[Federal Register Volume 63, Number 225 (Monday, November 23, 1998)]
[Notices]
[Pages 64832-64833]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31224]
[[Page 64831]]
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Part VIII
Department of Labor
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Employment and Training Administration
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Welfare-to-Work Grants; Performance Bonus Criteria; Notice
Federal Register / Vol. 63, No. 225 / Monday, November 23, 1998 /
Notices
[[Page 64832]]
DEPARTMENT OF LABOR
Employment and Training Administration
Welfare-to-Work Grants; Performance Bonus Criteria
AGENCY: Employment and Training Administration (ETA), DOL.
ACTION: Notice of Welfare-to-Work performance bonus criteria.
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SUMMARY: The Department of Labor (DOL) is responsible for administering
Welfare-to-Work Grants as authorized by the Balanced Budget Act of
1997. This includes developing a formula and accompanying guidelines
for awarding bonuses to successfully performing States. The Act
stipulates that bonuses are to be awarded in FY 2000 and based on the
performance of each State that is a Welfare-to-Work State in 1998 and
1999. DOL has consulted with the U.S. Department of Health and Human
Services (DHHS), the National Governors' Association (NGA), the
American Public Human Services Association (APHSA)--formerly American
Public Welfare Association (APWA), and State and local welfare and
workforce officials in drafting these guidelines.
FOR FURTHER INFORMATION CONTACT: Karen Greene, Chief, Division of
Performance Management and Evaluation, Office of Policy and Research,
United States Department of Labor, Employment and Training
Administration, (202) 219-8680--not a toll free number.
SUPPLEMENTARY INFORMATION:
I. Background
The Balanced Budget Act of 1997 amends the Social Security Act to
authorize the U.S. Department of Labor to provide Welfare-to-Work
Grants to States and local communities. The purpose of these grants is
to create additional job opportunities for the hardest-to-serve
recipients of Temporary Assistance for Needy Families (TANF) funds.
Section 5001(a)(5)(E) of the Social Security Act enables successfully
performing States in the Welfare-to-Work program to qualify for a
bonus. The bonus shall be awarded by a formula which includes the
following measures: placement in employment, employment retention,
increase in earnings of such individuals, and such other factors as the
Secretary deems appropriate. The formula may take into account general
economic conditions on a State-by-State basis. The Secretary of Labor
shall prescribe a performance threshold in a manner that ensures that
the performance bonus grants to states equal the $100,000,000 set aside
for this purpose.
As DOL approaches the development of the Welfare-to-Work
performance bonus formula and guidelines, certain factors make the
process unique. The Welfare-to-Work program operates within the broader
TANF and welfare reform effort. A set of ``High Performance Bonus''
guidelines for TANF performance in FY 1998 was issued by DHHS in March
of 1998 with additional clarification issues August 13, 1998. While
recognizing the unique nature of Welfare-to-Work grants, it is
important that these two bonus systems are compatible. As currently
authorized, the Welfare-to-Work performance bonus is a one-time
process, unlike the TANF high performance bonus that will be ongoing
over a period of five years. Thus, the Welfare-to-Work bonus criteria
may differ from the TANF bonus criteria in certain respects and should
also remain as straightforward as possible.
DOL has undertaken broad-based consultation with a workgroup of
DHHS, NGA, and APHSA and State and local welfare and workforce
officials to develop a bonus formula and guidelines for awarding the
performance grants. The workgroup has achieved consensus on a set of
proposed measures, explored the need and potential for economic
adjustments, identified procedures for determining the amount of bonus
awards, and examined the potential data sources for scoring States'
performance in the context of the anticipated reporting burden.
II. Formula and Guidelines
This section presents the set of performance measures, the
anticipated data sources, and the manner in which the bonus system will
be applied and grant amounts determined.
A. Performance Measures
The performance measures reflect the three specified in the statute
and the measures included in the TANF high performance bonus. They will
include two job entry measures (basic rate and 30+ hour rate) and two
post-placement measures (job retention and earnings gain).
1. Job Entry Rate: (a) Basic Rate = the number of participants
entering employment for the first time divided by the total number of
participants (i.e. the number of participants entering employment for
the first time + the number of participants who are not employed + the
number of participants entering employment not for the first time).
(b) 30+ Hour Rate = the number of participants entering employment
of at least 30 hours per week, or increasing hours of subsidized and
unsubsidized employment to 30 hours per week or greater for the first
time, divided by the total number of participants (i.e. the number of
participants entering or increasing to at least 30 hours of employment
per week + the number who are not employed or who work fewer than 30
hours per week).
Explanation: Job entry is a fundamental feature of the Welfare-to-
Work program. Providing two measures recognizes the importance of
moving the hard-to-employ Welfare-to-Work participants into employment.
At the same time, additional credit also should be given for promoting
self-sufficiency by helping participants secure full-time employment,
or jobs of at least 30 hours per week.
The time period for the measurement of both job entry measures will
be from October 1, 1998 through September 30, 1999. This allows for the
bonus criteria to apply when most States have reached a fully
operational stage.
Credit for basic job entry will include both subsidized and
unsubsidized employment and only the initial job entry for each
participant in light of the importance of securing an initial
attachment to the workforce. Basic job entry only counts for those jobs
obtained while receiving services from a Welfare-to-Work entity. Credit
for 30+ hour job entry will also include entry into both subsidized and
unsubsidized employment, but includes an initial placement into a 30+
hour job and an increase in hours of weekly employment from less than
30 to 30 or more hours per week. Credit for 30 + hour job entry will
include employment under 30 hours not obtained while receiving services
from a Welfare-to-Work entity if the employment is increased to 30 or
more hours while receiving services from the Welfare-to-Work entity.
