[Federal Register Volume 62, Number 222 (Tuesday, November 18, 1997)]
[Rules and Regulations]
[Pages 61588-61613]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29966]
[[Page 61587]]
_______________________________________________________________________
Part II
Department of Labor
_______________________________________________________________________
Employment and Training Administration
_______________________________________________________________________
20 CFR Part 645
Welfare-to-Work (WtW) Grants; Interim
Rule
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 /
Rules and Regulations
[[Page 61588]]
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DEPARTMENT OF LABOR
Employment and Training Administration
20 CFR Part 645
RIN 1205-AB15
Welfare-to-Work (WtW) Grants
AGENCY: Employment and Training Administration (ETA), DOL.
ACTION: Interim final rule; request for comments.
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SUMMARY: The Employment and Training Administration hereby issues an
Interim Final Rule implementing the Welfare-to-Work (WtW) grant
provisions of Title IV, Part A of the Social Security Act as amended by
the recent enactment of the Balanced Budget Act of 1997. The Interim
Final Rule provides an administrative framework for the WtW program
which is being coordinated with the closely-related Temporary
Assistance for Needy Families (TANF) program administered by the
Department of Health and Human Services (DHHS). While the use of WtW
funds should occur within the larger framework of the TANF program in
each State, these funds have a purpose that is distinct from that of
the TANF program. The purpose of WtW is to provide transitional
assistance which moves hard-to-employ welfare recipients living in high
poverty areas into unsubsidized employment and economic self-
sufficiency.
DATES: Effective Dates: This Interim Final Rule shall become effective
on November 18, 1997. However, affected parties do not have to comply
with the information collection requirements in Sec. 645.240 (reporting
requirements for WtW programs) until DOL publishes in the Federal
Register the control numbers assigned by the Office of Management and
Budget (OMB). Publication of the control numbers notifies the public
that OMB has approved this information collection requirement under the
Paperwork Reduction Act of 1995.
Comment Period: Comments must be submitted by January 20, 1998. The
Department will not consider comments received after this date.
Comments that are less than 10 pages in length may be transmitted via
facsimile at (202) 219-0376, provided that submission of written text
follows.
ADDRESSES: Submit written comments to the Employment and Training
Administration, Welfare-to-Work Office, 200 Constitution Avenue, NW,
Room S5513, Washington, D.C. 20210, Attention: Peter E. Rell.
All comments shall be available for public inspection and copying
during normal business hours at the Employment and Training
Administration, Office of Employment and Training Programs, 200
Constitution Avenue, NW, Room N4459, Washington, D.C. 20210. Copies of
the Interim Final Rule are available in the alternate formats of large
print and electronic file on computer disk which may be obtained at the
above-stated address. The Interim Final Rule is also available on the
WtW web site at http://wtw.doleta.gov. Comments may be submitted
electronically to that web address.
In compliance with 28 U.S.C. 2112(a), the Employment and Training
Administration designates the Associate Solicitor for Employment and
Training Services, Office of the Solicitor, U.S. Department of Labor,
200 Constitution Avenue, NW, Room N2101, Washington, D.C. 20210, as the
recipient of petitions to review this Interim Final Rule.
FOR FURTHER INFORMATION CONTACT: Mr. Peter E. Rell, Welfare-to-Work
Office, U.S. Department of Labor, 200 Constitution Avenue, NW, Room
S5513, Washington, D.C. 20210, Telephone: (202) 219-0181 (voice) (This
is not a toll-free number.) or 1-800-326-2577 (TDD).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
Pursuant to the Paperwork Reduction Act of 1995, information
collection requirements which would be imposed as a result of the
Interim Rule are being submitted separately to the Office of Management
and Budget.
I. Background
On August 22, 1996, President Clinton signed the Personal
Responsibility and Work Opportunity Reconciliation Act (PRWORA), a
comprehensive welfare reform bill, under which the TANF program was
established to supersede the Aid to Families with Dependent Children
(AFDC) welfare program, the Job Opportunities and Basic Skills (JOBS)
Training program and the Emergency Assistance (EA) Program. The TANF
program at section 401(a) of the Social Security Act (Act) established
the following objectives:
Provide assistance to needy families so that children may
be cared for in their own homes or in the homes of relatives;
End the dependence of needy parents on government benefits
by promoting job preparation, work, and marriage;
Prevent and reduce the incidence of out-of-wedlock
pregnancies and establish annual numerical goals for preventing and
reducing the incidence of these pregnancies; and
Encourage the formation and maintenance of two-parent
families.
The TANF provisions substantially changed the nation's welfare
system from one in which cash assistance was provided on an entitlement
basis to a system in which the primary focus is on moving welfare
recipients to work and promoting family responsibility, accountability
and self-sufficiency. In general, adult welfare recipients are expected
to become self-sufficient within a 60-month period of time. In support
of this ``work-first'' objective, the TANF provisions established an
overall work participation rate for all households and a work
participation rate for two-parent families that must be met by each
State starting in fiscal year (FY) 97 and in each fiscal year
thereafter through FY 2002. States that do not meet the TANF-
established work participation rates face significant financial
penalties.
The reference to ``work-first'' refers to the TANF concept that the
primary focus is on placing individuals in employment activities.
Nevertheless, the work-first approach also recognizes that individuals
may be provided, as appropriate, education and skills training related
to the job, as well as other services to ensure lasting employment and
the achievement of self-sufficiency. Since the enactment of PRWORA, the
Administration and Congress have been concerned that those welfare
recipients who have the least skills, education, employment experience
and who live within high poverty areas may need additional assistance
to obtain lasting jobs and become self-sufficient.
On August 5, 1997, the President signed the Balanced Budget Act of
1997. This legislation amended certain TANF provisions of the Social
Security Act and authorized the Secretary of Labor to provide WtW
grants to States and local communities for transitional employment
assistance to move the hard-to-employ TANF welfare recipients into
unsubsidized jobs and economic self-sufficiency. Approximately 75
percent of the funds in each fiscal year will be distributed as formula
grants to the States, with 85 percent to be passed through to local
service delivery areas (SDAs) (generally, one or more units of local
government with a population of 200,000 or more) in the States to be
administered by the
[[Page 61589]]
Private Industry Council (PIC) for the SDA, or an alternate
administering entity approved by the Secretary of Labor according to
the statutory requirements. The funds distributed through the WtW grant
program will assist States and PICs to meet their welfare reform
objectives by providing additional resources targeted to hard-to-employ
welfare recipients residing in high poverty areas within the State.
WtW activities should be coordinated with those undertaken through
TANF, as hard-to-employ welfare recipients constitute a significant
portion of the TANF eligible population. Therefore, the ability of
State/County TANF agencies, the PICs under the Job Training Partnership
Act (JTPA), local governments and a variety of other entities (e.g.,
One-Stop systems, private sector employers, labor organizations,
business and trade associations, education agencies, housing agencies,
community development corporations, transportation agencies, community-
based and faith-based organizations, disability community
organizations, community action agencies, and colleges and universities
which provide some of the assistance needed by the targeted population)
to implement WtW programs that move these individuals into employment
and self-sufficiency will be a major factor in the success of the
national initiative to reform the welfare system.
The Interim Final Rule provides a framework for the administration
of WtW programs, in coordination with the closely-related TANF program.
The Employment and Training Administration (ETA) has coordinated its
WtW regulatory efforts with the rulemaking being initiated by the
Department of Health and Human Services (DHHS) for the TANF program.
The Interim Final Rule supplements TANF's emphasis on moving welfare
recipients into work, and on improving program evaluation and
performance.
Section 403(a)(5)(A)(ii)(I) of the Act indicates that the States'
WtW formula plans are an ``addendum'' to the State TANF plans. In
keeping with the Congressional intent to allow States maximum
flexibility in implementing TANF requirements, the WtW regulations
provide States and local governments with broad discretion to design
and implement WtW programs that meet the needs of the hard-to-employ
population in the individual States. This approach is consistent with
PRWORA's statutory intent to provide States with maximum discretion.
The PRWORA Conference Report, H.R. Conf. Rep. No. 725 104th Cong. 2nd
Sess. (1996), states that the legislation establishes ``broad cash
welfare and child care block grants providing maximum flexibility so
that States can reform welfare in ways that are appropriate for them,
and can move families into jobs.''
The WtW statute contains several provisions designed to encourage
creative and effective use of grant funds. In particular, section
403(a)(5)(B) provides that approximately 25 percent of WtW funds shall
be distributed through a competitive grant process which are designed,
in part, to expand the base of knowledge about programs to successfully
move hard-to-employ recipients to unsubsidized employment and self-
sufficiency. In addition, section 403(a)(5)(E) sets aside $100 million
as a successful performance bonus, to be distributed in FY 2000 among
States who most effectively place hard-to-employ individuals in lasting
employment at increased earnings.
The format, as well as the substance, of the Interim Final Rule
reflects the Administration's commitment to regulatory reform. The
current Federal Register Document Drafting Handbook encourages Federal
agencies to produce regulations that are reader-friendly. The
Department has made every effort to make these regulations clear and
easy to understand, as well as to anticipate issues that may arise and
to provide appropriate direction. To this end, the Part 645 regulatory
text is presented in a ``question and answer'' format.
Section 403(a)(5)(C)(viii) of the Act requires the Secretary of
Labor to prescribe regulations implementing the WtW program within 90
days of enactment, after consultation with the Secretaries of DHHS and
Housing and Urban Development (HUD). Pursuant to Secretary of Labor's
Order No. 4-75, the Assistant Secretary for Employment and Training has
been delegated the responsibility to carry out WtW policies, programs,
and activities for the Secretary of Labor.
Given the short time frame imposed on the Department, the
Employment and Training Administration (ETA) has moved quickly to
initiate coordination with the other Federal agencies that have related
concerns. In particular, the Department established a Federal Policy
Committee composed of officials from the Departments of HHS, HUD,
Transportation and Labor. The Policy Committee reviewed and provided
policy recommendations to the Department on issues that arose during
the development of the Interim Final Rule.
In addition, ETA requested and received input from a broad range of
interested parties regarding guidance to be provided by the Agency on
how to comply with a number of WtW statutory provisions, e.g.,
allowable matching funds, expenditure time limits, reallocation policy,
Governors' authority to select the State administrative agency,
conditions under which the Governor may select an alternate
administrative agency (other than the Private Industry Council) at the
local level, eligible grant applicants for competitive WtW grants,
allowable activities, post-employment and job retention services, job
creation through public or private sector employment wage subsidies,
community services and work experience programs, limits on
administration costs, and performance standards and bonuses.
The Agency has determined that this Interim Final Rule, as
promulgated, complies with the WtW statutory mandate and will provide
effective direction for the implementation of WtW programs. ETA will
review all comments received in response to the Interim Final Rule, as
well as program experience, in considering what further action is
necessary and promulgating a Final Rule.
II. Summary and Explanation
This section describes and explains the individual provisions of
the Interim Final Rule. The explanatory text, in general, adheres
closely to the corresponding WtW statutory language. The supporting
rationale is provided for those instances where the rule provides
direction not prescribed by the WtW statute.
ETA has set regulations only where they are necessary to clarify or
to explain how the Agency intends to interpret the WtW statute.
Consistent with the Act, the Interim Final Rule provides the States and
local governments with the primary responsibility to initiate and
develop program implementation procedures and policy guidance regarding
WtW administration. For example, while 20 CFR 645.230 indicates that
the OMB Circular A-102 ``Common Rule'' requirements apply to WtW
programs, the Department has not defined what constitutes WtW
``allowable activities'' which are used under section 403(a)(5)(C) of
the Act.
Pursuant to Section 411(a)(1) of the Social Security Act, DHHS has
the responsibility to issue WtW participant and program data reporting
requirements, after consultation with other appropriate parties.
Accordingly, this Interim Final Rule does not address such reporting
requirements in detail. Consistent with the purpose of WtW, which is to
move welfare recipients into
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unsubsidized employment and economic self-sufficiency, the statute
anticipates reporting on these measures: placements in unsubsidized
employment; placements in unsubsidized employment that last at least
six months; placements in the private and public sectors; earnings of
individuals who obtain employment; and average expenditures per
placement.
Subpart A--Scope and Purpose
What Does This Part Cover? (Sec. 645.100)
This section of the Interim Final Rule indicates that Part 645
provides regulatory provisions applicable to WtW formula grant funds
that are to be used to carry out State-level programs and programs
conducted by the PICs at the Service Delivery Area (SDA) level. This
part of the regulations also provides general guidance on WtW
competitive grants, but it should be clear the Department intends to
publish specific Solicitations for Grant Applications (SGAs) in the
future. The SGAs to be published will be disseminated widely and will
contain specific information about purpose, application requirements,
funding amounts, and submission instructions for competitive grant
awards.
What Are the Purposes of the Welfare-to-Work Program? (Sec. 645.110)
This section of the Interim Final Rule describes what the
Department believes to be the statutory objective of the WtW program,
which complements the overall objectives of the TANF program. For
example, the WtW statutory provisions indicate that the ultimate
objective to be achieved through the various allowable activities is to
``* * * move individuals into and keep individuals in lasting
unsubsidized employment * * *''. In this regard, the WtW program
complements the TANF objective to ``* * * end the dependence of needy
parents by promoting job preparation, work * * *''. The WtW Program
focuses on assistance on hard-to-employ welfare recipients living in
high poverty areas.
Although the section requires only that WtW grant funds be
coordinated with the State TANF expenditures, the Department also
intends that WtW grant funds be coordinated with available resources
from the Job Training Partnership Act (JTPA), the Employment Service,
the Child Care and Development Block Grant, One-Stop systems, private
sector employers, labor organizations, business and trade associations,
vocational rehabilitation and other education agencies, housing
agencies, community development corporations, transportation agencies,
community-based and faith-based organizations, disability community
organizations, community action agencies, and colleges and universities
and other sources that provide assistance to the WtW targeted
individuals.
