Ms. Yvonne Chase
Director
Division of Community and Rural Development
Alaska Department of Community and Regional Affairs
333 West 4th Avenue, Suite 220
Anchorage, Alaska 99501-2341

Dear Ms. Chase:

I am pleased to offer JTPA waiver approvals to the State of Alaska in response to Governor Knowles' April 29, 1997 request. This could not have been done without the vision, strategy and planning that was produced by the local, State, and Federal (national and regional staff) partnership, of which it has been our pleasure to be a part. I thank you for your and your staff's hard work and patience.

The State's request was considered under the special appropriations act provision granting the Secretary of Labor authority to waive certain requirements of Titles I-III of JTPA, and Sections 8-10 of the Wagner-Peyser Act. This authority was granted to the Secretary in the Department of Labor's (DOL) Appropriation Act for 1997 (Pub. L. 104-208, section 101(e)).

This is a one-year authority and applies only to JTPA funds available for expenditure during the period July 1, 1997 through June 30, 1998, and, therefore, could affect the JTPA Grant Agreements for Program Year (PY) 1997, 1996 and 1995 funds, depending on fund availability during the waiver period. Enclosed you will find an overview and our disposition with regard to each of your requests, as well as copies of our formal response to the Governor. Enclosed also is a grant modification (3 copies) that will require signature by the Governor or the State's JTPA signatory official. Please check off the applicable JTPA grant agreements (PY 97, 96, 95) that the statutory waiver modification will affect. We ask that the documents be signed by the appropriate official and returned to the Grant Officer at the address indicated below:

Mr. James C. De Luca
U.S. Department of Labor - ETA
Office of Grants and Contract
Management - DAA
200 Constitution Avenue, N.W,
Room - South 4203
Washington, D.C. 20210

Upon execution by the appropriate USDOL grant officer, we will return an executed copy for the State's official files. This modification is effective July 1, 1997.

We applaud Alaska's efforts to focus on a workforce vision and the development of a strategy to meet that vision. Waivers, of course, are only a small part of this strategy. We will continue to work with Alaska to reach these goals. We expect that these reforms will continue to reflect the Department of Labor's guiding principles: individual opportunity and customer choice; leaner government; greater accountability; State and local flexibility; and strong private sector roles.

This is a living document. As we continue our partnership be sure to let us know if additional waivers or other action would be beneficial.

Sincerely,

Michael Brauser
Regional Administrator

Enclosures

OVERVIEW

The applicable JTPA Grant Agreements between the State and the Department will be modified upon execution of the enclosed Modification. Unless specified otherwise these waivers are authorized for the period beginning July 1, 1997 and ending June 30, 1998. In exchange for these waivers Alaska is expected to meet the agreed upon performance improvements.

Requests to waive program design components were honored except in the case where the request conflicted with the Secretary's statutory waiver authority, the Department's guiding principles for waivers and the One-Stop Career Centers and School-to-Work Systems principles. Administrative waivers were granted in such a manner as to maintain fiscal responsibility and accountability.

These waivers are based upon the Governor's request, meetings and discussions among staff, and the Department's familiarity with the program in Alaska. They do not necessarily constitute an endorsement of the examples in Alaska's waiver request. In several instances, the Department would recommend against the interventions proposed. For example, most research would caution against general use of stand-alone work experience, job search or on-the job training interventions, particularly for youth without a high school diploma or its equivalent. The Department continues to strongly encourage educational components for youth participants.

WAIVERS

A. The State's request to allow the Adult Follow-Up Rate and Youth Entered Employment Rate (see Training and Employment Guidance Letter 4-95, Change 1) to be adjusted for seasonal employment has not been granted under the statutory waiver authority. A waiver to accomplish the State's policy objective is not necessary. Under the Act and JTPA regulations, the Governor may adjust core standards -- either using the optional DOL model or the State's own -- to accomplish their policy purposes. The State should review the Guide to JTPA Performance Standards for Program Years 1996 and 1997, transmitted by Training and Employment Information Notice (TEIN) 22-96, dated April 22, 1997.

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

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

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

E. The State's request to provide JTPA services beyond intake and initial or suitability assessment to individuals, who may or may not be JTPA eligibile, without enrolling them in the program as participants is not approved. JTPA funds are appropriated to provide services to eligible individuals under the various JTPA titles, and may be expended only for thoseauthorized purposes. The definition of "participant," at JTPA § 4(37) is not being waived.

