfer of title on
nonexpendable Automated Data Processing Equipment (ADPE), in accordance
with provisions contained in 41 CFR 29-70.215. The Secretary reserves
the right to exercise prior approval authority in other areas, after
providing advance notice to the State.
(3) Application for financial assistance and modification
requirements shall be as specified under this part.
(4) Cost of promotional and informational activities consistent with
the provisions of the Act, describing services offered by employment
security agencies, job openings, labor market information, and similar
items are allowable.
(5) Each State shall retain basic documents for the minimum period
specified below:
(i) Work Application: One year.
(ii) Job Order: One Year.
(6) Costs of employer contributions and expenses incurred for State
agency fringe benefit plans that do not meet the requirements in 41 CFR
1-15.711-13 and 711-10 are allowable, provided that:
(i) For retirement plans, on behalf of individuals employed before
the effective date of this part, the plan is authorized by State law and
previously approved by the Secretary; the plan is insured by a private
insurance carrier which is licensed to operate this type of plan; and
any dividends or similar credits due to participation in the plan are
credited against the next premium falling due under the contract;
(ii) For retirement plans on behalf of individuals employed after
the effective date of this part, and for fringe benefit plans other than
retirement, the Secretary grants a time extension to cover an interim
period if State legislative action is required for such employees to be
covered by plans which meet the requirements of 41 CFR 1-15.711-13 and
711-10. During this interim period, State agency employees may be
enrolled in plans open to State agency employees only. No such extension
may continue beyond the 60th day following the completion of the next
full session of the State legislature which begins after the effective
date of this part;
(iii) For fringe benefit plans other than retirement, the Secretary
grants a time extension which may continue until such time as they are
comparable in cost to those fringe benefit plans available to other
similarly employed employees of the State on the condition that there
are no benefit improvements. The Secretary may grant this time extension
if the State agency can demonstrate that the extension is necessary to
prevent loss of benefits to current States agency employees,
retireees and/or their fringe benefit plan beneficiaries, or that it is
necessary to avoid unreasonable expenditures on behalf of the employee
or employer to maintain such fringe benefits for current employees and
retirees. At such time as the cost of these fringe benefit plans becomes
equitable with those available to other similarly employed State
employees, the time extension will cease and the requirements of 41 CFR
1-15.711-13 and 1-15.711-10 will apply;
(iv) Requests for time extensions under this section will include an
opinion of the State Attorney General, that either legislative action is
required to accomplish compliance with 41 CFR 1-15.711-13 and 1-15.711-
10 or, for (d)(6)(iii) of this section that such compliance would result
in either loss of current benefits to State agency employees and
retirees or unreasonable expenditures to maintain these benefits. Such
requests will be filed with the Secretary no later than 30 days after
the effective date of this part; and
(v) Time extensions granted relative to (d)(6)(iii) of this section
require a signed statement by the State agency Administrator, that no
improvements have been made to fringe benefits under the extension and
that the plan(s) is (are) not consistent with those available to other
similarly employed State employees, for each year of the extension.
Documentation supporting the affidavit shall be maintained for audit
purposes.
(7) Payments from the State's Wagner-Peyser allotment made into a
State's account in the Unemployment Trust Fund for the purpose of
reducing charges against Reed Act funds (section 903(c) of the Social
Security Act, as amended (42 U.S.C. 1103(c)) are allowable costs,
provided that:
(i) The charges against Reed Act funds were for amounts
appropriated, obligated, and expended for the acquisition of automatic
data processing installations or for the acquisition or major renovation
of State owned office building; and
(ii) With respect to each acquisition of improvement of property
pursuant to paragraph (d)(7)(i) of this section, the payments are
accounted for in the State's records as credits against equivalent
amounts of Reed Act Funds used for administrative expenditures.
(e) Disclosure of Information. (1) The State shall assure the proper
disclosure of information pursuant to section 3(b) of the Act.
(2) The information specified in section 3(b) and other sections of
the Act, shall also be provided to officers or any employee of the
Federal Government of a State government lawfully charged with
administration of unemployment compensation laws, employment service
activities under the Act or other related legislation, but only for
purposes reasonably necessary for the proper administration of such
laws.
(f) Audits, (1) At least once every 2 years, the State shall prepare
or have prepared an independent financial and compliance audit covering
each full program year not covered in the previous audit, except that
funds expended pursuant to section 7(b) of the Act shall be audited
annually.
(2) The Comptroller General and the Inspector General of the
Department shall have the authority to conduct audits, evaluations or
investigations necessary to meet their responsibilities under sections
9(b)(1) and 9(b)(2), respectively, of the Act.