What Definitions Apply to This Part? (Sec. 645.120)
This section of the Interim Final Rule includes a limited number of
definitions of terms, acronyms and phrases important to the
implementation of the WtW programs. This section is not intended to be
an all-inclusive listing of definitions provided within the WtW
legislation and WtW regulations.
This section includes definitions for the terms ``adult'',
``minor'', and ``TANF MOE'' found in the TANF statute. The Department
also relied on the definitions provided in the JTPA regulations at 20
CFR Part 626 for the terms ``PIC'' and ``SDA.'' The definition for
``Chief Elected Official'' comes from Section 103(c) of the Job
Training Partnership Act, as amended.
States and PICs (and alternate agencies) should keep in mind that
additional definitions applicable to the WtW program, but not listed in
this section for the sake of brevity, can be found in the definitions
section(s) of the pertinent OMB Circulars on Uniform Administrative
Requirements and the OMB Cost Principles Circulars. For example, 29 CFR
97.3 contains definitions for terms and acronyms relating to
administration of the WtW programs operated by State, local and Indian
tribal organizations, unless otherwise specified. Similarly, 29 CFR
Part 95 contains other administrative definitions relating to non-
profit organizations.
Subpart B--General Program and Administrative Requirements
What Does This Part Cover? (Sec. 645.200)
This subpart provides general program and administrative
requirements for WtW formula grant funds, including Governors' funds
for long-term recipients of assistance, and for competitive grant
funding.
Of the total amount of WtW funds available for allotment (after
reserving an amount for Indian tribes, evaluation, and performance
bonuses), 75 percent is allotted to the States on a formula basis.
Generally, the States are required to distribute at least 85 percent of
this amount, pursuant to a statutory formula, to service delivery
areas. The Governor of a State may reserve up to 15 percent of the
State's allotment for projects to help long-term recipients of
assistance. The roughly 25 percent of the funds that is not allotted to
the States by formula is available for the Secretary to award through a
competitive grant process. The regulations which appear in this subpart
apply to these funds.
What Is Meant by the Terms ``Entity'' and ``Project'' in the Statutory
Phrase ``An Entity that Operates a Project'' With Welfare-to-Work
Funds? (Sec. 645.210)
This section defines the terms ``entity'' and ``project'' in the
phrase ``an entity that operates a project'' with WtW funds, as used in
section 403(a)(5)(C)(ii) of the Act.
For WtW substate formula funds, ``entity'' means the PIC (or the
alternate agency designated by the Governor and approved by the
Secretary) which administers the WtW formula funds in a service
delivery area(s). This entity is referred to in Secs. 645.211 through
645.225 as the ``operating entity''. The term ``entity'' does not refer
to subrecipients, contractors, vendors, or other parties to which the
PIC or alternate agency may choose to distribute WtW formula funds to
provide specific services. The term ``project'' means all activities,
administrative and programmatic, supported by the total amount of the
WtW formula funds allotted to an entity as described above. Therefore,
the requirement relating to the expenditure of 70 percent WtW funds on
hard-to-employ individuals, as described in Sec. 645.211, applies to
all of the funds allotted to the PIC/alternate administering agency.
The entity need not impose these expenditure requirements on each
individual subrecipient, contractor, vendor or other party to whom it
may choose to distribute WtW funds. However, the entity must ensure
that, in the aggregate, it complies with the 70 percent expenditure
requirement.
For Governors' funds for long-term recipients of assistance,
``entity'' means the agency, group, or organization to which the
Governor has distributed such funds, as described in Sec. 645.410 (b)
and (c). This entity is referred to in Secs. 645.211 through 645.225 as
the ``operating entity''. The term ``project'' means all activities,
administrative and programmatic, supported by the total amount of any
one award of Governor's funds made to an entity as described above.
Therefore, should the entity receive more than one award from the
Governor, the 70 percent expenditure requirement, as described in
Sec. 645.211, applies individually to each award. The entity need not
impose the expenditure requirement on each individual
[[Page 61591]]
subrecipient, contractor, vendor or other party to whom it may choose
to distribute WtW funds. However, the entity must ensure that in the
aggregate it complies with the 70 percent expenditure requirement.
For competitive WtW grants, ``entity'' means an eligible applicant,
as described in Sec. 645.500, which is awarded a competitive WtW grant
by the Secretary. This entity is referred to in Secs. 645.211 through
645.225 as the ``operating entity''. The term ``entity'' does not refer
to subrecipients, contractors, vendors, or other parties to which the
competitive grant recipient may choose to distribute WtW funds. The
term ``project'' means all activities, administrative and programmatic,
supported by the total amount of any one competitive grant award.
Therefore, should the same entity receive more than one competitive
grant, the 70 percent expenditure requirement, as described in
Sec. 645.211, applies individually to each competitive grant. The
entity need not impose the expenditure requirements on each individual
subrecipient, contractor, vendor or other party to whom it may choose
to distribute WtW funds. However, the entity must ensure that in the
aggregate it complies with the 70 percent expenditure requirement.
How Must Welfare-to-Work Funds Be Spent by the Operating Entity?
(Sec. 645.211)
This section restates the statutory provisions, at section
403(a)(5)(C)(ii) and (iii) of the Act, which require that an operating
entity, as described in Sec. 645.210 of this part, expend not less than
70 percent of the WtW funds allotted or awarded to it for the benefit
of hard-to-employ individuals, as described in Sec. 645.212, and which
provide that up to 30 percent of the funds may be spent to assist
individuals with characteristics associated with long-term welfare
dependence, as described in Sec. 645.213. If less than 30 percent of
the funds are spent to assist individuals with long-term welfare
dependence characteristics, as described in Sec. 645.213, the remaining
funds shall be spent to benefit hard-to-employ individuals, as
described in Sec. 645.212. This requirement applies to all WtW funds,
i.e., to substate formula funds, Governors' funds for long-term
recipients of assistance, and competitive funds. It should be noted
that the requirement does not apply to the proportion of WtW
participants served; rather, as noted above, it applies to the
percentage of WtW funds expended on the participants in each category
of eligibility.
Who May be Served as a Hard-to-Employ Individual Under the 70 Percent
Provision? (Sec. 645.212)
The WtW legislation targets those welfare recipients who will have
the most difficulty transitioning into employment. Specifically, the
Act, at sections 403(a)(5)(C)(ii) and (iv), establishes three different
categories of individuals who may be served under the 70 percent
provision. An individual is eligible if (s)he meets the criteria of any
one of the following three eligibility categories. (1) To be eligible
under the first category, individuals: (a) must be recipients of TANF
assistance; and (b) must have two of the three specified barriers to
employment; and (c) must be long-term recipients of TANF assistance or
will become ineligible for TANF assistance within twelve months. (2) To
be eligible under the second category, an individual must be a
noncustodial parent of a minor whose custodial parent meets the three
criteria of the first eligibility category. (3) To be eligible under
the third category, an individual must have the specified barriers to
employment and no longer be receiving TANF assistance because (s)he has
reached either the Federal five-year lifetime limit on receipt of
assistance, or a State-imposed lifetime limit. The regulations
paraphrase the statutory language.
Eligibility: Category One. To be eligible to be served under
category one of the 70 percent provision, an individual must meet each
of the following three eligibility criteria:
Criterion a: Recipients of TANF Assistance. The individual must be
a current recipient of TANF assistance. The Act, at section
403(a)(5)(C)(ii), uses the term ``recipients of assistance under the
program funded under this part.'' In order to facilitate coordination
at the local level, the Department has consulted with DHHS regarding
interpretations for ``the program funded under this part'' and
``assistance''. Provisions in the statute which use the term ``the
program funded under this part'' refer to the State's program of family
assistance that is operated in accordance with the TANF statute,
regardless of its funding source. Thus, any individual receiving TANF
assistance under the State TANF program (whether funded with State or
Federal funds) is deemed to meet this criterion of eligibility under
the 70 percent provision.
``Assistance'' means every form of support provided to families
under TANF (including child care, work subsidies, and allowances to
meet living expenses), except: (a) services that have no direct
monetary value to an individual family and that do not involve implicit
or explicit income support, such as counseling, case management, peer
support, and employment services that do not involve subsidies or other
forms of income support; and (b) one-time, short-term assistance (i.e.,
assistance which is paid no more than once in any 12 month period, is
paid within a 30 day period, and covers needs that do not extend beyond
a 90-day period, such as automobile repair to obtain employment and
avoid welfare receipt, and appliance repair to maintain living
arrangements). The Secretary notes that she may issue further rules to
conform this provision to similar provisions in forthcoming final
regulations governing the TANF program.
Criterion b: Barriers to Employment. The Act, at section
403(a)(5)(C)(ii)(I), states that as the second criterion of eligibility
under category one of the 70 percent provision, an individual must face
at least two of the three following barriers to employment: (1) the
individual has not completed secondary school or obtained a certificate
of general equivalency, and has low skills in reading or mathematics;
(2) the individual requires substance abuse treatment for employment;
or (3) the individual has a poor work history.
We are defining the phrase ``has low skills in reading or
mathematics'', which is used in the first barrier in criterion b, to
mean having reading or mathematics skills at or below grade level 8.9.
This definition is consistent with the definition which is used in the
Job Training Partnership (JTPA) program. We are also defining the
phrase ``has a poor work history'' to mean having worked no more than
three consecutive months in the last 12 calendar months. In this way
individuals who have taken the initiative to try employment but have
not been successful for more than a brief period of time, are eligible
for assistance. These definitions reinforce the intent of the WtW
legislation to focus assistance on hard-to-employ individuals. However,
we provide PICs flexibility for each of these definitions for up to 10
percent of participants to recognize individual circumstances,
specialized needs, including individuals with disabilities, and local
labor market conditions.
TANF agencies are required to perform an initial assessment of the
skills, prior work experience and employability of each TANF recipient
who is at least 18 years old, or who has not completed high school (or
equivalent) and is not attending
[[Page 61592]]
secondary school. It is likely that this assessment may identify the
above-noted barriers, and we do not want to require further assessment
for the purposes of establishing eligibility where it is not needed.
Additionally, in relation to the criterion ``requires substance abuse
treatment for employment,'' we note that DHHS is suggesting that the
optional individual responsibility plan which the TANF agency develops
based on the initial assessment may require the individual to undergo
appropriate substance abuse treatment. We do not want to impose an
additional Federal definition which would cause a local WtW program
operator to ``second-guess'' this determination.
Criterion c: Long-Term/Duration-Impacted TANF Recipients. The third
eligibility criterion under category one of the 70 percent provision
requires that individuals be long-term recipients of TANF assistance or
will become ineligible for TANF assistance within 12 months. The
regulations paraphrase the statutory requirements, at section
403(a)(5)(C)(ii)(II), which states that an individual: (1) must have
received assistance under a State TANF program, and/or its predecessor
program, for at least 30 months, whether consecutive or not; or (2)
will become ineligible for assistance within 12 months due to Federal
or State-imposed durational time limits on receipt of TANF assistance.
This includes individuals who have been exempted from the durational
limits due to hardship pursuant to section 408(a)(7)(C) of the Act, but
would have faced termination within 12 months without the exemption.
Eligibility: Category Two: Noncustodial Parents. The regulations
paraphrase the statutory requirement at section 403(a)(5)(C)(ii). A
noncustodial parent of a minor child whose custodial parent meets the
eligibility criteria of category one, as specified in Sec. 645.212(a)
of this part, is eligible under the 70 percent provision. In order to
facilitate coordination at the local level, we are not defining the
term ``noncustodial'' any further. We are allowing States to develop
and employ their own definition of the term, which we understand States
generally use to mean a parent who is absent from the child's
household. Under TANF, States can extend employment services to
noncustodial parents by including them in their definition of
``eligible family''. In these cases, the States are already using their
own non-Federal definition of ``noncustodial.'' Further, States are
required by statute to report to DHHS on the number of noncustodial
parents participating in work activities. We do not want to impose a
definition which would be at odds with those already existing in the
States. If a State does not have a definition for ``noncustodial''
parent for TANF purposes, it should develop one in order to serve
noncustodial parents in WtW projects.
Eligibility: Category Three: Exceeding Durational Time Limits. The
regulations interpret the statutory provision at section
403(a)(5)(C)(iv) to apply to individuals who have reached State-imposed
time limits on receipt of TANF assistance in addition to individuals
who have reached the five-year Federal limit on receipt of Federal
assistance. This interpretation is consistent with the purpose of the
WtW funds to assist those who have the most difficulty making the
transition from welfare to work. Therefore, an individual who has
barriers to employment, as specified in Sec. 645.212(a)(2) of this
part, and who would otherwise be eligible to receive TANF assistance
but is no longer receiving TANF assistance because (s)he has reached
either the Federal five-year lifetime limit on receipt of assistance,
or a State-imposed lifetime limit, is eligible.
Who May be Served as an Individual With Long-Term Welfare Dependence
Characteristics Under the 30 Percent Provision? (Sec. 645.213)
The Act, at sections 403 (a)(5)(C)(iii) and (iv), establishes three
different categories of individuals who may be served as individuals
with characteristics associated with long-term welfare dependence under
the 30 percent provision. An individual is eligible if (s)he meets any
one of the following three eligibility categories: (1) To be eligible
under the first category, individuals must be recipients of TANF
assistance and have characteristics associated with, or predictive of,
long-term welfare dependence. (2) To be eligible under the second
category, an individual must be a noncustodial parent of a minor whose
custodial parent is receiving TANF assistance, and the noncustodial
parent must have characteristics associated with, or predictive of,
long-term welfare dependence. (3) To be eligible under the third
category, an individual must have characteristics associated with, or
predictive of, long-term welfare dependence, be otherwise eligible to
receive TANF assistance, but no longer be receiving TANF assistance
because (s)he has reached either the Federal five-year lifetime limit
on receipt of assistance, or a State-imposed lifetime limit.