F. As requested, the Secretary waives the prohibition on stand-alone work experience, job search assistance, job search skills training, and job club, for both youth and adults, in instances when an individual service strategy substantiates its use as appropriate, by waiving JTPA § 204(c)(2)(B)(ii) and 20 CFR 628.535(b)(2) and (c)(1)(ii) and applying JTPA § 264(d)(3)(A) and (B) as if they read ". . . shall be accompanied by . . . additional services . . . unless the individual service strategy demonstrates such additional services are not warranted." We wish to point out to the State that there is research suggesting that work experience provided in a stand-alone mode is not as effective as when combined with other needed services and that, as suggested in the request, this will be used sparingly.

G. The Secretary waives the youth OJT wage requirement at JTPA § 264(d)(3)(C)(i)(I) and the related regulations at 20 CFR 628.804(j)(1)(i) and the participation requirement at JTPA § 264(d)(3)(C)(iii) and the related regulation at 20 CFR 628.804(j)(2), when indicated as appropriate in the assessment and individual service strategy for youth on-the-job training. The State shall assure that the OJT positions for youth have substantial training content and that the training time is correctly determined. In addition, the State should issue policies to assure that youth OJT opportunities reflect positions with career potential and avoid the introduction of abuses in the development of youth OJT slots in low wage, low skill positions which precipitated the enactment of the provisions for which this waiver is requested.

H. As requested, the Secretary waives JTPA §§ 108(b)(4)(B) and 315(a), and (b); 20 CFR 627.445(a)(1)(i), and (a)(2)(i) and 631.14(a) and (b) eliminating the non-administration cost limitations for titles II and III [except for national reserve account (NRA) grants]; the 20% administration limitation for titles II-A and II-C, JTPA § 108(b)(4)(A), the 15% limitation for title III, at JTPA § 315(c), and the 15% limitation for title II-B, at JTPA § 253(a)(3) and 20 CFR 627.445(b)(3) of the JTPA regulations will remain in effect. The provisions at § 108(b)(1) and (c), and all references in the JTPA regulations that address the cost limitations under titles II-A, II-B, II-C, and III [except for national reserve account (NRA) grants] shall refer only to the administration cost limitations. The Secretary will apply JTPA § 108(b)(2) and (3) and 20 CFR 627.440(b), (c)(1) and (d) and 631.13(a)(1) to reduce the number of cost categories to two: Administration and Program Costs. The costs of Administration shall be those defined at 20 CFR 627.440(d)(5) for title II and 631.13(f) for title III. Program Costs will consist of all other costs including those defined at 20 CFR 627.440(d)(1), (2), (3), and (4) for title II and at 631.13(c), (d), and (e) for title III. The costs of Rapid Response activities identified at JTPA § 314(b) and 20 CFR 631.13(b) shall continue to be separately reported. Reporting instructions for the two cost category reporting method have been developed and are attached for use by the State.

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

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

• Each Governor has a similar requirement under Sec. 303(d) to recapture and reobligate formula funds, at both the State and Substate levels, to permit funds to be available where it is most needed within the State--and to preclude the necessity for the Secretary to recapture funds from a State.

• In addition, there are several "safety nets" in place for ensuring that Title III resources are available where and when they are needed:
• a Governor may retain up to ten percent of a State's annual allotment for allocation to substate areas based upon need (JTPA § 302(c)(2));
  
  
• a Governor may utilize a portion of the State's reserve funds (up to forty percent of annual allotment) as a discretionary allocation to substate areas to provide additional assistance to areas that experience substantial increases in the number of dislocated workers (JTPA § 302(c)(1)(E));
  
  
• a Governor may request Secretary's National Reserve funds to supplement resources that are available in a State to provide services resulting from mass layoffs, closures, natural disasters, etc. (JTPA § 323); and
  
  
• a Governor may request from the Secretary additional financial assistance for the formula programs when there is a need (JTPA § 323(a)(7)).

As requested, however, the Secretary waives for a period of four years the regulatory provision at 20 CFR 631.12(a)(1)(ii). This waiver will permit the State to expend title III funds in the year of allotment plus two following years, provided that it meets the eighty percent expenditure requirement in the year of the allotment. Also, DOL believes a State's policy for recapture and reallocation of title III funds within a State can accommodate plans to serve dislocated workers who require assistance across program years.

