ETA will work with the State to identify the specific contents of the State and local plans required for JTPA titles II and III, as well as the time lines for the publication and submission of the plans contained in JTPA §§ 104(b), 205(a), 121(b), 311(a) and (b) and 313(b); 20 CFR 628.205(a)(2), 20 CFR 628.420(b), 20 CFR 631.36(b), 20 CFR 631.36 (b) and 20 CFR 631.50(b) and (c); and Training and Employment Guidance Letter

No. 4-95, "Instructions for Submission of State Plans Under title II and III of the Job Training Partnership Act." Once this is accomplished, the Secretary will entertain a request for any waivers needed to implement the revised planning process.

B. The Secretary waives the criteria regarding youth employability enhancement (YEEN) termination set forth in TEGL 4-95, Change 1, "Job Training Partnership Act (JTPA) Title II and Title III Performance Standards for PY's 1996 and 1997" and in TEIN 5-93, Change 1, "Standardized Program Information Report Instructions", provided that 1) the SDA/State demonstrates that the youth did not need training in all competencies (for example, pretests indicate no need for basic skills or preemployment/work maturity or training in one of the two required competencies was provided by a funding source other than JTPA); and 2) in cases where a youth participant needs only one additional competency to qualify for the YEEN, training for that competency must be provided (not necessarily funded) by JTPA. SPIR reporting requirements will continue, and ETA will issue revised reporting instructions to accommodate this waiver. The basic definition of the Youth Employability Enhancement is not changed.

C. The Department has received clarification from the State regarding its request to waive the definition of "substantial layoff" at 20 CFR 631.2 for determining participant eligibility at JTPA § 301(a)(1)(B), which is under consideration. A response to the State's request will be provided under separate cover as soon as a decision is made.

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

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

E. The Secretary waives the youth OJT wage requirement at JTPA § 264(d)(3)(C)(i)(I) and the related regulations at 20 CFR 628.804(j)(1)(i) and the participation requirement at JTPA § 264(d)(3)(C)(iii) and the related regulation at 20 CFR 628.804(j)(2), when indicated as appropriate in the objective assessment and individual service strategy for youth on-the-job training. The State shall assure that the OJT positions for youth have substantial training content and that the training time is correctly determined.

F. The Secretary waives the requirements of 20 CFR 627.240(b)(3), which provides maximum time limits during on-the-job training for part-time workers, provided the part-time training time during OJT is correctly determined, taking into consideration the necessary occupational skills, and the time required to acquire such skills, for the participant to function in the job for which the OJT is contracted.

G. The State's request to eliminate the distinction between initial assessment and objective assessment has not been granted. Under paragraph T., the State has requested and received a waiver to eliminate cost limitations and to collapse cost categories into two: Administration and Program Costs which makes a waiver unnecessary, since these items would no longer be required to be charged to different cost categories (e.g., initial assessment is currently chargeable to the "Training-related" cost category, and objective assessment is currently chargeable to the "Training" cost category). With the waiver granted in paragraph T., costs for both services will be chargeable to the "Program" cost category. However, the definition of "participant" in Section 4(37) will not be waived; enrollment and reporting of individuals on whom program dollars are spent for services beyond initial assessment--including objective assessment--will continue to be required.

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

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

I. The State's request to waive the Ratio of Out-of-School to In-School Youth service requirements at JTPA § 263(f)(1) and 20 CFR 628.803(h)(1) has not been granted. It appears that this may be an eligibility requirement and, as such is, excepted under the Secretary's waiver authority granted in the 1997 DOL Appropriations Act. However, in any event the Department believes that it is important to provide services to out-of-school youth, and the ratio requirement is the only statutory provision that guarantees services to this target population. Since funding for title II-C youth services has decreased in recent years, the Secretary is not prepared to permit further reduction of services to out-of-school youth by waiving the ratio requirement.

J. As requested, the Secretary waives the provisions at JTPA § 106(b)(7)(e) which require that no more than 25% of the incentive grant be awarded based on performance standards prescribed by the State.