Eligibility: Category One. To be eligible under category one of the
30 percent provision, an individual must meet both of the following
criteria:
Criterion a: Recipients of TANF Assistance. The individual must be
a current recipient of TANF assistance. The Act states, at section 403
(a)(5)(C)(iii)(I), that individuals with long-term welfare dependence
characteristics under the 30 percent provision must be ``recipients of
assistance under the program funded under this part''. The regulations
paraphrase the statutory requirement. In order to facilitate
coordination at the local level, the Department has consulted with DHHS
regarding interpretations for ``the program funded under this part''
and ``assistance''. For a fuller discussion of this approach, refer to
the discussion regarding recipients of TANF assistance in the preamble
for Sec. 645.212.
Criterion b: Characteristics Associated With Long-Term Welfare
Dependence. The Act states, at section 403 (a)(5)(C)(iii)(I), that an
individual must have characteristics associated with long-term welfare
dependence, such as having dropped out of school, teenage pregnancy, or
having a poor work history. We are interpreting ``associated with'' to
include characteristics ``predictive of'' long-term welfare dependence.
In order to facilitate coordination at the local level, we will not
further define the characteristics associated with long-term welfare
dependence. It is likely that the TANF assessment may identify the
above-noted characteristics, and we do not want to require further
assessment for the purposes of establishing eligibility where it is not
needed. Moreover, the regulations interpret the statutory phrase ``such
as'' to mean that, in addition to the characteristics listed in the
statute, States and PICs may designate other characteristics associated
with, or predictive of, long-term welfare dependence, including having
a disability. In order to provide the State and local areas with
flexibility to design the WtW program to support the goals and
objectives of their overall program of assistance for welfare
recipients, we are not imposing any further restrictions in this area.
Starting with the FY99 State WtW formula plans, States will be asked to
include examples of characteristics which the State and PICs consider
to be predictive of long-term welfare dependency.
Eligibility: Category Two: Noncustodial Parents. The Act states, at
section 403(a)(5)(C)(iii)(II), that noncustodial parents of minors who
have the characteristics associated with,
[[Page 61593]]
or predictive of, long-term welfare dependence, as described under
category one, are eligible to participate under the 30 percent
provision if the custodial parent is receiving TANF assistance. In
order to facilitate coordination at the local level, we are not
defining the term ``noncustodial'' any further. For a fuller discussion
of this approach, refer to the discussion regarding noncustodial
parents in the preamble for Sec. 645.212.
Eligibility: Category Three: Exceeding Durational Time Limits. The
regulations interpret the statutory provision at section
403(a)(5)(C)(iv) to apply to individuals who have reached State-imposed
time limits on receipt of TANF assistance in addition to individuals
who have reached the five-year Federal limit on receipt of Federal
assistance. This interpretation is consistent with the purpose of the
WtW funds to assist those who have the most difficulty making the
transition from welfare to work. Therefore, an individual who has
characteristics associated with, or predictive of, long-term welfare
dependence, as specified in Sec. 645.213(a)(2) of this part, and who
would otherwise be eligible to receive TANF assistance but is no longer
receiving TANF assistance because (s)he has reached either the Federal
five-year lifetime limit on receipt of assistance, or a State-imposed
lifetime limit, is eligible to participate under the 30 percent
provision.
How Will Welfare-to-Work Participant Eligibility be Determined?
(Sec. 645.214)
The regulations state that the operating entity is accountable for
ensuring that WtW funds are spent on individuals who are eligible for
WtW projects. The regulations acknowledge, however, that the operating
entity may not be in the best position to determine all aspects of WtW
eligibility, particularly those associated with receipt of TANF
assistance. Therefore, the regulations require that the operating
entity ensure that there are mechanisms in place to establish WtW
eligibility based on the criteria in Secs. 645.212 and 645.213. We urge
that the mechanisms for determining WtW eligibility address how the PIC
or other WtW operating entity and the TANF agency will work together to
facilitate the exchange of eligibility information. The actual scope of
the mechanisms, operating procedures, and roles and responsibilities of
the cooperating parties are best left to local determination given the
myriad of circumstances that exist in local areas.
Since receipt of TANF assistance will be the single most critical
WtW eligibility criterion in the majority of cases, it is critical that
the TANF agency be the source of information about whether an
individual is receiving TANF assistance, the length of such receipt,
and applicable time limits on such receipt. At a minimum, therefore,
for TANF recipients, WtW eligibility determination mechanisms must
include arrangements with the TANF agency to ensure that such a
determination is based on information, current at the time of the WtW
eligibility determination, for the factors specified in
Sec. 645.214(b)(1) of this part.
In establishing WtW eligibility for the criteria of barriers to
employment, pursuant to Sec. 645.212(a)(2), and characteristics
associated with long term-welfare dependency, pursuant to
Sec. 645.213(a)(2) of this part, the regulations seek to minimize
duplication of effort and encourage coordination of TANF and WtW
resources. Specifically, the regulations state that for TANF
recipients, the operating entity may base a determination of WtW
eligibility for these factors on information that was collected up to
six months prior to the WtW eligibility determination, by or through
the operating entity for JTPA or for other purposes, or by the TANF
agency for the TANF assessment or individual responsibility plan (IRP).
This mechanism provides an efficient method to minimize duplication of
effort and utilize existing, reliable information while ensuring that a
WtW eligibility determination will not be made on the basis of outdated
information. This six-month window is intended to provide flexibility
to the operating entity to customize its mechanisms for determining WtW
eligibility to address the unique circumstances of its local area. In
some cases, the operating entity may determine that a shorter time
period is preferable. In others, the operating entity may determine
that for some characteristics, such as the possession of a high school
diploma, the individual's status immediately prior to determination of
eligibility should be used in the determination. We recognize that the
information previously collected by the operating entity or in the TANF
assessment and IRP: (1) may be sufficiently comprehensive to allow for
making the WtW eligibility determination; or (2) may not necessarily
provide sufficient information to determine WtW eligibility in all
categories. In either case, we urge close coordination between the TANF
agency and the operating entity to develop a coordinated mechanism for
eligibility determination.
The operating entity must also have mechanisms in place to
determine WtW eligibility for individuals who are not receiving TANF
assistance (i.e., noncustodial parents and individuals who have reached
the time limit on receipt of TANF). Mechanisms may include approaches
such as: (1) using staff from the operating entity to determine WtW
eligibility (utilizing information from TANF and other appropriate
agencies); (2) entering into agreements with local agencies, such as
the TANF agency, and other appropriate entities, such as One-Stop
systems and substance abuse treatment providers, which foster
coordination and facilitate the exchange of eligibility information
among parties at the local level; and/or (3) performing joint WtW
eligibility determination with other appropriate agencies, including
the TANF agency. The TANF agency should be able to provide information
about assistance received by the custodial parent of minors or by
exhaustees to permit the PIC to determine whether an individual
qualifies as a noncustodial parent or about individuals who are no
longer receiving TANF assistance.
In determining whether someone requires substance abuse treatment
for employment, the operating entity can benefit from coordinating with
the local recipients of funds from the Substance Abuse Prevention and
Treatment (SAPT) Block Grant. In some States, SAPT funds substance
abuse awareness and identification programs for TANF case workers. In
others, substance abuse counselors supported by SAPT funds are co-
located in TANF offices. We urge close coordination by the operating
entity with efforts of SAPT and other agencies to identify and address
substance abuse among the TANF population.
The regulations also state that once an individual begins to
receive WtW services, the operating entity is not required to
redetermine WtW eligibility. For instance, if someone ceases to receive
TANF assistance due to increased earnings, that individual may continue
to participate in appropriate WtW services (such as occupational
training offered as a post-employment service or job retention
services, if such services are not otherwise available).
What Activities Are Allowable Under This Part? (Sec. 645.220)
The ultimate objective for each welfare recipient is placement into
an unsubsidized job which provides the potential for achieving economic
self-sufficiency. Activities conducted with
[[Page 61594]]
WtW grant funds must be grounded in the ``work first'' philosophy which
is a fundamental tenet of the Act. Although a variety of activities are
authorized under WtW, these activities should be viewed as employment-
based developmental steps for helping individuals secure and retain
unsubsidized employment.
Section 403(a)(5)(C)(i) specifies the allowable activities which
can be funded under WtW grants. The statute prescribes the following as
allowable activities: job readiness, placement, and post-employment
services financed through job vouchers or through contracts with public
or private providers; community service or work experience programs;
job creation through public or private sector employment wage
subsidies; on-the-job training; and job retention or support services
if such services are not otherwise available. Congress did not define
these activities further. Some activities have commonly understood
meanings from their use over time or from operational definitions
adopted by other employment and training programs, but others may not.
We consulted with a variety of groups to determine what others
thought about how these activities should be defined. A major theme
they expressed is the need for maximum State and local flexibility to
design programs to successfully move the hardest to employ welfare
recipients into unsubsidized employment leading to economic self-
sufficiency.
Another major theme expressed by those with whom we consulted is
the need for flexibility to provide to the WtW eligible population,
training in basic educational and occupational skills, English as a
second language training, and referral to vocational rehabilitation
services. Indeed, one of the eligibility factors is the lack of a high
school or secondary school diploma or a certificate of general
equivalency, coupled with low skills in math or reading. In order to
make it possible for these educationally disadvantaged individuals to
begin to achieve economic self-sufficiency, they need access to tools
for developing the skills necessary for achieving their employment
goal.
The regulations address these concerns. They provide maximum
flexibility to provide transitional assistance which moves welfare
recipients into unsubsidized employment providing good career potential
for achieving economic self-sufficiency. They also encourage effective
linkages of welfare agencies, other agencies serving people with
disabilities, adult education, and the workforce development system at
the State and local operational levels to maximize the use of all
available resources and to focus resources on direct assistance to
recipients. Additionally, they encourage the use of training
interventions only after an individual begins to work to help
participants retain their jobs and move toward economic self-
sufficiency.
Specifically, in order to facilitate coordination between WtW and
TANF activities at the State and local level, the regulations do not
define or describe the activities which are common to both WtW
allowable activities and TANF work activities. That is, the regulations
provide no definitions or description for community service, work
experience, job creation through public or private sector employment
wage subsidies, on-the-job training, or job readiness activities. Job
readiness may, however, include training for WtW participants starting
their own businesses. It is expected that operating definitions for
these activities will be arrived at through partnership between the
State and local administering agencies, taking into consideration
applicable statutory and regulatory provisions.
The regulations do provide examples of post-employment services.
Whether an individual is working in a subsidized or unsubsidized job,
including self-employment or participation in a registered
apprenticeship program, that individual may be allowed to receive post-
employment services, which may include basic education, English as a
second language, occupational skills training, and mentoring. While the
legislation does not permit stand-alone training activities independent
of a job, allowing them as post-employment activities only while the
participant is working in a subsidized or unsubsidized job reflects the
basic ``work first'' thrust of the legislation, while recognizing the
critical importance of continuous skills acquisition and lifelong
learning to economic self-sufficiency. These examples of post-
employment services are not intended to imply that only educational,
training, or mentoring services are allowable as post-employment
services.
The regulations incorporate the statutory requirement that job
readiness, placement, and post-employment services be provided through
job vouchers or contracts with public or private providers.
Additionally, the requirement, at Sec. 645.230(a)(3), that contracts or
vouchers for job placement must include a provision to require that at
least one-half of the payment occur after an eligible individual has
been placed into the workforce for six months, is referenced.
Given the needs of the target group for this assistance, the
provision of adequate job retention and support services will be
critical. Each participant engaged in a job readiness activity, an
employment activity, or in any other subsidized or unsubsidized job,
including participation in a registered apprenticeship program, will
also be allowed to receive appropriate job retention and support
services, if such services are not otherwise available. These could
include transportation assistance, substance abuse treatment, child
care, emergency or short-term housing assistance, disability-related
services, or other supportive services. However, these services can be
provided with WtW funds only where they are not otherwise available to
the participant. For instance, in the area of child care, the operating
entity should ensure that WtW funds are not substituted for child care
services available from the Child Care and Development Block Grant,
TANF funds, and other State and local funds.
The availability of transportation services, to get welfare
recipients to work, training, and child care, is a significant factor
in obtaining and retaining employment. Historically, DHHS and DOL
programs have defined transportation in terms of the individual client,
and allowed reimbursement for services used rather than for service
availability. However, client reimbursement will not work where
services do not exist. WtW funds may be used for both purposes. For
instance, WtW funds may be used to reimburse individual participants
for transportation costs, to enable an administering agency to purchase
additional needed services from transportation providers, or
alternatively to support, in combination with other funding sources,
the development of new transportation services that may be needed in
order to connect individuals to jobs. Such services could include: late
night and other off peak hour services, shuttle service, guaranteed
ride home, van pooling and ridesharing, and specialized transportation
services provided by non-profit agencies. WtW funds cannot be
substituted for services available or already provided through other
sources. However, this is not meant to preclude funding of an
individual's access to existing sources. For example, although a
transit service may exist, an individual may need financial assistance
to afford such transportation.
[[Page 61595]]
Substance abuse treatment is specifically provided as an example of
a job retention service because one of the eligibility factors under
the hard-to-employ criteria is the need for substance abuse treatment
for employment. In arranging for substance abuse treatment, States and
localities should coordinate with the Single State Authority (SSA) (and
its subcontractors) designated by the Governor to receive and
administer the Substance Abuse Prevention and Treatment (SAPT) Block
Grant administered by the Substance Abuse and Mental Health Services
Administration, DHHS. This grant, totaling $1.23 billion in FY 1998,
accounts for approximately 40 percent of all substance abuse treatment
provided through State agencies. The SSA and its county or regional
subcontractors also coordinate with, or actually provide, substance
abuse treatment funded through other sources. It is imperative that use
of WtW funds for substance abuse treatment be coordinated with other
funding sources to provide only services not otherwise available. It is
equally important that the expertise of SAPT block grant recipients be
utilized in developing a strategy to provide WtW participants with
substance abuse treatment services.
