[Federal Register: June 30, 2003 (Volume 68, Number 125)]
[Rules and Regulations]
[Page 38999-39003]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30jn03-25]
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Part V
Department of Labor
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Veterans' Employment and Training Service
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20 CFR Part 1001
Funding Formula for Grants to States; Interim Final Rule
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DEPARTMENT OF LABOR
Veterans' Employment and Training Service
20 CFR Part 1001
RIN 1293-AA10
Funding Formula for Grants to States
AGENCY: Veterans' Employment and Training Service (VETS), Department of
Labor.
ACTION: Interim final rule; request for comments.
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SUMMARY: The Department of Labor is issuing an interim final rule
implementing the Jobs for Veterans Act (Act). This rule establishes
formula criteria for making funds available to each State. This rule
will add a new Subpart F to 20 CFR part 1001.
DATES: This interim final rule is effective on July 30, 2003. The
Department is requesting comments to be considered on this interim
final rule. Comments will be considered and a final rule published as
quickly as possible. To ensure consideration, comments must be received
on or before August 29, 2003. This interim final rule expires September
30, 2004. A notice of proposed rulemaking will be published and the
final rule will be issued before September 30, 2004, which addresses
funding beyond fiscal year 2004.
ADDRESSES: Comments shall be sent to Paul Robertson, Legislative
Analysis Division, VETS. Electronic mail is the preferred method for
submitting comments. Comments must be clearly identified as pertaining
to the interim final rule and sent to robertson-paul@dol.gov. Brief
comments, limited to ten pages or fewer may be transmitted by facsimile
(FAX) at (202) 693-4754. Individuals with hearing impairments may call
(800) 670-7008 (TTY/TDD).
Where necessary, hard copies of comments also may be delivered to
Paul Robertson, Legislative Analysis Division, VETS, U.S. Department of
Labor, Room S-1325, 200 Constitution Avenue NW., Washington, DC 20210.
Because of heightened security measures, mail in Washington, DC is
sometimes delayed. For this reason we will only consider comments,
postmarked on or before the deadline for comments.
Receipt of submissions, whether by e-mail, FAX transmittal, or U.S.
Mail, will not be acknowledged; however, the sender may request
confirmation that a submission has been received, by telephoning VETS
at (202) 693-4714, or by making a request for confirmation (separate
from the submission) via the above e-mail.
Comments will be available for public inspection during normal
business hours at the above address. Persons who need assistance to
review the comments will be provided with appropriate aids such as
readers or print magnifiers. Copies of this interim final rule will be
made available in the following formats: large print, electronic file
on computer disk, and audiotape. To schedule an appointment to review
the comments and/or to obtain the interim final rule in an alternate
format, contact VETS at the e-mail address, telephone number, or mail
address listed above.
FOR FURTHER INFORMATION: Contact Paul Robertson, Legislative Analysis
Division, VETS, U.S. Department of Labor, Room S-1325, 200 Constitution
Avenue NW., Washington, DC 20210, or by e-mail at robertson-
paul@dol.gov.
SUPPLEMENTARY INFORMATION: The preamble to this interim final rule is
organized as follows:
I. Background--provides a brief description of the development of
the interim final rule.
II. Authority--cites the statutory provisions and rationale
supporting the interim final rule.
III. Section-by-Section Review of the Rule--summarizes pertinent
aspects of the regulatory text and describes its purposes and
application.
IV. Regulatory Flexibility and Regulatory Impact Analysis--sets
forth the applicable regulatory requirements.
I. Background
The President signed the Jobs for Veterans Act (Pub. L. 107-288)
into law on November 7, 2002. The statute amends title 38 of the United
States Code to revise and improve employment, training, and placement
services furnished to veterans. This rule implements the provisions of
38 U.S.C. 4102A(c) as amended by section 4 of the Act that establishes
a new funding formula for making funds available to each State, with an
approved State plan, to support the Disabled Veterans Outreach Program
(DVOP) and the Local Veterans Employment Representative (LVER) program.
II. Authority
The statutory authority for this interim final rule is 38 U.S.C.