K. It is not clear that the Secretary has authority to waive formula allotment and reallotment requirements, including the requirements under JTPA § 303 for the recapture and reallotment of unexpended Title III formula funds. Furthermore, except as described below, the State's request to waive JTPA § 303(b)(1), and 20 CFR 631.12(a)(i) 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 § 303(d) to obligate and deobligate formula funds, at both the State and Substate levels, to permit the funding to be available where it is most needed within the State--and to preclude the necessity for the Secretary to recapture funds from a State.
  
  

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

As requested, however, the Secretary waives for a period of four years the regulatory provision at 20 CFR 631.12(a)(1)(ii). This will permit the State to expend title III funds in the year of allotment plus two following years, provided that it meets the eighty percent expenditure requirement in the year of the allotment. Also, ETA 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.

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

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

However, the provision within 20 CFR 627.310(e) which prohibits the use of financial assistance as a post-termination service is not waived. Therefore, needs-based and needs-related payments are not post-termination options under this waiver for both titles II and III.

M. As requested, the Secretary waives the prohibition on stand-alone work experience, job search assistance, job search skills training, and job club, for both youth and adults, in instances when an individual service strategy substantiates its use as appropriate, by waiving JTPA § 204(c)(2)(B)(ii) and 20 CFR 628.535(b)(2) and (c)(1)(ii) and applying JTPA § 264(d)(3)(A) and (B) as if they read ". . . shall be accompanied by . . . additional services . . . unless the individual service strategy demonstrates such additional services are not warranted." Additionally, the title III prohibition on work experience at 20 CFR 627.245(e), where such strategy is supported by an individual assessment, and the combination requirements at 20 CFR 627.245(d) and 628.804(e) and (f) are waived. We wish to point out to the State that there is research suggesting that work experience provided in a standalone mode is not as effective as when combined with other needed services and that, as suggested in the request, this authority will be used sparingly.

N. 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 individuals with disabilities, youth, and older workers has not been granted. Consistency for this term and these standards is needed across multiple programs under JTPA and with welfare reform. 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.

O. As requested, the Secretary waives the requirements at JTPA § 141(k) that prohibit subsidized employment with private for-profit employers, to permit limited internships for adults with private for-profit employers, in cases where the objective assessment and individual service strategy indicate it is the appropriate intervention when:

1. It is used in the private for-profit sector, as in the public and private non-profit sectors, for those participants who need to build and demonstrate labor market skills or undertake career exploration, in jobs for which there is a demand in the community and which are within the skill goals of the participant. This waiver authority shall be administered so as to preclude the reintroduction of the abuses where participants are placed in low skill, low wage paying type jobs as a subsidy to the employer.
   
   
2. It is used when on-the-job training is not available or is inappropriate.
   
   
3. Worker protections under Section 143 of the Act are in place, particularly health and safety standards and workers compensation and that no displacement or reduction in hours of regular employees occurs.
   
   
4. 4. It is provided as a temporary activity, of limited duration. The State agrees to set a policy governing duration of such employment with private for-profit employers.

This may be an effective strategy for welfare-to-work (TANF) participants as well as for some of the disadvantaged population. However, its appropriateness for most eligible dislocated workers would appear to be extremely limited. Therefore, we recommend the State implement a State-wide policy which addresses the target populations, including dislocated workers, for which this strategy will be used. The policy for dislocated workers should contain a requirement that the worker's individual assessment must justify such a placement over OJT.

P. As requested, the Secretary will apply the definition of "family income" in 20 CFR 626.5 such that ". . . . The Governor may, for the purposes of determining income eligibility for services under title II of the Act, exclude up to 50 percent of Social Security and Old Age Survivors' Insurance benefit payments. . . from the definition of family income." This means that once the income is excluded it applies for all title II eligibility purposes. This administrative regulatory waiver is being granted under the provisions of 20 CFR 627.201 for a period of four years from the effective date of this Grant Modification. The State's request to exclude 100 percent was declined since it would have the effect of circumventing the eligibility requirements for the economically disadvantaged. Similarly, the request to exclude workers' compensation payments from the definition of family income has been declined since these are regular cash payments that are considered income for other federally assisted programs, and are based on the individual's inability to work.