Regarding substance abuse treatment, States and localities need to
be aware that section 408(a)(6) of the Act, which bars the use of
Federal TANF funds for medical services, also applies to WtW funds. In
many, but not all, instances the treatment of alcohol and drug abuse
involves not just ``medical services,'' but other kinds of social and
support services as well. Allowing States to use Federal WtW funds for
substance abuse treatment is programmatically sound since it addresses
the need of a particular target group and may help clients make
successful transitions to work. Therefore, WtW funds can be used for
drug and alcohol abuse treatment services to the extent that such
services are not medical and not otherwise available to the
participant. States and localities will have to look at the range of
services offered and differentiate between those that are medical and
those that are not. For instance, an evaluation of a substance abuser,
to determine the appropriate level of care, performed by a member of
the medical profession is considered a medical service, as is a
medically supervised detoxification program. However, services
performed by those not in the medical profession, such as counselors,
technicians, social workers, and psychologists, and services not
provided in a hospital or clinic, including 24 hour care programs, may
be considered non-medical. In short, as in TANF, States and localities
cannot use Federal WtW funds for services that the State identifies as
medical; they may only use Federal WtW funds for services that are non-
medical. States may, however, use their own funds or other funds to
provide these services as long as they do not commingle State and
Federal funds. Medicare and Medicaid funds may provide another source
of funding for medical substance abuse treatment.
Individual development accounts (IDAs) are authorized by section
403(a)(5)(C)(v)(I) of the Act. They are described in detail at section
404(h) of the Act, which gives States the option to fund IDAs with
TANF, and by extension, WtW funds, for WtW participants. An IDA is an
account established by or for an individual to allow the individual to
accumulate funds for specific purposes enumerated in the Act, i.e.,
postsecondary educational expenses, first home purchase, and business
capitalization. The Secretary of DHHS is authorized to establish
regulations regarding IDAs. Therefore, we are not regulating or
providing further guidance in this area. An entity that funds IDAs with
WtW grant funds must comply with Section 404(h) of the Act and the
applicable DHHS regulations.
Lastly, the regulations state that intake, assessment, eligibility
determination, the development of an individualized service strategy,
and case management are allowable and may be incorporated in the
program design of any of the allowable activities.
How Do Welfare-to-Work Activities Relate to Activities Provided Under
TANF and Other Related Programs? (Sec. 645.225)
The regulations require that activities provided through WtW be
coordinated effectively with activities being provided through the TANF
grant and other related programs. The WtW grants provide a critical
tool to help States and local governments achieve their own welfare
reform goals and to meet their responsibilities under the Act to reduce
welfare caseloads and move welfare recipients into permanent employment
and off welfare. WtW must be an integral part of the States' and local
governments' overall program of assistance to move welfare recipients
into unsubsidized employment. WtW formula grants are intended to work
through the operating entity to supplement and enhance their overall
capacity for assisting welfare recipients find work and progress toward
self-sufficiency.
Coordination of resources should include not only those available
through WtW and TANF grant funds, and the Child Care and Development
Block Grant, but also those available through other related activities
and programs, such as the JTPA programs, the State employment service,
One-Stop systems, private sector employers, labor organizations,
business and trade associations, education agencies, housing agencies,
community development corporations, transportation agencies, community-
based and faith-based organizations, disability community
organizations, community action agencies, and colleges and universities
which provide some of the assistance needed by the targeted population.
The regulations require that an assessment of skills, prior work
experience, employability, and other relevant information be in place
for each WtW participant. This is consistent with the TANF requirement,
at section 408(b)(1) of the Act, that an assessment be developed for
each recipient of TANF assistance who has attained 18 years of age or
has not completed high school or obtained a certificate of high school
equivalency, and is not attending secondary school. In order to
maximize coordination and minimize duplication of effort, we urge the
use of the TANF assessment to meet this requirement where feasible in
order to avoid duplicative assessments and unnecessary use of WtW
resources.
The regulations require that an individualized strategy for
transition to unsubsidized employment should be in place for each
participant. This requirement is similar to the TANF provision, at
section 408(b)(2) of the Act, regarding an individual responsibility
plan (IRP). This strategy should take into account the individual's
circumstances reflected in the TANF assessment, JTPA individual service
strategy or any participant assessment which may have been performed by
the operating entity or its agent. The individualized strategy should
also include information regarding disabilities since the
characteristics associated with long-term welfare dependence can be
caused, or contributed to, by a physical, emotional or cognitive
disability. The strategy should assure that activities funded through
WtW are effectively coordinated with similar activities (e.g.,
assessment, case management, supportive services, work activities)
being funded through TANF and other related programs to address the
[[Page 61596]]
individual's needs so that (s)he can obtain and retain unsubsidized
employment. In order to maximize coordination and minimize duplication
of effort, the regulations also state that, where appropriate, the TANF
IRP may be used for this purpose. It is our understanding that most, if
not all, States have exercised their option under TANF of implementing
an IRP requirement. The statutory guidelines for the content of an IRP,
at section 408(b)(2) of the Act, include an employment goal for the
individual and a plan for moving the individual into unsubsidized
employment as quickly as possible, and for increasing the
responsibility and amount of work the individual is to handle over
time. The statutory guidelines also include a description of the
obligations of the individual and the services to be provided so that
the individual will be able obtain and retain employment. In order to
avoid duplicative strategies and unnecessary use of staff resources, we
urge the use of the TANF IRP as the WtW individualized service strategy
where feasible.
What General Fiscal and Administrative Rules Apply to the Use of
Federal Funds? (Sec. 645.230)
This regulation identifies the appropriate DOL regulations which
specify the rules applicable to WtW grants in the areas of fiscal and
administrative requirements, audit requirements, allowable cost/cost
principles, debarment and suspension, drug-free workplace, restrictions
on lobbying, and nondiscrimination. In addition, paragraph (a)(3) of
this section specifically indicates that the provision at section
403(a)(5)(C)(i) of the Act is a requirement that is imposed in addition
to the procurement provisions applicable to an entity awarding a
contract or voucher for job placement services. That provision requires
that contracts or vouchers for job placement services must include a
provision to require that at least one-half of the payment occur after
an eligible individual placed into the workforce has been in the
workforce for at least 6 months. Consistent with the purpose of the
Act, we have interpreted this provision to apply to placement in
unsubsidized jobs. We have done this to avoid the unintended
consequence of having all subsidized employment last a minimum of six
months.
Paragraph (a)(4) of this section adds a provision to address PIC
conflict of interest which is not addressed by the uniform
requirements. Paragraph (a)(5) of this section specifies the
requirement that the addition method will be required for the use of
program income and that the cost of generating any program income may
be deducted in determining the amount of program income earned. In
paragraph (c) of this section, the authority to grant or deny prior
approval for those selected items of cost which require such approval
has been delegated to the Governor. Paragraph (g) of this section sets
forth restrictions on nepotism related to individuals being hired into
WtW subsidized employment, work experience, on-the-job training
positions and the like.
What Are the Time Limitations on the Expenditure of Welfare-to-Work
Grant Funds? (Sec. 645.233)
The regulation specifies the time limitation rules for expenditure
of the two types of Federal WtW grant funds:
(a) Formula funds--The general rule is that these funds will be
available for expenditure for a ``maximum'' period of three years which
commences with the effective date of the grant to a State. The grant
period will be specified in the Department's formula grant document for
each fiscal year of funds provided to the State.
(b) Competitive funds--The general rule is that these funds have
the potential for being granted for the ``maximum'' three-year period
from the effective date of the grant award but are subject to the terms
and conditions of the specific grant.
For both types of grant funds, any remaining funds unexpended at
the end of the approved grant period must be returned to the Department
in accordance with the applicable closeout rules and procedures. For
purposes of determining the time limitations for expenditure of
``performance bonus'' grants, the provisions applicable to formula
funds (excluding match) will apply.
What Types of Activities Are Subject to the Administrative Cost Limit
on Welfare-to-Work Grants? (Sec. 645.235)
Paragraph (a) of the regulation restates the fact that the statute
imposes a 15 percent limitation on administrative costs for formula
grants to States. For competitive grants, the regulation permits a
different limitation, up to a maximum of 15 percent, to be specified in
the grant agreement. If no limitation is specified, then the 15 percent
limitation on administrative costs will also apply to competitive
grants.
Paragraphs (b) & (c) spell out the definition of administrative
costs for these WtW grants and provide some additional cost
classification guidance. Because the local JTPA system is the presumed
delivery system for these grants, the regulation uses the JTPA
definition of ``administrative costs'' except that paragraph (c)(3) of
the regulation incorporates an exception specified at Section 404(b)(2)
of the Act. The exception specifically excludes from the administrative
cost category the costs of computer hardware and software that is used
for tracking and monitoring under a WtW grant. It is only the cost of
the assets, however, and not the salaries or wages of staff who use the
computers, that is excluded. The regulation also requires that all
information technology purchased for WtW grants must be ``year 2000
compliant.'' To meet this requirement, information technology must be
able to accurately process date/time data (including, but not limited
to, calculating, comparing and sequencing) from, into, and between the
twentieth and twenty-first centuries, and the years 1999 and 2000. The
information technology must also be able to make leap year
calculations.
These Interim Final WtW regulations adopt the JTPA definition of
the term ``Administrative Costs'' to minimize the burden on PICs. The
Secretary notes that she may issue further rules to conform this
provision to similar provisions in forthcoming final regulations
governing the TANF program. Comments on this subject are invited and
would be helpful in assessing the advantages and disadvantages of such
a change.
What Are the Reporting Requirements for Welfare-to-Work Grants?
(Sec. 645.240)
This regulation indicates that DOL will issue instructions and
formats for financial reporting, that DHHS will issue the instructions
for participant reporting, and that DOL will issue supplemental
participant reporting requirements for competitive grants.
With respect to participant reporting, DOL will, as an interim
measure, revise the Standard Program Information Report (SPIR) to
incorporate identification of WtW enrollees and WtW activity categories
to facilitate the use of a SPIR-based management information system by
PICs who choose to use it to manage their WtW funded activities.
However, DOL will not require the use or submission of SPIR for WtW.
Who is Responsible for Oversight and Monitoring of Welfare-to-Work
Grants? (Sec. 645.245)
The Secretary of Labor is authorized to provide WtW grants to
States and local entities through formula allocations and a competitive
process,
[[Page 61597]]
respectively. To ensure that Federal funds are accounted for and used
in a permissible manner, the Secretary is responsible for oversight of
grant activities and expenditure of grant funds, and may monitor any
WtW grant recipient or subrecipient. The regulations provide for
Federal and State oversight responsibilities.
For formula grants, the Department's monitoring of the States will
include a sample of subrecipients. States funded under this program
shall develop a statewide monitoring plan and shall make the monitoring
plan available for Federal review. In the event that the Secretary
determines that a State grant recipient is not in compliance with
Federal statutory or regulatory requirements, the Department may
provide technical assistance as part of the corrective action process.
The Governor is responsible for oversight of formula grants at the
substate level. The State monitoring plan shall provide for adequate
oversight and should include State policies and procedures for the
implementation, operation and management of the program, as well as
State monitoring of reporting requirements for WtW substate grants. The
State shall ensure compliance with statutory and regulatory
requirements of WtW at the substate level. The State monitoring plan
should include an annual monitoring schedule and should describe its
process for providing technical assistance to substate grantees that
are not in compliance with State or Federal requirements.
What Procedures Apply to the Resolution of Findings Arising From
Audits, Investigations, Monitoring and Oversight Reviews?
(Sec. 645.250)
The regulation assigns to the Governor the responsibility to
resolve subrecipient findings that arise from audits, investigations,
monitoring reviews, and the like. If the States have procedures in
place that are used for audit resolution, debt collection and appeal
for other grant programs, then the existing processes may be used.
Otherwise the State must develop and implement such procedures.
The regulation reserves to the Secretary the authority for
resolution of findings that arise from Federal audits, investigations,
incident reports, and monitoring reviews, as well as recipient level
OMB Circular A-133 audits. The process that will be used is the grant
officer initial and final determination process used for other grant
programs which is codified at 29 CFR 96.503. Appeals of grant officer
final determinations are to be made to the Department's Office of
Administrative Law Judges in accordance with the procedures found at 29
CFR 96.603(b).
So as to avoid confusion about which procedures apply to
nondiscrimination findings, paragraph (c) specifies that findings
arising from investigations or reviews conducted under
nondiscrimination laws are to be resolved in accordance with those
nondiscrimination laws and the applicable implementing regulations.
What Nondiscrimination Protections Apply to Participants in Welfare-to-
Work Programs? (Sec. 645.255)
Section 645.255 of the regulations provides that participants in
WtW programs have such rights as are available under any applicable
Federal, State or local law prohibiting discrimination, including, but
not limited to: the Age Discrimination Act of 1975 (42 U.S.C. 6101 et
seq.); Section 504 of the Rehabilitation Act of 1975 (Section 504)(29
U.S.C. 794); the Americans with Disabilities Act of 1990 (ADA) (42
U.S.C. 12101 et seq.) and Title VI of the Civil Rights Act of 1964
(Title VI)(42 U.S.C. 2000d et seq.). ETA is not responsible for
administering any civil rights laws. Rather, it is the Civil Rights
Center (CRC), formerly the Directorate of Civil Rights, within the
Office of the Assistant Secretary for Administration and Management,
that has the responsibility to enforce such laws as the Age
Discrimination Act of 1975, Section 504 and Title VI, with respect to
recipients of federal financial assistance from the Department.
Additionally, the CRC is responsible for processing complaints alleging
violations of the ADA by all State and local government programs,
services, and regulatory activities relating to labor and the
workforce.