(3) The audit, conducted pursuant to paragraph (f)(1) or (f)(2) of
this section, shall be submitted to the Secretary who shall make an
initial determination. Such determinations shall be based on the
requirements of the Act, regulations, and State plan.
(i) The initial determination shall identify the audit findings,
state the Secretary's proposed determination of the allowability of
questioned costs and activities, and provide for informal resolution of
those matters in controversy contained in the initial determination.
(ii) The Secretary shall not impose sanctions and corrective actions
without first providing the State with an opportunity to present
documentation or arguments to resolve informally those matters in
controversy contained in the Secretary's initial determination. The
informal resolution period shall be at least 60 days from issuance of
the initial determination and no more that 170 days from the receipt by
the Secretary of the final approved
audit report. If the matters are resolved informally, the Secretary
shall issue a final determination pursuant to paragraph (f)(3)(iii) of
this section which notifies the parties in writing of the nature of the
resolution and may close the file.
(iii) If the matter is not resolved informally, the Secretary shall
provide each party with a final written determination by certified mail,
return receipt requested. In the case of audits, the final determination
shall be issued not later than 180 days after the receipt by the
Secretary of the final approved audit report. The final determination
shall:
(A) Indicate that efforts to resolve informally matters contained in
the initial determination have been unsuccessful;
(B) List those matters upon which the parties continue to disagree;
(C) List any modifications to the factual findings and conclusions
set forth in the initial determination;
(D) Establish a debt if appropriate;
(E) Determine liability, method of restitution of funds and
sanctions;
(F) Offer an opportunity for a hearing in accordance with 20 CFR
658.707 through 658.711 in the case of a final determination imposing a
sanction or corrective action; and
(G) Constitute final agency action unless a hearing is requested.
(g) Sanctions for Violation of the Act. (1) The Secretary may impose
appropriate sanctions and corrective actions for violation of the Act,
regulations, or State plan, including the following:
(i) Requiring repayment, for debts owed the Government under the
grant, from non-Federal funds;
(ii) Offsetting debts arising from the misexpenditure of grant
funds, against amounts to which the State is or may be entitled under
the Act, provided that debts arising from gross negligence or willful
misuse of funds shall not be offset against future grants. When the
Secretary reduces amounts allotted to the State by the amount of the
misexpenditure, the debt shall be fully satisfied;
(iii) Determining the amount of Federal cash maintained by the State
or a subrecipient in excess of reasonable grant needs, establishing a
debt for the amount of such excessive cash, and charging interest on
that debt;
(iv) Imposing other appropriate sanctions or corrective actions,
except where specifically prohibited by the Act or regulations.
(2) To impose a sanction or corrective action, the Secretary shall
utilize the initial and final determination procedures outlined in
(f)(3) of this section.
(h) Other violations. Violations or alleged violations of the Act,
regulations, or grant terms and conditions except those pertaining to
audits or discrimination shall be determined and handled in accordance
with 20 CFR part 658, subpart H.
(i) Fraud and abuse. Any persons having knowledge of fraud, criminal
activity or other abuse shall report such information directly and
immediately to the Secretary. Similarly, all complaints involving such
matters should also be reported to the Secretary directly and
immediately.
(j) Nondiscrimination and Affirmative Action Requirements. States
shall:
(1) Assure that no individual be excluded from participation in,
denied the benefits of, subjected to discrimination under, or denied
employment in the administration of or in connection with any services
or activities authorized under the Act because of age, race, sex, color,
religion, national origin, handicap, political affiliation or belief.
All complaints alleging discrimination shall be filed and processed
according to the procedures in the applicable DOL
nondiscrimination regulations;
(2) Assure that discriminatory job orders will not be accepted,
except where the stated requirement is a bona fide occupational
qualification (BFOQ). See, generally, 42 U.S.C. 2000(e)-2(e), 29 CFR
parts 1604, 1606, 1625.
(3) Assure that employers' valid affirmative action requests will be
accepted and a significant number of qualified applicants from the
target group(s) will be included to enable the employer to meet its
affirmative action obligations.
(4) Assure that employment testing programs will comply with 41 CFR
part 60-3 and 29 CFR parts 1627 and 32.
(5) Nondiscrimination and equal opportunity requirements and
procedures, including complaint processing
and compliance reviews, will be governed by the provisions of the
applicable DOL nondiscrimination regulations.
[64 CFR 18693, Apr. 15, 1999]
