Mr. Craig W. Johnson
Secretary
South Dakota Department of Labor
Kneip Building
700 Governor's Drive
Pierre, South Dakota 57501-2277

Dear Mr. Johnson:

I am pleased to offer South Dakota JTPA waiver approvals in response to Governor Janklow's April 28, 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 South Dakota'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 South Dakota 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,

John (Skip) Sweeney
Acting Regional Administrator

Enclosures

OVERVIEW

The JTPA Grant Agreement between the Governor and the Department will be modified upon the Governor (or his designee) signing the attached Modification. The granted waivers are authorized for the period of Program Year 1997. In exchange for these waivers South Dakota is expected to meet the agreed upon performance improvements. Below is a discussion, including the disposition, of all of the State's waiver requests.

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 South Dakota. They do not necessarily constitute an endorsement of the examples in South Dakota'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. 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. (JTPA § 204(c)(2)(A) was not waived as it was unnecessary to do so since (B)(i) already provides an exception.) 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.

B. 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 the 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.

C. For title II and III, current authority permits participants to continue to receive services following placement so long as 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 South Dakota 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), 204(c)(4), and 20 CFR 627.310(e) to title III and waive the timelines at § 314(c)(15) to enable title III participants to receive post-termination services, except for 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), 264(d)(5) and 314(c)(15) and 20 CFR 627.310(e) to authorize training as a post-termination service contingent upon the Governor:

1. Developing a record keeping system that will track post-termination training provided and outcomes achieved for any post-termination training provided.
   
   
2. Maintaining current safeguards to ensure that employers do not receive federal funding for training/retraining laid off and subsequently recalled/rehired employees.

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 title II and III.

D. As requested, the Secretary waives the requirements at JTPA § 141(k) that prohibit subsidized employment with private for-profit employers, to permit limited internships with private for-profit employers, in cases where the objective assessment and individual service strategy indicate it is the appropriate intervention, and 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 skills of the participant. This authority shall be administered so as to preclude the reintroduction of 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; and
   
   
4. It is provided as a temporary activity of limited duration. The State agrees to set a policy for the maximum duration.

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.

E. 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), (f), 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(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.

F. As requested, the Secretary shall apply the requirements in TEIN 26-96 transmitting the "Guide to JTPA Performance Standards for Program Years 1996 and 1997," such that title III performance standards calculations exclude participants terminating after receiving objective assessment only, consistent with title II.

G. As requested, the JTPA Standardized Program Information Report (SPIR) instructions in Training and Employment Information Notice (TEIN) 5-93, Change 1 that require follow-up by participant contact for the 13th week after termination are waived on the condition that South Dakota adopt the provisions in the Department's "JTPA Statutory Waiver Guidelines: Substitution of Wage Record Follow-Up for Survey Follow-Up in JTPA Performance Standards" and future implementing guidance.

These provisions were developed to provide some uniformity in systemwide measurement for the limited number of States that receive such waivers. The guidelines make provisions pertaining to: universal reporting; reporting elements, formats, and electronic media; reporting deadline; out-of-state placements; required core performance measures; adjustments to performance standards; alternative incentives and sanctions policy; sampling or baseline data for national follow-up measures; performance improvement; and other provisions deemed appropriate. As stated in these guidelines, the Department will provide revised reporting instructions.

H. 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.