Section 645.255 of the regulations further provides that complaints
alleging discrimination, except for those alleging gender
discrimination in violation of Sec. 645.255(d), shall be processed in
accordance with applicable regulations. For example, WtW recipients who
are not also JTPA grant recipients should process complaints that
allege discrimination based on race, color or national origin in
violation of Title VI of the Civil Rights Act of 1964 in accordance
with the Department's Title VI regulation at 29 CFR part 31 by
forwarding all such complaints to the CRC (Address at the end of this
paragraph.). Similarly, WtW recipients who are not also JTPA grant
recipients should process complaints that allege discrimination based
upon disability in violation of Section 504 in accordance with 29 CFR
32.45(b), i.e., using the complaint procedures established pursuant to
that section. WtW recipients who are also JTPA grant recipients should
process complaints of discrimination under procedures established
pursuant to 29 CFR 34.42.
29 CFR 34.42 establishes the procedures under which JTPA grant
recipients shall process complaints involving violations of the JTPA
nondiscrimination and equal opportunity provisions. Since many WtW
grant recipients will be PICs and other entities with experience
operating programs under JTPA, the Department has determined that, in
order to avoid administrative burdens, such entities shall process WtW
discrimination complaints under these procedures rather than require
that they comply with two different sets of procedures. (Recipients of
financial assistance from the Department should be aware that the DOL
regulations, at 29 CFR Parts 31, 32, and 34, also require that programs
and activities meet certain administrative obligations. Among those is
the responsibility to notify participants of their rights under
nondiscrimination laws (e.g., Title VI, Section 504 and the Age
Discrimination Act), including the right to file a complaint with the
CRC. Individuals with questions about the requirements of these
nondiscrimination laws, or concerns about compliance by individual WtW
programs with these laws, should address their comments or concerns to
the Director, Civil Rights Center, U.S. Department of Labor, 200
Constitution Avenue, NW, Room N4123, Washington, D.C. 20210.)
Both Section 408(d) of the PRWORA and its legislative history, as
reflected in H.R. Conf. Rep. No. 725, 104 Cong., 2nd Sess. 293 (1996),
clarify that recipients are subject to Federal enforcement mechanisms.
The Balanced Budget Act of 1997 amended the PRWORA. It provides for,
among other things, a new civil rights protection against gender
discrimination. This provision ensures that participants who may not be
covered under either Title VII of the Civil Rights Act of 1964 or Title
IX of the Education Amendments of 1972, are protected against gender
discrimination. The PRWORA, as amended, requires States to have
grievance procedures to process complaints alleging gender
discrimination. The legislative history makes clear that gender-based
discrimination is the only civil rights matter that the legislation
required to be resolved through a State grievance procedure. See H.R.
Conf. Rep. No. 217, 105th Cong., 1st Sess. 935-937 (1997). Other civil
rights matters are to be resolved in accordance with the
[[Page 61598]]
applicable statutes and regulations listed in the preceding paragraph.
What Health and Safety Provisions Apply to Participants in Welfare-to-
Work Programs? (Sec. 645.260)
The regulation restates the health and safety provisions which are
found in section 403(a)(5)(J)(ii) of the Act and specifies that
participants alleging a violation of these standards may file a
complaint using the State's legislatively mandated grievance system.
The Department interprets the statutory phrase ``work activity'' to
refer to the allowable employment activities provided for at
Sec. 645.220(b) of this part.
What Safeguards Are There to Ensure That Participants in Welfare-to-
Work Employment Activities do not Displace Other Employees?
(Sec. 645.265)
Section 403(a)(5)(J) of the Act provides protections to ensure that
employees are not displaced by WtW participants engaged in a work
activity. The Department interprets the phrase ``work activity'' to
refer to the allowable employment activities provided for at
Sec. 645.220(b) of this part.
The regulation incorporates the statutory prohibition, in section
403(a)(5)(J)(i) of the Act, against allowing WtW participants to be
enrolled in employment activities which violate existing contracts for
services or collective bargaining agreements. Where an employment
activity would violate a collective bargaining agreement, the
regulations provide that the appropriate affected labor organization
and employer must provide written concurrence before the employment
activity can be undertaken.
The regulations also incorporate the statutory prohibition against
allowing an individual participating in employment activities under the
WtW program from displacing another employee. Employment activities
shall not result in the employment or assignment of a WtW participant
or the filling of a position when any other person is on layoff from
the same or substantially equivalent job within the same organizational
unit. The use of the phrase ``within the same organizational unit''
further clarifies the parameters for the concept of ``a substantially
equivalent job''. The employment or assignment of a WtW participant or
the filling of a position is prohibited when an employer has terminated
any regular, unsubsidized employee or otherwise reduced its workforce
with the intent of filling the vacancy with a WtW program participant.
In addition, a WtW participant may not be employed or assigned to a
position where the employer has caused an involuntary reduction to less
than full time in hours of an employee in the same or substantially
equivalent job.
Consistent with the goal of this program, which is to place
participants in employment which will eventually lead to their economic
self-sufficiency, we encourage the States to safeguard the current
workforce, while aggressively promoting the creation of employment
opportunities for welfare recipients. The State's goal should be the
expansion of its workforce through the creation of additional new jobs.
The regulations also specify that grievances regarding displacement
may be filed using the State's legislatively mandated grievance system.
What Procedures Are There To Ensure That Currently Employed Workers May
File Grievances Regarding Displacement and That Welfare-to-Work
Participants in Employment Activities May File Grievances Regarding
Displacement, Health and Safety Standards and Gender Discrimination?
(Sec. 645.270)
The regulations reflect the statutory language concerning the
requirement that a State must establish a grievance system for regular,
unsubsidized employees regarding displacement and for participants in
the WtW program regarding displacement, health and safety standards and
gender discrimination.
The statute requires that the grievance system must provide an
opportunity for a hearing, an appeal, and a final determination within
120 days of the original filing date of the complaint. The regulations
give the State the option of including in the grievance system an
opportunity for informal resolution prior to the formal hearing. The
regulations also provide that in developing its grievance system, the
State must specify the time period and format for the hearing and the
appeal portions of the procedure. The informal resolution and hearing
steps in the grievance procedure may occur at either the State or SDA
level. This section of the regulations also restates the statutory
provision concerning the designation of a State agency, independent of
the State or local agency responsible for administering or supervising
the administration of State TANF and WtW programs, to hear appeals.
Subpart C--Additional Formula Grant Administrative Requirements and
Procedures
What Constitutes an Allowable Match? (Sec. 645.300)
A State will be awarded a total of $2 in WtW formula grant funds
for each $1 in State matching expenditures up to the maximum amount
that the State is entitled to receive under the WtW allotment formula.
If the State chooses to propose a lesser amount of match than would be
required in order for it to receive the full allotment, it may do so.
In such cases, the amount of the Federal WtW grant will be reduced
accordingly.
The regulation authorizes the States to use the uniform financial
and administrative requirements, codified at 29 CFR 97.24 (the Common
Rule), regarding match allowability and documentation, except that no
more than one-half of the match may be in the form of in-kind
contributions. We will allow 50 percent of the required match to be in-
kind contributions in order to encourage the participation of private
non-profit and faith-based organizations in efforts to assist
individuals transition from welfare to unsubsidized employment and
economic self-sufficiency. These organizations can offer significant
resources, especially in-kind services, to assist WtW program
participants.
Cash donations from non-Federal third parties that are used to pay
for allowable costs of the WtW grant program will be considered as cash
match, and not counted as in-kind contributions. Matching funds include
those State and local dollars in excess of funds spent to meet the TANF
MOE requirement when those funds are spent on WtW eligible individuals
and activities. Matching requirements may not be met by the use of
employers' share of participant wage payments, e.g., the employer's
share of OJT. The planning guidance issued for FY98 reiterated the
legislative provision requiring that the total matching funds must be
expended during the FY in which the WtW grant is awarded. A legislative
amendment eliminating this requirement and permitting the expenditure
of matching funds over the same three-year period as Federal funds is
being considered by Congress. The final rule will reflect the action
taken by the Congress with respect to this amendment. If match
expenditures do not satisfy the requirement for the full level of
Federal funds, the grant amount will be reduced by an appropriate
corresponding amount.
[[Page 61599]]
Paragraph (c)(7) of the regulation indicates that the burden-of-
proof for substantiating match expenditures is to be borne by the
recipient of a WtW grant based on its own records and/or those of its
subrecipients.
What Assurances Must a State Provide That It Will Make the Required
Matching Expenditures? (Sec. 645.310)
This regulation restates the planning guidance which requires a
State to provide a written estimate of planned matching expenditures in
its State plan and to describe the process by which the funds will be
tracked and reported to ensure that the State meets its projected
match.
What Actions Are To Be Taken if a State Fails To Make the Required
Matching Expenditures? (Sec. 645.315)
This regulation requires the Department to implement an annual
reconciliation and grant adjustment process for WtW grants. The
reconciliation will be based on reported match expenditures made
through the end of the FY, as specified in the required report due 45
days after the end of each fiscal year. If the end-of-fiscal-year
report has not been received by December 1 of that year, then the
reconciliation will be based on the most current report received.
In addition, each FY the Department will evaluate second quarter
matching expenditures to determine the status of each State's
expenditures compared with planned match. DOL will alert and consult
with States that appear to be underexpending matching funds concerning
the possibility of reducing the grant to reallot funds if match
requirements are not met.
When Will Formula funds be Reallotted and What Reallotment Procedures
Will the Secretary Use? (Sec. 645.320)
This section describes the reconciliation process that the
Department will use for determining whether or not a State has expended
the required level of matching funds and the process for reallotment of
funds that become available as a result of underexpenditure of the
required match or failure to fully obligate funds by either States or
substate entities. Funds are fully obligated by States when they are
awarded to the substate entities.
Subpart D--State Formula Grants Administration
Under What Conditions May the Governor Request an Alternate
Administering Agency at the Local Level? (Sec. 645.400)
The regulations reflect the WtW legislative intent to assign PICs,
in cooperation with Chief Elected Officials (CEOs), a presumptive role
as the administering agencies for the WtW program at the local level.
The Act also provides the Governor authority to select an alternate
administrative agency and to request from the Secretary a waiver of the
statutory provision that PICs have the sole authority to expend funds
for the program at the local level. The Governor may request such a
waiver in the State's annual plan and must provide information
indicating how the selection of the alternate agency will improve the
effectiveness or efficiency of the program in each substate area. In
presenting the rationale, pursuant to section 403(a)(5)(A)(vii)(III) of
the Act, the Governor shall provide such information as (s)he deems is
necessary to establish that the designated alternate agency would
improve the effectiveness or efficiency of the administration of the
funds in each SDA.
The Department intends for the Governors to have maximum
flexibility on what should be included in their presentation(s) of the
reason(s) for the selection of an alternate administering agency at the
local level. While no specific format is provided, it is suggested the
Governor include, as part of the rationale for the selection of an
alternate administering agency, information regarding the PIC's
performance, administrative capacity, or whether the PIC has turned
down the WtW role; and information on the alternate agency's capacity
and fiscal integrity. In addition, the Governor is to provide copies of
any comments from the CEOs regarding the Governor's selection of the
alternate agency.
In addition, the Governor must request a waiver if, during the
operation of the local WtW program, s(he) determined that the PIC, or
alternate agency, which is administering WtW has not coordinated its
expenditures with expenditure of funds provided to the State under
TANF. Whenever the Governor requests a waiver, the Governor is to
provide a copy of such request to the PIC and CEO of the affected SDA.
The Governor shall bear the burden of proving that the proposed
designated alternate agency, rather than the PIC, would improve the
effectiveness or efficiency of the administration of WtW funds in the
SDA. The Secretary shall assess the information provided by the
Governor, as well as any input from the affected CEOs, in reaching a
decision on the granting of the waiver requested. The regulations
provide the PIC and CEO 15 days in which to respond to the Governor's
waiver request and submit written comments to the Department. The
Secretary's decision on the Governor's request constitutes final agency
action and is not subject to further administrative review.
It is the Department's position, consistent with section
403(a)(5)(A)(vii)(I) of the Act, that in WtW programs the PICs have the
same policy guidance and oversight functions as the PICs have under the
JTPA. In service delivery areas where, pursuant to the PIC/CEO
agreement, the PIC is not the ``administrative entity'' or the ``grant
recipient'' (see JTPA sections 4(2) and 103(b)(1)(B)), the PICs will
exercise the authority specified in the WtW legislation. In such
situations, consistent with section 403(a)(5)(A)(vii)(I) of the Act,
the PIC can use the current JTPA administering agency or grant
recipient to disburse WtW funds and manage the program. Finally, in
situations where the alternate administering agency selected and
approved by the Secretary is neither the SDA's administrative entity
nor the SDA's grant recipient entity, the Department intends for the
alternate agency to take steps to ensure the CEO(s) continues to be
consulted on WtW service strategies and activities planned for the SDA.
What Elements Will the State Use in Distributing Funds Within the
State? (Sec. 645.410)
The regulations follow closely the statutory provisions concerning
the Governor's responsibility to distribute funds to the SDAs in the
State. The Act requires the Governors to establish a formula to
distribute funds to the SDAs in the State and specifies the use of up
to three formula factors described at section 403(a)(5)(A)(vi)(I) of
the Act. The Governor's formula cannot contain any additional formula
factors.