Unsubsidized employment will be defined as any type of employment that
does not include a wage subsidy (e.g. a TANF wage subsidy or OJT).
Subsidized employment counts as long as it is not fully subsidized
employment or workfare, i.e. the amount paid to the individual exceeds
the amount of the subsidy.
2. Job Retention rate = the number of participants employed in
unsubsidized employment in the base quarter (Quarter 3: April 1 through
June 30, 1999) who are retained in unsubsidized employment in the
second subsequent quarter (Quarter 5: October 1 through December 31,
1999), divided by the number of participants employed in
[[Page 64833]]
unsubsidized employment in the base quarter (Q3).
3. Earnings Gain rate = the sum of the earnings of participants
retained in unsubsidized employment in the second subsequent quarter
(Q5) minus the sum of the earnings of that same group in the base
quarter (Q3), divided by the sum of the earnings of that same group in
the base quarter (Q3).
Explanation: The measures are based on a six-month time frame
between the base quarter and the measurement quarter because at least
six months are needed to see any significant earnings gains. The Act
also suggests that job retention of at least 6 months is an appropriate
outcome measure to use in evaluating the Welfare-to-Work program. Both
retention and earnings are based solely on employment in unsubsidized
jobs in light of the long-term goal of moving participants into
unsubsidized employment. The third quarter was selected as the base
period because it allows sufficient time for States to reach a steady
state of program operations and have substantial numbers of
participants in an employment retention phase. Measurement is limited
to a single quarter because of the overall time limits on applying the
bonus (measuring the FY 99 performance of FY 98 and 99 grantees for
bonuses to be awarded in FY 2000).
B. Data Sources
The primary source of data to measure performance for bonus
purposes will be the participant summary information included on the
Welfare-to-Work Cumulative Quarterly Financial Status Report. States
will automatically be considered for the Welfare-to-Work performance
bonus by submitting the proper information on the Quarterly Financial
Status Report. The primary source of data for filling out the
participant information on these quarterly reports is anticipated to be
Unemployment Insurance (UI) wage records. The recommended and
preferable data source for earnings and retention measurement is UI
wage records, with the measures and general approach having been set
anticipating their use. DOL understands that there will be States that
cannot or choose not to use UI wage records. States using other data
sources for retention and earnings gain must justify the sufficiency of
the other data collection methods to be used.
C. Bonus Allocation
Weighting the measures. The importance and influence of each of the
measures can be reflected through the weighting of the measure. During
the consultation on designing the bonus system, various views were
expressed and considered. DOL has developed a weighting scheme as
follows:
Job Entry Rate 60%
(a) Basic Rate 40%
(b) 30+ Hour Rate 20%
Retention and Earnings Rate 40%
(a) Retention Rate 25%
(b) Earnings Gain Rate 15%
Applying the formula. Statistical methods based on the distribution
of States' performance levels for each performance measure will be
used, both to determine which States can receive a bonus and to
calculate the bonus amounts.
Determining eligibility. Each State's eligibility for receiving a
bonus will be determined by a point system based on the extent to which
the State performs above or below the national average for each
measure. Assuming a normal distribution, a State will receive zero
points for each measure on which it performs average or below average;
one point for each measure on which it performs above average; and two
points for each measure on which it performs significantly above
average. If a State scores significantly below average on a specific
measure, it will receive a score of negative one on that measure. In
order to qualify for the bonus, a State must receive at least one point
on one of the two job entry measures, plus at least one point on either
the job retention or earnings gain measure. The extent of the standard
deviation from the mean for each measure will be the basis for what
determines above average (mean to one standard deviation above the
mean), significantly above average (one or more standard deviations
above the mean), and significantly below average (one or more standard
deviations below the mean) performance.
Determining bonus amounts. Each State that qualifies for a bonus
will be assigned a score according to the formula:
(W1)(X1) + (W2)(X2) + (W3)(X3) + (W4)(X4) = total score
(Where W represents the weight of the measure and X represents the
score for each measure)
For example, if a State scores a 1 on basic job entry, 0 on 30+ hour
job entry, a 2 on retention and
a 1 on earnings gain, their score would be: (40)(1) + (20)(0) + (25)(2)
+ (15)(1) = 105
States will then be grouped according to their scores. Top
performers (135-200 points) will receive a set percentage of their
original Welfare-to-Work grant amount. Second-level performers (100-134
points) and third-level performers (35-99 points) will receive
proportionately lower percentages. Applying the percentages to the
State's formula grant amount will scale the award to the size of the
State. Percentages will be set based on final performance data in a
manner that provides for the full distribution of the $100,000,000 set
aside for the bonus as required by the Act.
In order to avoid a single State receiving a disproportionately
large bonus grant, caps are set at no more than 25% of a State's
formula allotment, and no state may receive more than $20,000,000 (20%
of the bonus money available).
Equity adjustments. DOL, based on the consultation process and past
experience with providing adjustment approaches for performance
standards, acknowledges the need to take into account the different
economic circumstances in States and localities. The two most important
factors expected to influence performance are the unemployment rate
statewide and the unemployment rate in areas of the State with a high
concentration of Welfare-to-Work participants. There is no comparable
program able to provide a database that would allow the development of
a statistical model to confirm that assumption. Once performance data
are received, they will be analyzed to determine the extent to which
these or other economic factors influence program performance, and
appropriate adjustments will be taken under consideration in the
assessment of a State's performance. A supplemental notice outlining
more specific unemployment adjustment procedures will be published as
soon as it is available.
Signed at Washington, DC this 18th day of November 1998.
Dennis Lieberman,
Director, Office of Welfare to Work.
[FR Doc. 98-31224 Filed 11-20-98; 8:45 am]
BILLING CODE 4510-30-P