4102A(c)(2)(B), as amended by the Jobs for Veterans Act, enacted
November 7, 2002, as Public Law 107-288. Congress allowed for the
phasing in of this requirement ``over the three fiscal-year period''
beginning in fiscal year 2003, which started on October 1, 2002 (38
U.S.C. 4102A(c)(2)(B)(ii), as amended by the Act). Because of the late
enactment of the law, one year of the phase-in had already lapsed on
the date of enactment. There are only two years, therefore, to phase-in
the funding formula. Congress intended that the formula will be phased-
in and be fully implemented by the beginning of fiscal year 2006, which
is October 1, 2005. The phase-in provision was not intended to delay
the anticipated date of full implementation of the formula. The only
practical way to adhere to the implementation expectations of Congress
is to begin the phase-in process in FY 2004. The Secretary of Labor
(Secretary) is publishing an interim final rule for the first phase-in
year, to be followed by a notice of proposed rulemaking, because full
notice and comment to begin implementation of the statutory phase-in
period would result in impracticable delay and would be contrary to the
public interest. Full notice and comment would be impracticable because
the statutory duty to execute the law in a timely manner cannot be
accomplished by strictly adhering to such requirements.
Solely using full notice and comment would be contrary to the
public interest because enacting a requirement in one year that, by
statutory design, was to take effect over a three-year period would
unduly impact States. The effective date of the law caused a reduction
of the phase-in to two years. If there are further delays brought about
through a full notice and comment period, then the second year of the
three-year phase-in period would be lost and the States would lose even
more of the benefit intended by the phase-in provision. Because the new
funding formula required by the Act will result in significant changes
to States' funding allocations, the Secretary has determined it is in
the public interest to act expediently to ensure States receive as much
of the benefit of the phase-in period as possible. This will enable
those States whose funding will be reduced more time to adjust to the
reduced funding and will avoid disruptions in service to the greatest
extent possible. It will also permit States, which gain funding to more
sensibly plan how to administer their programs.
These concerns provide a sufficient good cause basis to forgo full
notice and comment requirements for the first year in which the new
formula will be phased-in. To accommodate a full notice and comment
period and implement the formula beyond the first phase-in year, a
notice of proposed rulemaking will be published. The upcoming notice of
proposed
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rulemaking will address the funding formula for FY 2005 (the last year
of the phase-in period) and subsequent years.
III. Section-by-Section Review of the Rule
A. Funding Formula--Basic Grant
The Act requires the Secretary to make funds available to each
State, upon approval of an ``application'' (i.e., a State plan), to
support the DVOP and LVER programs designed to provide employment
services to veterans and transitioning servicemembers (38 U.S.C.
4102A(c)(2)(B), as amended by the Act). The Act further allows the
Secretary to use such criteria as the Secretary may establish in
regulation, including civilian labor force and unemployment data in
determining the funding levels (38 U.S.C. 4102A(c)(B)(i), as amended by
the Act). The statute requires that the amount of funding available to
each State reflect the ratio of: (1) The total number of veterans
residing in the State that are seeking employment; to (2) the total
number of veterans seeking employment in all States (38 U.S.C.
4102A(c)(B)(i)(I) and (II), as amended by the Act). Additionally, the
Act permits the Secretary to establish minimum funding levels and hold
harmless criteria, in order to mitigate the impact upon states whose
funding levels may be significantly affected by the implementation of
the new formula (38 U.S.C. 4102A(c)(B)(i)(iii), as amended by the Act).
The Act states that the use of this formula be phased-in over the
three fiscal-year period beginning October 1, 2002. Since the statute
was not enacted until November 7, 2002, after the beginning of fiscal
year 2003, we interpret this to mean that the first phase-in year for
the funding formula will be fiscal year 2004, which begins on October
1, 2003. This will only allow a 2-year phase-in period, fiscal years
2004 and 2005, instead of the 3 years as contemplated by the statute.
1. Basic Grant Funding Formula and Data and Methodology
It has been determined that the ratio of the number of veterans
seeking employment in each State to the number of veterans seeking
employment in all States can be best determined using data collected
through the Current Population Survey (CPS) and the Local Area
Unemployment Statistics (LAUS), both of which are administered by the
Bureau of Labor Statistics (BLS). The CPS is the most reliable source
of current State level data on the number of veterans in the civilian
labor force. However, because the sample size of veterans at the State
level is so small, the use of CPS to determine veterans' unemployment
rates at the State level is subject to large relative sampling errors.
LAUS data are considered as the most highly reliable data on the
general rate of unemployment at the State level and do not contain the
large sampling error found in the CPS. Therefore, we determined to use
LAUS data to measure the State unemployment rate. Furthermore, the
Office of Management and Budget (OMB) requires Agencies allocating
federal funds that include unemployment as a factor, to use LAUS as the
indicator of unemployment, unless the authorizing statute specifies
otherwise (OMB Statistical Policy Directive 11). Since LAUS data is
based on total unemployment for a State, we concluded that LAUS data is
the best available measure of veterans who are seeking work.