In developing the Governor's formula, the statute requires that a
weight of no less than 50 percent be given to the following factor: the
number by which the population of the area with an income less than the
poverty line exceeds 7.5 percent of the total population of the area,
compared to all such numbers for all SDAs in the State. This means that
at least 50 percent of the funds must be distributed to SDAs based on
this factor. If the Governor
[[Page 61600]]
chooses not to use this factor in distributing the rest of the funds,
these funds may be distributed to an SDA based on one or both of the
following factors: an SDA's share of the number of adults receiving
assistance under TANF, or the predecessor program, in the SDA for at
least 30 months (whether consecutive or not), relative to the number of
such adults residing in the State; or an SDA's share of the number of
unemployed individuals residing in the SDA, relative to the number of
such individuals residing State. If the Governor chooses to use one or
both of these additional factors, s(he) may not distribute more that 50
percent of the funds on the basis of these factors. In circumstances
where the Governor's formula allocation to an SDA is less than
$100,000, those amounts are added to the funds retained at the State
level, thereby increasing the amount of funds which may be retained at
the State above the 15 percent level. However, in cases where the
distribution formula would allocate at least $100,000 to an SDA, those
amounts must be allocated to the SDA within 30 days of the date the
State receives its Federal allotment.
For guidance in determining the number of individuals with income
less than the poverty line, the regulations point the States to section
403(a)(5)(D) of the Act. This section instructs States to use the
methodology used by the Bureau of the Census to produce and publish
intercensal poverty data for States and counties. The Department is
aware that the Bureau of the Census in March of 1997 produced an
intercensal report containing State and county data estimates of the
number of individuals in poverty and poverty rates for 1993. States
should use this data, or comparable more recent data published by the
Bureau, to determine the number of individuals below the poverty line
who exceed 7.5 percent of the total population of the area. For areas
for which 1993 intercensal data is not produced and published by the
Bureau of the Census, Governors may use 1990 Census poverty data, in
conjunction with the intercensal poverty data for related
jurisdictions, where appropriate, as a basis for determining the
poverty data for those areas. The Governor is to use the most recent
year for which poverty data is available when determining the number of
individuals below the poverty line and should use data for the most
recent 12-month period when determining the number of adults receiving
assistance for at least 30 months.
This section also sets forth the statutory authority of the PICs
(or alternate administering agency) to determine, within their
respective service delivery areas, the eligible individuals and the
allowable activities upon which to expend their within-State fund
allocation. The Department expects that a PIC's targeting of eligible
individuals and the selection of service strategies will reflect the
needs of the target population and the local employment opportunities,
and are coordinated with State TANF expenditures.
Up to 15 percent of the funds allotted to the State may be retained
by the State for projects to transition long-term recipients into
unsubsidized jobs. For a full discussion of what other requirements are
applicable to funds retained by the State, please refer to the preamble
discussions of Secs. 645.210 through 645.225. The regulations clarify
that the Governor may utilize PICs, as well other entities, such as
One-Stop systems, private sector employers, labor organizations,
business and trade associations, education agencies, housing agencies,
community development corporations, transportation agencies, community-
based and faith-based organizations, disability community
organizations, community action agencies, and colleges and
universities, to operate projects for long-term recipients to enter
unsubsidized jobs. The Department intends for the Governors to develop
guidelines on such matters as project application criteria, project
design criteria, project outcome goals, project placement expectations,
project duration, etc. The Department intends for the Governors to have
maximum flexibility in the management and operation of the funds
retained by the State, consistent with statutory requirements, to
enable the Governors to fund projects that support and complement the
Governors' and the PICs' strategies to transition welfare recipients
into unsubsidized jobs and economic self-sufficiency.
What Planning Information Must a State Submit in Order to Receive a
Formula Grant? (Sec. 645.415)
The regulation follows section 403(a)(5)(ii) of the Act and
specifies that a State must provide an annual plan to the Secretary for
each fiscal year it wishes to receive funding. The format of the State
plan, as well as the date for submission, will be established by the
Secretary and provided to the States. The plan will be an addendum to
the TANF plan and will be submitted to the Secretaries of Labor and
Health and Human Services.
The Department will review the State plan and will accept it as
complete if the plan demonstrates compliance with the WtW legislation.
Once the plan is accepted, the Department will provide funding to the
State. Where a State includes in its plan a request to use an agency
other than the PIC to administer the program locally, the Secretary
will carefully assess waiver requests for each local jurisdiction and
will grant a waiver if the Secretary determines that the designated
alternate agency will more effectively or efficiently administer the
WtW grant funds for that area. The Secretary will use the information
submitted by the Governor as well as input from the affected PICs and
CEOs in the decision-making process. The Secretary's decision whether
to grant a waiver shall be considered final agency administrative
action.
What Factors Will Be Used in Measuring State Performance?
(Sec. 645.420)
This regulation advises that the Secretary will develop and issue a
formula that will be used to measure State performance and to serve as
the basis for the award of performance grants in FY 2000. The formula
will be developed in consultation with DHHS, the National Governors
Association (NGA), and the American Public Welfare Association (APWA),
and will be published in mid-1998. As required by section 403(a)(5)(E),
the formula will be the basis used to measure the success of States in
placing individuals in private sector employment or any kind of
employment, the duration of such placements, any increase in earnings
of such individuals, and other additional factors that the Secretary of
Labor deems to be appropriate.
What Are the Roles and Responsibilities of the State(s) and PIC(s)?
(Sec. 645.425)
This section of the regulations enumerates a number of State and
PIC roles and responsibilities embedded in the WtW statute. During the
consultation process conducted by the Department to gather input on WtW
policy development, there were a number of requests for the Department
to explain and clarify the State and PIC roles. The Department believes
this section of the regulation is responsive to those requests and
highlights the key responsibilities at the State and local level. It
does not attempt to create arbitrary divisions since it is our view
that coordination among State agencies and programs (e.g., TANF,
employment service, One-Stop centers), and local agencies and programs
(e.g., PICs, JTPA Title IIA) is essential to meeting the goals of the
WtW legislation and that the methods and mechanisms established to
[[Page 61601]]
combine resources and mount a coordinated effort to serve WtW
participants will necessarily vary according to State/local needs and
established relationships. In general, it is our view that, under the
Act, the State has the primary responsibility for ensuring that WtW
programs are consistent with and well coordinated with services under
TANF, and that local entities are in the best position to decide the
participants to be targeted and the service mix most appropriate for
the participants. Consistent with statutory provisions, the State may
not restrict PICs from exercising their authority to expend funds on
the statutorily eligible populations. PICs, therefore, have authority
to determine the individuals to be served in the service delivery
areas.
Subpart E--Welfare-To-Work Competitive Grants
Who Are Eligible Applicants for Competitive Grant Funds? (Sec. 645.500)
According to the Act, in order to be eligible to apply for
competitive grant funds, an organization must be a PIC for an SDA in a
State, a political subdivision of a State (e.g., cities, counties), or
a private entity applying in conjunction with the PIC or political
subdivision. The proposal must be developed in consultation with the
Governor. The Department defines the term ``in conjunction with'' to
mean that the application submitted by a private entity must include a
signed certification by both the applicant and either the applicable
PIC or political subdivision that the relevant PIC/political
subdivision has been consulted during the development of the
application and that the activities proposed in the application are
consistent with, and will be coordinated with, the WtW efforts of the
PIC/political subdivision.
We believe that this definition of ``in conjunction with'' provides
sufficient flexibility for private nonprofit entities, such as
community development corporations, community-based and faith-based
organizations, disability community organizations, community action
agencies, and public and private colleges and universities, to apply
for funds, while ensuring that adequate coordination with the ongoing
WtW formula program occurs. Our requirement for consultation and
certification reiterates the Department's emphasis on collaboration and
integration of resources at the local level.
We are also interpreting ``private entity'' to be any qualified
organization, public or private, which is neither a PIC nor a political
subdivision of a State. The legislative intent, however, is that
competitive grants are for projects which are community based and
responsive to the circumstances in a local community. Therefore, an
application for competitive grant funds will be judged for its
connection and responsiveness to a local community.
Although the Department considers local collaboration to be
critical to the development of a WtW proposal, in some limited cases,
providing evidence of such a collaborative effort may not be possible.
In these cases, where a private entity cannot obtain certification from
the PIC/political subdivision, the applicant must certify, and provide
information indicating, that the PIC/political subdivision has been
provided a sufficient opportunity to cooperate in the development of
the application and has not acted within a reasonable period of time.
The Department believes that 30 days is a sufficient period of time in
which a private entity can expect a response from the PIC or political
subdivision.
This requirement applies to all PICs or political subdivisions
included in the area to be served by the proposed project.
What Is the Required Consultation With the Governor? (Sec. 645.510)
All applicants for competitive grants, including PICs and political
subdivisions, must submit their application to the Governor or the
designated State administrative entity for the WtW program for review
and comment prior to submission of the application to the Secretary. We
have defined sufficient time for review and comment at the State level
to be at least 15 days. For applications from private entities, the 15
day comment period must be consecutive to the 30 day period for
obtaining evidence of collaboration and support from the PIC or
political subdivision.
What Are the Program and Administrative Requirements That Apply to Both
the Formula Grants and Competitive Grants? (Sec. 645.515)
The regulations indicate that all of the general program and
administrative requirements that apply to the WtW formula grants also
apply to the competitive grants. Competitive grants will be subject to
additional reporting and monitoring requirements, however, which will
be tailored to the scope of work of the specific grants.
What Are the Application Procedures and Timeframes for Competitive
Grant Funds? (Sec. 645.520)
The Secretary shall establish appropriate application procedures,
selection criteria and an approval process to ensure that grant awards
accomplish the statutory purposes of the competitive grant funds and
that available funds are used in an effective manner. We anticipate
that more than one application and award process will occur in each
fiscal year of the WtW program. Grant application procedures will be
published in the Federal Register for each round of competitive grants.
What Special Consideration Will Be Given to Rural Areas and Cities With
Large Concentrations of Poverty? (Sec. 645.525)
Competitive grant awards will be targeted to areas of significant
need, especially rural areas and cities with large concentrations of
residents living in poverty.
Subpart F--Administrative Appeal Process
What Administrative Remedies Are Available Under This Part?
(Sec. 645.800)
The WtW statute contains provisions (e.g., those addressing the
allowable use of funds) which contemplate the exercise of discretion by
ETA. It is reasonable to anticipate that there will be instances where
parties will seek to overturn decisions made by the Agency.
This section sets the administrative procedures available where a
party seeks review of a Grant Officer determination that imposes a
sanction or corrective action, pursuant to Sec. 645.250(b) of this
part. Paragraph (a) provides that an adverse decision by a Grant
Officer may be appealed, within 21 days of the Grant Officer's final
determination, to the Department of Labor's Office of Administrative
Law Judges. The parties present their cases before an Administrative
Law Judge (ALJ) who develops the record for the proceeding, making
findings of fact and of law. Such proceedings are relatively informal,
utilizing relaxed rules of evidence. For example, a Notice of Appeal
functions simply as the invocation of a party's right to administrative
review of an Agency decision, rather than as a formal complaint.
Paragraph (b) of this section provides that the ALJ's decision
regarding a case arising under this section constitutes final agency
action for the purpose of judicial review, unless, within 20 days of
the ALJ's decision, a dissatisfied
[[Page 61602]]
party petitions the Administrative Review Board (ARB) for review.
Review by the ARB is discretionary, so paragraph (b) of this section
provides that the ALJ's decision constitutes final Agency action unless
the ARB notifies the parties, within 30 days of the filing of the
petition for review, that the case has been accepted for review.
Further, the ALJ's decision constitutes final Agency action if the ARB
has not decided the case arising under this section within 120 days of
acceptance for review.
III. Regulatory Flexibility and Executive Order
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). ETA has assessed the potential
impact of the draft Interim Final Rule, consulting with a wide range of
small entities, in order to identify any areas of concern. Based on
that assessment, the Agency certifies that the Interim Final Rule, as
promulgated, will not have a significant impact on a substantial number
of small entities.
As indicated in the Background Section (Section I, above), the WtW
Interim Final Rule implements grant programs that enhance the resources
available to States and PICs or the additional WtW financial resources
targeted to hard-to-employ welfare recipients and which will assist in
efforts to move these individuals into lasting unsubsidized jobs.
ETA has minimized any potential burdens for grant applicants and
recipients in order to maximize the resources that will be applied to
achieve the purposes of the WtW program. The Agency has further
ameliorated any foreseeable burdens by providing (at Sec. 645.235 of
the Interim Final Rule) that a grantee can allocate up to 15 percent of
a grant award for management and administration of the grant, rather
than for the direct provision of services to participants. The Agency
has determined that the incremental costs of applying for or
administering WtW grants will be minimal, because applicants and
grantees will, in general, already be familiar with the grant process
due to involvement in existing TANF and JTPA programs. Further, ETA has
concluded that any such costs will not place small entities at a
disadvantage in relation to larger entities, with regard to obtaining
formula grants or competitive grants. Therefore, it is unnecessary to
set alternative requirements for small entities.
In addition, pursuant to the Small Business Regulatory Fairness Act
(SBREFA) (5 U.S.C. Chapter 8), the Agency has screened the Interim
Final Rule and has determined that it is not a ``major rule,'' as
defined in 5 U.S.C. 804(2).
IV. Executive Order 12866
Pursuant to Executive Order 12866, the Agency has evaluated the
Interim Final Rule and has determined its provisions are consistent
with the statement of regulatory philosophy and principles promulgated
by the Executive Order. The Department of Labor is required to
prescribe regulations for the WtW program within 90 days of the
enactment of the Balanced Budget Act of 1997. Within this limited time
frame, the Department has made every reasonable effort to obtain input
in a purposeful manner from a variety of interested parties (State and
local government officials, community-based organizations, and the
general public). The WtW grant program increases the resources
available to the public and private organizations that promote long-
term employment and family self-sufficiency. The Agency has determined
the Interim Final Rule will not have an adverse effect in a material
way on the nation's economy.
ETA has developed the Interim Final Rule in close consultation with
the Departments of HHS, HUD, and Transportation, and with other
responsible Federal agencies. Based on that consultation, the Agency
has determined the Interim Final Rule will not create a serious
inconsistency or otherwise interfere with any action taken or planned
by another agency.