J. The State's request to waive the intra-title transfer limitation of 10 percent between titles II-A and II-C is being deferred at this time, pending additional clarification from the State on its request. There are some issues which must be addressed in considering Alaska's request to transfer 50 percent of sub-state formula funds between Title IIA and IIC (and IIC to IIA). First, the State wants flexibility to be able to respond to changing local economic conditions. However there is no discussion on what these local economic conditions are, how they have changed, and how will the transfer flexibility enable the State to address the these new (changing) economic conditions? The second point to consider is that the statutory provisions at JTPA §§ 206 and 256 limit the transfer of funds from IIA to IIC, and vice versa, to 10 percent if approved by the Governor. For example, have there been drastic shifts in adult population needing services versus youth.

The Administration has a commitment to serve both youth and adults, and wants to ensure that there are adequate funds to serve both groups. Consequently, the Secretary must consider the drastic reductions in services that would result in allowing Alaska to transfer 50 percent of its adult program funds to serve youth or conversely transferring 50 percent of its already reduced youth funds to serve adults. Once the State has addressed these issues ETA will proceed with action on the State's request and render a decision.

K. The State's request to waive the requirement for cost and price analysis found at JTPA § 164(a)(3)(C) and 20 CFR 627.420(e)(2) of the JTPA regulations has not been granted. To ensure financial accountability, where we have approved requests for waiver of all or part of the procurement requirements, we have required that states abide by the requirements in the Office of Management and Budget (OMB) Circular A-102 as codified in the DOL regulations at 29 CFR, Part 97. The provision at 29 CFR 97.36(f) requires essentially the same cost and price analysis as that required by the JTPA regulation.

Based on the examples provided by the State, it appears as if it has misinterpreted the cost and price analysis requirement. Purchases of low cost routine items should not require extensive, time consuming cost or price analysis, but rather a very basic price analysis. Quite frequently, purchases of items costing less than $5,000 require only a price analysis because the item(s) being purchased are commonly available at a catalogue or market price. The first example given by the State suggests that it has done spot checks with vendors [presumably at least three] and determined that the selected vendor typically provides the needed items at a savings of 40% over standard store prices. Such spot checks should not be that costly or time consuming and would satisfy the requirement for price analysis. A second situation in which price analysis is adequate is when there is adequate price competition for the procurement, i.e., when there are at least three offerors who submit offers within a reasonable range of prices which is also inclusive of the agency estimate. Cost analysis would only be required in such situations if there was wide discrepancies between the offered prices.

ETA staff will work with the State to provide guidance and technical assistance on the need for and the methodologies for cost and price analysis.

L. The State's waiver request to permit sampling of those who apply for program services at a percentage that is yet to be determined, but will be statistically valid is not necessary. The State does not need a waiver to implement an alternative documentation procedure such as the random sampling method. The State is not compelled to do a 100 percent verification check. If the State desires to follow another method, it need only establish that it is a statistically valid process.

ETA staff will work with the State to provide guidance and technical assistance on radom sampling methodoligies.

M. In consideration of the waivers contained in this grant modification, the State agrees to a performance improvement of at least five percent at the State and local levels measured at the conclusion of Program Year 1997 using actual performance in PY 1996 as the baseline for improvement. Performance improvements will apply to all the Secretary's performance measures, or to their approved equivalents, for Titles II-A, II-C, and III. States will take into account the SDAs' performance improvement targets in determining the receipt of Title II incentive grant awards for PY 1997. In considering whether the State and the SDAs have attained the agreed upon performance improvement for PY 1997, the Department will apply the Secretary's Adjustment Models, exclusive of Governor's Adjustments, to the performance improvement goals. Program Year 1996 and Program Year 1997 performance will be calculated in the same way for both years.

The Standardized Participant Information Report (SPIR) instructions in Training and Employment Information Notice 5-93, Change 1 (dated June 23, 1994), as modified by Training and Employment Information Notice 5-93, Change 2 (dated January 24, 1997), remain in effect where not specifically waived or modified in this Agreement. Also in effect unless specifically waived are the Performance Standards Status Summary Report requirements put forth in Training and Employment Guidance Letter 2-95 (dated August 10, 1995). This requires Governors to report each SDA's final standard and actual performance for each of the Secretary's Title II core standards, with required technical assistance plans and reorganization plans attached.

These waivers will be open for modification. The Department will also entertain additional requests for waivers during this program year. In addition to these waivers, the Department agrees to work with Alaska on the following:

1. These waivers apply to the title II and the title III formula programs. ETA will also consider requests to apply specific waivers to individual title III Secretary's National Reserve Account (NRA) grants which are active during Program Year 1997. In addition, ETA will consider requests to incorporate specific waivers into new individual NRA grants, as appropriate.

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

a. An inclusive planning process;

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

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

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