Accordingly, we concluded the number of unemployed veterans in each
State can be best determined by using a ratio of the general
unemployment level in each State to the unemployment level in all
States (from LAUS for the individual States / LAUS for all States) and
the number of veterans in the civilian labor force in each State
compared to the total number of veterans in the civilian labor force
across all States (from CPS for the individual States / CPS for all
States). The result of these two ratios will be averaged and converted
to a percentage of veterans seeking employment in the State compared to
the percentage of veterans seeking employment in all States. Three-year
averages of the CPS and LAUS data are used in calculating the funding
formula to stabilize the effect of annual fluctuations in the data in
order to avoid undue fluctuations in the annual amounts allocated to
States.
2. Minimum Funding Levels and Hold Harmless Criteria
The Act authorizes the Secretary to establish hold harmless
criteria and minimum funding levels (38 U.S.C. 4102A(c)(2)(B)(iii), as
amended by the Act). This interim final rule establishes a hold
harmless rate of eighty percent for the phase-in period for fiscal year
2004 to mitigate the impact of the most significant reductions to
States' prior funding levels. With the eighty percent hold harmless
during fiscal year 2004 each State will be provided no less than eighty
percent of its previous year's allocation. The eighty percent hold
harmless will allow the reduction of funding, to those States impacted,
to be implemented incrementally. To give States the maximum available
period to adjust to changes in funding, the Department is implementing
the first year's hold harmless rate through this interim final rule and
will propose a second year hold harmless rate in the notice of proposed
rulemaking to be published later. Finally, a minimum funding level of
0.28 percent of the prior year's total funding level will be applied,
meaning that no State may receive less than that amount, which is the
same percentage applied in section 6 of the Wagner-Peyser Act (29
U.S.C. 49e(b)(3)).
3. Other Funding Criteria
In addition to requiring the Secretary to use civilian labor force
and unemployment data in establishing States' funding levels, the Act
states that the Secretary ``shall make available to each State * * * an
amount of funding * * * using such criteria as the Secretary may
establish in regulation * * *'' (38 U.S.C. 4102A(c)(2)(B)(i), as
amended by the Act). In addition to the amount awarded based on the
basic grant funding formula, described in section 1 of this document,
the Secretary will distribute four percent of the total amount made
available for allocation to the States based on Transition Assistance
Program (TAP) workload and exigent circumstances (38 U.S.C. 4102,
4102A(b), and 4107(c)(1), and 10 U.S.C. 1141). These other funding
criteria are discussed more fully below.
a. Transition Assistance Program Workload
The Act requires the Secretary to implement programs to ease the
transition of servicemembers to civilian careers (38 U.S.C. 4102. See
also 10 U.S.C. 1141). Transition Assistance Program workshops provide
such employment services for transitioning servicemembers. Since active
military personnel are not included in the CPS civilian labor force
data, or in the LAUS unemployment data, the level of need for
Transition Assistance Program workshops are not reflected in the
funding formula for the basic grant. Therefore, in order to ensure that
each State has adequate funding to provide Transition Assistance
Program workshops, supplemental funding is warranted. This funding will
be proportional to each State's Transition Assistance Program workload
as identified in its State plan. Policy guidance will be provided to
States to assist them in determining the amounts needed for this
additional workload, which will be calculated on a per workshop basis
as identified in the State plan.
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b. Exigent Circumstances
Funding will be made available for exigencies, including but not
limited to, needs based on sharp or unanticipated fluctuations in State
unemployment levels and services to transitioning servicemembers as
required by the Act. Economic and unemployment conditions at the time
of the grant application may not reflect actual conditions. In such
cases, program needs may warrant additional funding. These funds will
be made available to States based on need and as supported by an
approved modified plan.
Regulatory Flexibility and Regulatory Impact Analysis
The Regulatory Flexibility Act of 1980, as amended in 1996 (5
U.S.C. chapter 6), requires the Federal government to anticipate and
minimize the impact of rules and paperwork requirements on small
entities. ``Small entities'' are defined as small businesses (those
with fewer than 500 employees, except where otherwise provided), small
non-profit organizations (those with fewer than 500 employees, except
where otherwise provided), and small governmental entities (those in
areas with fewer than 50,000 residents). We have assessed the potential
impact of this interim final rule by consulting with a wide range of
small entities, in order to identify and address any areas of concern.
Based on that assessment, we certify that the interim final rule, as
promulgated, will not have a significant impact on a substantial number
of small entities. We are transmitting a copy of our certification to
the Chief Counsel for Advocacy of the Small Business Administration.