The Agency has also assessed the impact of the WtW State match
requirement and has determined it will not materially alter the
budgetary impact of entitlements and grants. States will receive $2
dollars in WtW grant funds for each $1 in State matching expenditures
up to the State WtW fund allotment. Further, ETA has determined that up
to 50 percent of the State matching effort can be ``in kind'' (goods
and services provided in lieu of cash), allowing the States additional
flexibility in qualifying for formula funds.
Overall, as discussed above, the Department has determined that the
Interim Final Rule is not unduly burdensome and that the impacts and
consequences are non-material for States, local governmental entities
and other potentially interested parties.
The Agency finds that this Interim Final Rule raises novel policy
issues and thus constitutes a significant regulatory action which has
been reviewed by the Office of Management and Budget for the purposes
of Executive Order 12866.
V. Unfunded Mandates
The Interim Final Rule has been reviewed in accordance with the
Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1501 et seq.) and
Executive Order 12875. Section 202 of UMRA requires that a covered
agency prepare a budgetary impact statement before promulgating a rule
that includes any Federal mandate that may result in the expenditure by
State, local and Tribal governments, in the aggregate, or by the
private sector, of $100 million or more in any one year.
If a covered agency must prepare a budgetary impact statement,
section 205 of UMRA further requires that it select the most cost-
effective and least burdensome alternative that achieves the objectives
of the rule and is consistent with the statutory requirements. In
addition, section 203 of UMRA requires a plan for informing and
advising any small government that may be significantly or uniquely
impacted.
ETA has determined that the WtW Interim Final Rule will not
regulate the expenditure by the State, local, and Tribal governments,
in the aggregate, or by the private sector, of more than $100 million
in any one year (Tribal governments are covered by a separate Interim
Final Rule for which a separate Unfunded Mandates statement has been
prepared). Accordingly, the Agency has not prepared a budgetary impact
statement, specifically addressed the regulatory alternatives
considered, or prepared a plan for informing and advising any
significant or uniquely impacted small government.
VI. Effective Date and Absence of Notice and Comment
The Employment and Training Administration has determined, pursuant
to 5 U.S.C. 553(b)(B), that the statutory mandate to promulgate
regulations within 90 days of the enactment of the statute constitutes
good cause for waiving notice and comment proceedings. In addition, the
Agency has determined, pursuant to 5 U.S.C. 553(d)(3), that the WtW
statutory mandate provides good cause for waiving the customary
requirement to
[[Page 61603]]
delay the effective date of a final rule for 30 days following its
publication. The short statutory duration of the WtW program
underscores the importance of beginning the disbursement of WtW funds
at the earliest possible date. Accordingly, the issuance of a proposed
rule, rather than an interim final rule, (or delaying the effective
date for 30 days) would be contrary to the public interest. The Interim
Final Rule sets a comment period to elicit any concerns raised by the
Rule. ETA has limited the comment period to 60 days so that any input
is received in time for the Agency to review it in considering any
revisions to Part 645 while the WtW program is still in its early steps
of operation.
VII. Catalog of Federal Domestic Assistance Number
The program is listed in the Catalog of Federal Domestic Assistance
at No. 17.253, ``Employment and Training Assistance--Welfare-to-Work
Grants to States & Local Entities for Hard-to-Employ Welfare Recipient
Programs.''
List of Subjects in 20 CFR Part 645
Employment programs, Grant programs--labor, Welfare-to-Work
programs.
Signed at Washington, D.C., this 10th day of November 1997.
Alexis M. Herman,
Secretary of Labor.
Raymond J. Uhalde,
Acting Assistant Secretary, Employment and Training Administration.
For the reasons set forth in the preamble, 20 CFR Ch. V is amended
by adding Part 645 to read as follows:
PART 645--PROVISIONS GOVERNING WELFARE-TO-WORK GRANTS
Subpart A--Scope and Purpose
Sec.
645.100 What does this subpart cover?
645.110 What are the purposes of the Welfare-to-Work program?
645.120 What definitions apply to this part?
Subpart B--General Program and Administrative Requirements
645.200 What does this part cover?
645.210 What is meant by the terms ``entity'' and ``project'' in
the statutory phrase ``an entity that operates a project'' with
Welfare-to-Work funds?
645.211 How must Welfare-to-Work funds be spent by the operating
entity?
645.212 Who may be served as a hard-to-employ individual under the
70 percent provision?
645.213 Who may be served as an individual with long-term welfare
dependence characteristics under the 30 percent provision?
645.214 How will Welfare-to-Work participant eligibility be
determined?
645.220 What activities are allowable under this part?
645.225 How do Welfare-to-Work activities relate to activities
provided through TANF and other related programs?
645.230 What general fiscal and administrative rules apply to the
use of Federal funds?
645.233 What are the time limitations on the expenditure of
Welfare-to-Work grant funds?
645.235 What types of activities are subject to the administrative
cost limit on Welfare-to-Work grants?
645.240 What are the reporting requirements for Welfare-to-Work
programs?
645.245 Who is responsible for oversight and monitoring of Welfare-
to-Work grants?
645.250 What procedures apply to the resolution of findings arising
from audits, investigations, monitoring, and oversight reviews?
645.255 What nondiscrimination protections apply to participants in
Welfare-to-Work programs?
645.260 What health and safety provisions apply to participants in
Welfare-to-Work programs?
645.265 What safeguards are there to ensure that participants in
Welfare-to-Work employment activities do not displace other
employees?
645.270 What procedures are there to ensure that currently employed
workers may file grievances regarding displacement and that Welfare-
to-Work participants in employment activities may file grievances
regarding displacement, health and safety standards and gender
discrimination?
Subpart C--Additional Formula Grant Administrative Standards and
Procedures
645.300 What constitutes an allowable match?
645.310 What assurances must a State provide that it will make the
required matching expenditures?
645.315 What actions are to be taken if a State fails to make the
required matching expenditures?
645.320 When will formula funds be reallotted, and what reallotment
procedures will the Secretary use?
Subpart D--State Formula Grants Administration
645.400 Under what conditions may the Governor request a waiver to
designate an alternate local administering agency?
645.410 What elements will the State use in distributing funds
within the State?
645.415 What planning information must a State submit in order to
receive a formula grant?
645.420 What factors will be used in measuring State performance?
645.425 What are the roles and responsibilities of the State(s) and
PIC(s)?
Subpart E--Welfare-to-Work Competitive Grants
645.500 Who are eligible applicants for competitive grants?
645.510 What is the required consultation with the Governor?
645.515 What are the program and administrative requirements that
apply to both the formula grants and competitive grants?
645.520 What are the application procedures and timeframes for
competitive grant funds?
645.525 What special consideration will be given to rural areas and
cities with large concentrations of poverty?
Subpart F--Administrative Appeal Process
645.800 What administrative remedies are available under this part?
Authority: 42 U.S.C. 606(a)(5)(C)(viii).
Subpart A--Scope and Purpose
Sec. 645.100 What does this subpart cover?
(a) Subpart A establishes regulatory provisions that apply to the
Welfare-to-Work (WtW) programs conducted at the State and at the
Service Delivery Area (SDA) levels.
(b) Subpart B provides general program requirements applicable to
all WtW formula funds. The provisions of this subpart govern how WtW
funds must be spent, who is eligible to participate in the program,
allowable activities and their relationship to TANF, Governor's
projects for long-term recipients, administrative and fiscal
provisions, and program oversight requirements. This subpart also
addresses worker protections and the establishment of a State grievance
system.
(c) Subpart C sets forth additional administrative standards and
procedures for WtW Formula Grants, such as matching requirements and
reallotment procedures.
(d) Subpart D sets forth the conditions under which the Governor
may request a waiver to designate an alternate administering agency,
sets forth the formula elements that must be included in the within-
State distribution formula, the submission of a State annual plan, the
factors for measuring State performance, and the roles and
responsibilities of the States and the Private Industry Councils
(PICs).
(e) Subpart E outlines general conditions and requirements for the
WtW Competitive Grants.
(f) Regulatory provisions applicable to the Indian and Native
American Welfare-to-Work Program (INA WtW) are found at 20 CFR part
646.
[[Page 61604]]
Sec. 645.110 What are the purposes of the Welfare-to-Work Program?
The purposes of the WtW program are:
(a) To facilitate the placement of hard-to-employ welfare
recipients into transitional employment opportunities which will lead
to lasting unsubsidized employment and self-sufficiency;
(b) To provide a variety of activities, grounded in TANF's ``work
first'' philosophy, to prepare individuals for, and to place them in,
lasting unsubsidized employment;
(c) To provide for a variety of post-employment and job retention
services which will assist the hard-to-employ welfare recipient to
secure lasting unsubsidized employment;
(d) To provide targeted WtW funds to high poverty areas with large
numbers of hard-to-employ welfare recipients.
Sec. 645.120 What definitions apply to this part?
The following definitions apply under this part:
Act means Title IV, Part A of the Social Security Act, 42 U.S.C.
601-619.
Adult means an individual who is not a minor child.
Chief Elected Official(s) (CEOs) means:
(1) The chief elected official of the sole unit of general local
government in the service delivery area,
(2) The individual or individuals selected by the chief elected
officials of all units of general local government in such area as
their authorized representative, or
(3) In the case of a service delivery area designated under section
101(a)(4)(A)(iii) of JTPA, the representative of the chief elected
official for such area (as defined in section 4(4)(C) of JTPA).
Competitive Grants means those WtW funds awarded by the Department
under a competitive application process to local governments, PICs, and
private entities (such as community development corporations,
community-based and faith-based organizations, disability community
organizations, and community action agencies) who apply in conjunction
with a PIC or local government.
Department or DOL means the U.S. Department of Labor.
Employment activities means the activities enumerated at
Sec. 645.220(b).
ETA means the Employment and Training Administration of the U.S.
Department of Labor.
Fiscal year (FY) means any 12-month period ending on September 30
of a calendar year.
Formula grants means the WtW funds allotted to each Welfare-to-Work
State, based on a formula prescribed by the Act, which equally
considers States' shares of the national number of poor individuals and
of adult recipients of assistance under TANF. The State is required to
distribute not less than 85 percent of the allotted formula grant funds
to service delivery areas in the State; and the State may retain not
more than 15 percent for projects to help long-term recipients of
assistance enter unsubsidized employment. Unless otherwise specified,
the term ``formula grant'' refers to the 85 percent and 15 percent
funds.
Governor means the Chief Executive Officer of a State.
Job Training Partnership Act or JTPA means Public Law (Pub. L.) 97-
300, as amended, 29 U.S.C. 1501, et seq.
Minor child means an individual who has not attained 18 years of
age; or has not attained 19 years of age and is a full-time student in
a secondary school (or in the equivalent level of vocational or
technical training).
MOE means maintenance of effort. Under TANF, States are required to
maintain a certain level of spending on welfare based on ``historic''
FY 1994 expenditure levels (Section 409 (a)(7) of the Act).
PIC means a Private Industry Council established under Section 102
of the Job Training Partnership Act, which performs the functions
authorized at Section 103 of the JTPA.
PRWORA means the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996, Public Law (Pub. L.) 104-193, which
established the TANF program.
SDA means a service delivery area designated by the Governor
pursuant to section 101(a)(4) of the Job Training Partnership Act.
Secretary means the Secretary of Labor.
Separate State program means a program operated outside of TANF in
which the expenditures of State funds may count for TANF MOE purposes.
State means the 50 States of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, the US Virgin Islands, Guam,
and American Samoa, unless otherwise specified.
State TANF Program means those funds expended under the State
Family Assistance Grant (SFAG), the basic block grant allocated to the
States under Section 403(a)(1) of the Act.
TANF means Temporary Assistance for Needy Families Program
established under PRWORA.
TANF MOE means the expenditure of State funds that must be made in
order to meet the Temporary Assistance for Needy Families Maintenance
of Effort requirement.
WtW means Welfare-to-Work.
WtW State means those States that the Secretary of Labor determines
have met the five conditions established at Section 403(a)(5)(A)(ii) of
the Act. Only States that are determined to be WtW States can receive
WtW grant funds.
WtW statute means those provisions of the Balanced Budget Act of
1997 containing certain amendments to PRWORA and establishing the new
Welfare-to-Work program, amending Title IV of the Social Security Act,
(codified at 42 U.S.C. 601-619).
Subpart B--General Program and Administrative Requirements
Sec. 645.200 What does this subpart cover?
This subpart provides general program and administrative
requirements for WtW formula funds, including Governors' funds for
long-term recipients of assistance, and for competitive grant funding
(section 403(a)(5) of the Act).
Sec. 645.210 What is meant by the terms ``entity'' and ``project'' in
the statutory phrase ``an entity that operates a project'' with
Welfare-to-Work funds?
The terms ``entity'' and ``project'', in the statutory phrase ``an
entity that operates a project'', means:
(a) For WtW substate formula funds:
(1) ``Entity'' means the PIC (or the alternate agency designated by
the Governor and approved by the Secretary pursuant to Sec. 645.400 of
this part) which administers the WtW substate formula funds in a
service delivery area(s). This entity is referred to in Secs. 645.211
through 645.225 of this part as the ``operating entity.''
(2) ``Project'' means all activities, administrative and
programmatic, supported by the total amount of the WtW substate formula
funds allotted to the entity described in paragraph (a)(1) of this
section.
(b) For WtW Governors' funds for long-term recipients of
assistance:
(1) ``Entity'' means the agency, group, or organization to which
the Governor has distributed any of the funds for long-term recipients
of assistance, as described in Sec. 645.410 (b) and (c) of this part.
This entity is referred to in Secs. 645.211 through 645.225 of this
part as the ``operating entity.''
(2) ``Project'' means all activities, administrative and
programmatic, supported by the total amount of one discrete award of
WtW Governors' funds for long-term recipients of assistance awarded to
the entity described in paragraph (b)(1) of this section.
