Mr. Robert C. Gross
Executive Director
Department of Workforce Services
140 East 300 South
P.O. Box 143001
Salt Lake City, Utah 84114-3001

Dear Mr. Gross:

I am pleased to offer Job Training Partnership Act (JTPA) waiver approvals to the State of Utah in response to Governor Leavitt's request. This could not have been done without the vision, strategy and planning that was produced by the local, State, and Federal 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 by you since you are 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. The effective date of this modification is September 30, 1997.

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We applaud Utah'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 Utah 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 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 the State 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 Utah. They do not necessarily constitute an endorsement of the examples in Utah'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 title II 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 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 this authority should be used sparingly.

B. . The Secretary waives the requirements at JTPA § 264(d)(3)(A) and 20 CFR 628.804(d) and (f) that prohibit pre-employment and work maturity skills training as a stand-alone activity in cases where the objective assessment and individual service strategy indicate it is the appropriate intervention.

C. 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 Utah 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:

i. Developing a record keeping system that will track post-termination training provided and

outcomes achieved for any post-termination training provided.

ii. 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 titles II and III.

D. 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. 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.

E. (UT 007) 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 not approved since it would have the effect of circumventing the eligibility requirements for the economically disadvantaged.

F. 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) and 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 title III national reserve account (NRA) grants]; and will apply JTPA § 108(b)(2) and (3) and 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.

G. It is not clear that the Secretary has authority to waive her statutory responsibilities for formula allotment and reallotment, including the requirements under JTPA § 303 for the recapture and reallotment of unexpended Title III formula funds. Moreover, except as described below, the State's request to waive JTPA § 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 JTPA § 303(d) to obligate and deobligate formula funds, at both the State and Substate area 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 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 State's and Substate areas' formula programs (JTPA § 323(a)(7)).

It is noted that Utah was earlier granted a four-year waiver to the regulatory provision at 20 CFR 631.12(a)(1)(ii). This waiver permits the State to carry over prior year funds contingent upon meeting the eighty percent expenditure requirement in the year of allotment. DOL believes a State's policy for recapture and reallocation of unexpended Title III funds within a State can accommodate obligations to serve dislocated workers across program years.

H. As requested, the Secretary waives the JTPA procurement requirements and the implementing regulations at §164(a)(3) and 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 consistent with Office of Management and Budget (OMB) Circular A-102 as codified in the DOL regulations at 29 CFR 97.36 (The Common Rule). References elsewhere in JTPA to § 164(a)(3) should be understood to apply to State and local procurement provisions. The Circular/Common Rule requires the State to follow the same policies and procedures it uses for procurement from its non-Federal funds when procuring property and services under a grant.

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) of the regulations deals with conflict of interest. Even though The Circular/Common Rule also has a section that deals with conflict of interest, it is a generic requirement. Section 627.420(c) of the regulations 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.

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

Although §164(a)(3)(I) has been waived, the requirements contained in §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.

We note that JTPA §107(a), which requires the consideration of demonstrated performance in selecting entities to deliver services, and which calls for giving proper consideration to community-based organizations (CBOs), is not being waived. ETA considers demonstrated performance to be an important component in the selection of service providers. Historically CBOs have provided integral employment and training services. The State is expected to not only take into consideration the demonstrated performance of entities being considered for funding, but also to include CBOs in the pool of entities being considered for funding.

Although the JTPA procurement requirements, as cited above, are being waived, this does not relieve the State from awarding JTPA monies through competitive processes. Competition has a positive impact on the services provided with JTPA monies, 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. The State may have concerns about undertaking competitions in rural areas, where historically there may only be one qualified service provider. There are ways to ease the administrative burden in these areas. For example, if historically competitions have resulted in only one qualified and eligible applicant, the SDA should document this. It is then reasonable for the SDA to procure the services on a sole-source basis (documenting this process) in future years. Since the life of these monies is three years at the local level, it would be reasonable for the SDA to fund these services non-competitively for a period of up to three years. After three years, the SDA should then re-test the market by either undertaking another competition or advertising in various forums that the SDA is interested in purchasing these services. If the response is the same as before, the SDA can again procure the services non-competitively for up to three years.

I. As requested, the Secretary waives the provisions at 20 CFR 627.465(e)(1) and (2) for personal property procured before July 1, 1993. The State agrees that the accountability, records retention, use and disposition requirements of 20 CFR 627.465(a) - (d) shall apply to all JTPA personal property. 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.

J. In consideration of the waivers contained in this grant modification, the State agrees to a performance improvement of four percent (4%) at the State level 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. In order to meet this performance improvement, the State is expected to require that each SDA/SSG make some improvement in performance and that those SDAs/SSGs which demonstrate comparatively lower levels of performance be required to make greater performance improvements. States will take into account the SDA's performance improvement targets in determining the receipt of Title II incentive grant awards for PY 1997. In considering whether the State has 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 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.