Q. As requested, the Secretary will apply the definition of "family income" in 20 CFR 626.5 such that ". . . such income shall also exclude Social Security Disability Income for an individual with a disability,. . . ." This administrative regulatory waiver is being granted under the provisions of 20 CFR 627.201 for a period of four years from the effective date of this Grant Modification.

R. As requested, the Secretary waives the JTPA procurement requirements at §164(a)(3) of the Act and the implementing regulations at 20 CFR 627.420(a)(1), (2), (3), and (4); (b); (d)(1); (e)(1), (2), (3), and (5); (g) and (h). The Governor agrees to use State and local procurement procedures and abide by the procurement provisions included in the Office of Management and Budget (OMB) Circular A-102 as codified in the DOL regulations at 29 CFR 97.36. References elsewhere in JTPA to § 164(a)(3) will be understood to refer to State and local procurement provisions. The circular requires the State to follow the same policies and procedures it uses for procurements using non-Federal funds when procuring property and services under a grant.

The State indicates that collaborative planning and the delivery of services will be facilitated through the granting of this waiver. We believe that collaboration is a process of bringing various organizations, who bring with them more than minimal funding and/or other tangible resources, to the table for a collaborative effort. Where JTPA, the Employment Service, the Unemployment Insurance system, the Vocational-Educational system, and others collaborate and bring funds to the table, these entities (whose legislative mandate is to provide specific types of services and/or programs) can provide those legislatively mandated services/programs in an integrated or cooperative setting. We do not believe that collaboration is a process of bringing various organizations to the table in order to divide up the available JTPA funds among themselves. JTPA procurement rules do not preclude the former type of collaborative effort.

Section 627.420 of the JTPA regulations includes rules implementing statutory provisions other than JTPA § 164(a)(3). As a result, the waiver of this section is not all encompassing. Section 627.420 subsections which are not being waived follow (the sections of JTPA which they implement, where applicable, are listed in brackets): (a)(5) [§141(h)], (a)(6) [§107(a)], (c); (d)(2); (e)(4); (f) [§163], (i) [§144] and (j) [§107(e)(2)].

Subsection 627.420(c) deals with conflict of interest. Even though OMB Circular A-102 also has a section that deals with conflict of interest, it is a generic requirement. Subsection 627.420(c) was written specifically to cover the unique relationships that JTPA created with the formation of Private Industry Councils. Therefore, this subsection is not being waived.

Subsection 627.420(d)(2) provides the State and its SDAs/SSGs with pass through authority to any unit of State or local government. This requirement is being retained for the State since the circular does not provide this authority.

Subsection 627.420(e)(4) is based on the financial requirements contained in the Act and requires that costs be charged according to the allowable cost provisions at 20 CFR 627.435.

Although JTPA § 164(a)(3)(I) has been waived, the requirements contained in 20 CFR 627.450, Program Income, still apply. The section being waived requires that procurement transactions between units of State or local government, SDAs/SSGs, et. al., be conducted on a cost reimbursement basis. The Program Income section of the regulations, in summary, requires that program income earned be used for purposes of the program.

The Secretary will not waive JTPA § 107(a) of JTPA which requires the consideration of demonstrated performance in selecting entities to deliver services and calls for giving proper consideration to community based organizations (CBOs) for the delivery of services.

Although the JTPA procurement requirements, as cited above, are being waived, this does not relieve the State from awarding JTPA monies through competitive processes as required by JTPA § 107(e) which is not being waived. Competition has a positive impact on the services provided with JTPA funds by leading to the selection of service providers with the capabilities to provide the services and by resulting in competitive pricing for the purchased services.

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

Also, the Secretary is not prepared to approve the use of a budget based cost allocation system as referenced in the summary section of the State's request. Such a system would be contrary to generally accepted accounting principles and does not ensure accountability. Note that the State does not identify or request a waiver of any provisions associated with this issue.

T. 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 are open for modification and the Department will also entertain additional requests for waivers during this program year. These waivers apply to the title II and the title III formula programs. However, ETA will consider requests to apply specific waivers to individual title III Secretary's National Reserve Account (NRA) grants which are active during Program Year 1997. In addition, ETA will consider requests to incorporate specific waivers into new individual NRA grants, as appropriate.