This interim final rule implements reforms to the nation's job
training system. The Act will provide resources to States to assist
veterans in preparing for, obtaining and retaining employment. This
rule sets forth the conditions under which State governments receive
funding. This rule does not directly impact small governmental
entities.
Paperwork Reduction Act
This rule does not contain information collection that is subject
to review by the Office of Management and Budget (OMB) under the
Paperwork Reduction Act of 1995.
Executive Order 12866, Regulatory Planning and Review
The Department of Labor has determined that this rule is not a
``significant regulatory action'' under Executive Order 12866 because
this action will not: (1) Have an annual effect on the economy of $100
million or more, or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities; (2) create a serious inconsistency, or
otherwise interfere, with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs, or the rights and obligations of recipients
thereof; (4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
Executive Order 12866. Therefore, no regulatory impact analysis is
required.
Unfunded Mandates
Executive Order 12875--This rule will not create an unfunded
Federal Mandate upon any State, local, or tribal government.
Unfunded Mandate Reform Act of 1995--This rule will not include any
Federal mandate that may result in increased expenditures by State,
local and tribal governments in the aggregate of $100 million or more,
or increased expenditures by the private sector of $100 million or
more.
Executive Order 13132, Federalism
This rule will not have substantial direct effects on the states,
on the relationship between the national government and the states, or
on the distribution of power and responsibilities among the various
levels of government. Therefore, the requirements of section 6 of
Executive Order 13132 do not apply to this rule.
Executive Order 12988
This rule has been drafted and reviewed in accordance with
Executive Order 12988, Civil Justice Reform, and will not unduly burden
the Federal court system. The rule has been written so as to minimize
litigation and provide a clear legal standard for affected conduct, and
has been reviewed carefully to eliminate drafting errors and
ambiguities.
0
For the reasons set forth in the preamble, 20 CFR chapter IX is amended
as set forth below.
PART 1001--SERVICES FOR VETERANS
0
1. The authority citation continues to read as follows:
Authority: Sec. 4(a), Pub. L. 107-288; 38 U.S.C. 4102A.
0
2. Part 1001 is amended by adding a new Subpart F to read as follows:
Subpart F--Formula for the Allocation of Grant Funds to State
Agencies
Sec.
1001.150 Method of calculating State base grant awards.
1001.151 Other funding criteria.
1001.152 Hold harmless criteria and minimum funding level.
Subpart F--Formula for the Allocation of Grant Funds to State
Agencies
Sec. 1001.150 Method of calculating State base grant awards.
(a) In determining the amount of funds available to each state, the
ratio of the number of veterans seeking employment in the state to the
number of veterans seeking employment in all states will be used.
(b) The number of veterans seeking employment will be determined
based on the number of veterans in the civilian labor force and the
unemployment rate. The civilian labor force data will be obtained from
the Current Population Survey (CPS) and the unemployment rate will be
obtained from the Local Area Unemployment Statistics (LAUS).
(c) Each state's allocation will be determined by dividing the sum
of the corresponding figures across all states for the number of
unemployed veterans in each state (LAUS for the individual states /
LAUS for all sStates) and the number of veterans in the civilian labor
force in each state compared to the total number of veterans in the
civilian labor force across all states (CPS for the individual states /
CPS for all states). The result of these two ratios will be averaged
and converted to a percentage of veterans seeking employment in the
state compared to the percentage of veterans seeking employment in all
states. Three-year averages of the CPS and LAUS data will be used in
calculating the funding formula to stabilize the effect of annual
fluctuations in the data in order to avoid undue fluctuations in the
annual amounts allocated to states.
Sec. 1001.151 Other funding criteria.
(a) Four percent of the total amount available at the national
level for allocation to the states will be distributed to the states
based on Transition Assistance Program (TAP) workload and other
exigencies.
(b) Funding for TAP workshops will be provided on a per workshop
basis as described in the approved state plan submitted by the state.
(c) Funds for exigent circumstances, such as unusually high levels
of unemployment, surges in the demand for transitioning services,
including the
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need for TAP workshops, will be allocated based on need as supported by
an approved or modified state plan.
Sec. 1001.152 Hold harmless criteria and minimum funding level.
(a) A hold harmless rate of 80 percent of the prior year's funding
level will be applied for fiscal year 2004.
(b) A minimum funding level is established to ensure that in any
year, no state will receive less than 0.28 percent of the previous
year's total funding for all states.
Signed at Washington, DC this 25th day of June, 2003.
Frederico Juarbe Jr.,
Assistant Secretary of Labor for Veterans' Employment and Training.
[FR Doc. 03-16481 Filed 6-27-03; 8:45 am]
BILLING CODE 4510-79-P