Mr. Gary Gallwas
Assistant Commissioner
Employment and Training Division
Employment and Security Department
P.O. Box 9046
Olympia, Washington 98507-9046

Dear Mr. Gallwas:

I am pleased to offer Washington JTPA waiver approvals in response to Governor Locke's May 8, 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.

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We applaud Washington'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 Washington 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 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 Washington 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 Washington. They do not necessarily constitute an endorsement of the examples in Washington'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 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, at 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 JTPA § 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); 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.

B. 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. However, 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:



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, 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.

C. 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 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 the Grant Modification.

D. 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 the Grant Modification.

E. As requested, 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.

F. For titles II and III, current authority permits participants to continue to receive training 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 Washington 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, 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) and (d)(5) and 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 title II and III.

G. The request to waive the needs-related payment eligibility requirements for dislocated workers has not been granted. 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 the eligibility requirement exclusion contained in the Appropriations Act of 1996, JTPA § 314(e)(1) is not waived nor is 20 CFR 631.20(b). Therefore, in order to be eligible for needs-related 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) is not waived and neither is 20 CFR 631.20(c) or (d).

The Secretary will, however, consider an alternative definition of "enrolled in training or education" at 20 CFR 631.20(b)(2) to be utilized in extraordinary circumstances if Washington 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.

H. The Governor agrees to continue to require an objective assessment and individualized service strategy 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 ensures that 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 developing the State policy.

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 stand-alone activities permitted in paragraphs I. and J. 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.

I. 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 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.

J. As requested, 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. We note that the State has neither asked for nor received a waiver of the definition of the Youth Employability Enhancement performance standard, which requires as one of five options that two out of three youth employment competencies (pre-employment/work maturity, basic skills, and occupational skills) be obtained. (A waiver of 20 CFR 628.520(e) is unnecessary since this requirement applies only if the assessment indicates that a service is needed. This provision is also applied as non-binding guidance pursuant to waiver H.)

K. In response to the State's request to waive 20 CFR 631.3(i)(2) to permit the temporary recall to the former employer and thus permit a participant to continue to participate in the title III program, the Department does not believe such a waiver is required. Title III eligibility requirements (as defined in JTPA §§ 301(a)(1) or 314(h)) authorize services to workers who have been determined eligible prior to actual layoff, thus a temporary recall in and of itself may not change the ability to continue title III services as long as the eligibility requirements are met. This would require a determination that the recall was of short duration, e.g., under a continuing plant closure notice or layoff notice acceptable to the State. There is a related discussion in the preamble to the September 2, 1994 JTPA regulations (p. 45810). In summary, the Department believes that a "temporary recall" as described in your request and within the parameters discussed above is not the same as "temporary employment for the purpose of income maintenance" as described in 20 CFR 631.3(i)(2). However, the caveat in paragraph F.2.ii., above, that safeguards be in place to ensure that employers do not receive federal funding for training/retraining laid off and subsequently recalled/rehired employees applies here as well.

L. The Secretary waives the requirements of JTPA § 254(a) and 20 CFR 628.710 in order to enable Service Delivery Areas to selectively operate their summer programs for school dropouts for a period of up to a month prior to the months of school vacation.

M. The Secretary shall interpret the definition of "poverty area" as defined in JTPA § 263(g)(2) and 20 CFR 628.803(g)(3) to include "one or more contiguous census blocks," with a poverty rate of 30 percent or more as defined by the Bureau of Census.

N. 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.