(c) For competitive WtW funds:
[[Page 61605]]
(1) ``Entity'' means an eligible applicant, as described in
Sec. 645.500 of this part, which is awarded a competitive WtW grant.
This entity is referred to in Secs. 645.211 through 645.225 of this
part as the ``operating entity.''
(2) ``Project'' means all of the activities, administrative and
programmatic, supported by the total amount of one discrete WtW
competitive grant awarded to the entity described in paragraph (c)(1)
of this section (section 403(a)(5)(C) of the Act).
Sec. 645.211 How must Welfare-to-Work funds be spent by the operating
entity?
(a) At least 70 percent of the WtW funds allotted to or awarded to
an operating entity, as described in Sec. 645.210 of this part, must be
spent to benefit hard-to-employ individuals, as described in
Sec. 645.212 of this part.
(b) Not more than 30 percent of the WtW funds allotted to or
awarded to an operating entity, as described in Sec. 645.210 of this
part, may be spent to assist individuals with long-term welfare
dependence characteristics, as described in Sec. 645.213 of this part.
If less than 30 percent of the funds is spent to assist individuals
with long-term welfare dependence characteristics, the remaining funds
shall be spent to benefit hard-to-employ individuals pursuant to
paragraph (a) of this section (section 403(a)(5)(C)of the Act).
Sec. 645.212 Who may be served as a hard-to-employ individual under
the 70 percent provision?
(a) An individual is eligible to be served under the 70 percent
provision if (s)he meets all three of the criteria listed in paragraphs
(a)(1), (2), and (3) of this section:
(1) The individual is receiving TANF assistance; and
(2) Barriers to employment--at least two of the three following
barriers to employment must apply to the individual:
(i) Has not completed secondary school or obtained a certificate of
general equivalency, and has low skills in reading or mathematics. At
least 90 percent of individuals determined to have low skills in
reading or mathematics must be proficient at the 8.9 grade level or
below.
(ii) Requires substance abuse treatment for employment.
(iii) Has a poor work history. At least 90 percent of individuals
determined to have a poor work history must have worked no more than 3
consecutive months in the past 12 calendar months; and
(3) Length of receipt of TANF assistance--the individual must be a
long-term recipient, meeting one of the following two criteria:
(i) Has received assistance under a State TANF program, and/or its
predecessor program, for at least 30 months. The months do not have to
be consecutive; or
(ii) Will become ineligible for assistance within 12 months due to
either Federal or State-imposed durational time limits on receipt of
TANF assistance. This includes individuals who have been exempted from
the durational limits due to hardship pursuant to section 408(a)(7)(C)
of the Act, but would face termination within 12 months without the
exemption.
(b) A noncustodial parent of a minor is eligible to participate
under the 70 percent provision if the custodial parent meets the
eligibility requirements of paragraph (a) of this section.
(c) An individual who has barriers to employment, as specified in
paragraph (a)(2) of this section, and who would be otherwise eligible
to receive TANF assistance but is no longer receiving TANF assistance
because (s)he has reached either the Federal five-year lifetime limit
on receipt of assistance, or a State-imposed lifetime limit, is
eligible to participate under the 70 percent provision (section
403(a)(5)(C) of the Act).
Sec. 645.213 Who may be served as an individual with long-term welfare
dependence characteristics under the 30 percent provision?
(a) An individual is eligible to be served under the 30 percent
provision if (s)he meets both criteria listed in paragraphs (a)(1) and
(2) of this section:
(1) The individual is receiving TANF assistance; and
(2) The individual has characteristics associated with, or
predictive of, long-term welfare dependence, such as having dropped out
of school, teenage pregnancy, or having a poor work history. States, in
consultation with the operating entity, may designate additional
characteristics associated with, or predictive of, long-term welfare
dependence.
(b) A noncustodial parent of a minor child is eligible to
participate under the 30 percent provision if the noncustodial parent
has the characteristics specified in paragraph (a)(2) of this section,
and the custodial parent is receiving TANF assistance.
(c) An individual who has characteristics associated with, or
predictive of, long-term welfare dependence, as specified in paragraph
(a)(2) of this section, and who would be otherwise eligible to receive
TANF assistance but is no longer receiving TANF assistance because
(s)he has reached either the Federal five-year lifetime limit on
receipt of assistance, or a State-imposed lifetime limit, is eligible
to participate under the 30 percent provision (section 403(a)(5)(C) of
the Act).
Sec. 645.214 How will Welfare-to-Work participant eligibility be
determined?
(a) The operating entity, as described in Secs. 645.210(a)(1),
(b)(1), and (c)(1) of this part, is accountable for ensuring that WtW
funds are spent only on individuals eligible for WtW projects.
(b) The operating entity must ensure that there are mechanisms in
place to determine WtW eligibility for individuals who are receiving
TANF assistance. These mechanisms:
(1) Must include arrangements with the TANF agency to ensure that a
WtW eligibility determination is based on information, current at the
time of the WtW eligibility determination, about whether an individual
is receiving TANF assistance, pursuant to Secs. 645.212(a)(1) and
645.213(a)(1) of this part, the length of receipt of TANF assistance,
pursuant to Sec. 645.212(a)(3)(i) of this part, and when an individual
may become ineligible for assistance pursuant to Sec. 645.212(a)(3)(ii)
of this part (section 403(a)(5)(A)(ii)(dd) of the Act).
(2) May include a determination of WtW eligibility for barriers to
employment, pursuant to Sec. 645.212(a)(2) of this part, and for
characteristics of long-term welfare dependence, pursuant to
Sec. 645.213(a)(2) of this part, based on information collected by the
operating entity or the TANF agency up to six months prior to the WtW
eligibility determination.
(c) The operating entity must ensure that there are mechanisms in
place to determine WtW eligibility for individuals who are not
receiving TANF assistance (i.e., noncustodial parents, pursuant to
Secs. 645.212(b) and 645.213(b) of this part, and individuals who have
reached the time limit on receipt of TANF, pursuant to Secs. 645.212(c)
and 645.213(c) of this part). Mechanisms may include, but are not
limited to:
(1) Using staff from the operating entity to determine eligibility;
(2) Entering into agreements with local agencies such as the TANF
agency and other appropriate agencies which foster coordination and
facilitate the exchange of eligibility information among parties at the
local level; and/or
[[Page 61606]]
(3) Performing joint eligibility determination with other
appropriate agencies, including the TANF agency.
(d) Eligibility for WtW need not be redetermined for an individual
after the individual begins to receive WtW services (section
403(a)(5)(C) of the Act).
Sec. 645.220 What activities are allowable under this part?
Entities operating WtW projects may use WtW funds for the
following:
(a) Job readiness activities financed through job vouchers or
through contracts with public or private providers.
(b) Employment activities which consist of any of the following:
(1) Community service programs;
(2) Work experience programs;
(3) Job creation through public or private sector employment wage
subsidies; and
(4) On-the-job training.
(c) Job placement services financed through job vouchers or through
contracts with public or private providers, subject to the payment
requirements at Sec. 645.230(a)(3).
(d) Post-employment services financed through job vouchers or
through contracts with public or private providers, which are provided
after an individual is placed in one of the employment activities
listed in paragraph (b) of this section, or in any other subsidized or
unsubsidized job. Post-employment services include, but are not limited
to, such services as:
(1) Basic educational skills training;
(2) Occupational skills training;
(3) English as a second language training; and
(4) Mentoring.
(e) Job retention services and support services which are provided
after an individual is placed in a job readiness activity, as specified
in paragraph (a) of this section, in one of the employment activities,
as specified in paragraph (b) of this section, or in any other
subsidized or unsubsidized job. These services can be provided with WtW
funds only if they are not otherwise available to the participant. Job
retention and support services include, but are not limited to, such
services as:
(1) Transportation assistance;
(2) Substance abuse treatment (except that WtW funds may not be
used to provide medical treatment);
(3) Child care assistance;
(4) Emergency or short term housing assistance; and
(5) Other supportive services.
(f) Individual development accounts which are established in
accordance with section 404 (h) of the Act.
(g) Intake, assessment, eligibility determination, development of
an individualized service strategy, and case management may be
incorporated in the design of any of the allowable activities listed in
paragraphs (a) through (f) of this section (section 403(a)(5)(C) of the
Act).
Sec. 645.225 How do Welfare-to-Work activities relate to activities
provided through TANF and other related programs?
(a) Activities provided through WtW must be coordinated effectively
at the State and local levels with activities being provided through
TANF (section 403(a)(5)(A)(vii)(II) of the Act).
(b) The operating entity must ensure that there is an assessment of
skills, prior work experience, employability, and other relevant
information in place for each WtW participant. Where appropriate, the
assessment performed by the TANF agency or JTPA should be used for this
purpose.
(c) The operating entity must ensure that there is an
individualized strategy for transition to unsubsidized employment in
place for each participant which takes into account participant
assessments, including the TANF assessment and any JTPA assessment.
Where appropriate, the TANF individual responsibility plan (IRP) or
JTPA individual service strategy should be used for this purpose.
(d) Coordination of resources should include not only those
available through WtW and TANF grant funds, and the Child Care and
Development Block Grant, but also those available through other related
activities and programs such as the JTPA programs, the State employment
service, One-Stop systems, private sector employers, labor
organizations, business and trade associations, education agencies,
housing agencies, community development corporations, transportation
agencies, community-based and faith-based organizations, disability
community organizations, community action agencies, and colleges and
universities which provide some of the assistance needed by the
targeted population (section 402(a)(5)(A) of the Act).
Sec. 645.230 What general fiscal and administrative rules apply to the
use of Federal funds?
(a) Uniform fiscal and administrative requirements. (1) State,
local, and Indian tribal government organizations are required to
follow the common rule ``Uniform Administrative Requirements for Grants
and Cooperative Agreements to State and Local Governments'' which is
codified in the DOL regulations at 29 CFR part 97.
(2) Institutions of higher education, hospitals, and other non-
profit organizations are required to follow OMB Circular A-110 which is
codified in the DOL regulations at 29 CFR part 95.
(3) In addition to the requirements at 29 CFR 95.48 and 29 CFR
97.36(i), contracts or vouchers for job placement services supported by
funds provided for this program must include a provision to require
that at least one-half (\1/2\) of the payment occur after an eligible
individual placed into the workforce has been in the workforce for six
(6) months. This provision applies only to placement in unsubsidized
jobs (section 403(a)(5)(C)(i) of the Act).
(4) In addition to the requirements at 29 CFR 95.42 and 29 CFR
97.36(b)(3) which address codes of conduct and conflict of interest
issues related to employees, it is also required that:
(i) A PIC member shall neither cast a vote on, nor participate in,
any decision making capacity on the provision of services by such
member (or any organization which that member directly represents), nor
on any matter which would provide any direct financial benefit to that
member or a member of his immediate family.
(ii) Neither membership on the PIC nor the receipt of WtW funds to
provide training and related services shall be construed, by itself, to
violate these conflict of interest provisions.
(5) The addition method shall be required for the use of all
program income earned under WtW grants. The cost of generating program
income shall be subtracted from the amount earned to establish the
amount of program income available for use under the grants.
(b) Audit requirements. All governmental and non-profit
organizations are required to follow the audit requirements of OMB
Circular A-133.\1\ This requirement is imposed at 29 CFR 97.26 for
governmental organizations and at 29 CFR 95.26 for institutions of
higher education, hospitals, and other non-profit organizations.
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\1\ OMB Circulars are available from: Executive Office of the
President Publications Service, 725 17th Street NW, Suite G-2200,
Washington, DC 20503; 202-395-7332.
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(c) Allowable costs/cost principles. The DOL regulations at 29 CFR
95.27 and 29 CFR 97.22 identify the Federal principles for determining
allowable costs which each kind of recipient and subrecipient must
follow. For those selected items of cost requiring prior approval, the
authority to grant or deny approval is delegated to the Governor.
(1) State, local, and Indian tribal government organizations must
determine allowability of costs in
[[Page 61607]]
accordance with the provisions of OMB Circular A-87, ``Cost Principles
for State and Local Governments.''
(2) Non-profit organizations must determine allowability of costs
in accordance with OMB Circular A-122, ``Cost Principles for Non-Profit
Organizations.''
(3) Institutions of higher education must determine allowability of
costs in accordance with OMB Circular A-21, ``Cost Principles for
Education Institutions.''
(4) Hospitals must determine allowability of costs in accordance
with the provisions of appendix E of 45 CFR part 74, ``Principles for
Determining Costs Applicable to Research and Development Under Grants
and Contracts with Hospitals.''
(5) Commercial organizations and those non-profit organizations
listed in Attachment C to OMB Circular A-122 must determine
allowability of costs in accordance with the provisions of the Federal
Acquisition Regulation (FAR), at 48 CFR part 31.
(d) Government-wide debarment and suspension, and government-wide
drug-free workplace requirements. All WtW grant recipients and
subrecipients are required to comply with the government-wide
requirements for debarment and suspension, and the government-wide
requirements for a drug-free workplace which are codified in the DOL
regulations at 29 CFR part 98.
(e) Restrictions on lobbying. All WtW grant recipients and
subrecipients are required to comply with the restrictions on lobbying
which are codified in the DOL regulations at 29 CFR part 93.
(f) Nondiscrimination. All WtW grant recipients and subrecipients
are required to comply with the nondiscrimination provisions which are
codified in the DOL regulations at 29 CFR parts 31 and 32. In addition,
recipients of WtW grants who are also recipients under JTPA are
required to comply with 20 CFR part 34. For purposes of this paragraph,
the term ``recipient'' has the same meaning as the term is defined in
29 CFR parts 31, 32, and 34. Participant rights related to
nondiscrimination may be found at Sec. 645.255 of this part.
(g) Nepotism. (1) No individual may be placed in a WtW employment
activity if a member of that person's immediate family is engaged in an
administrative capacity for the employing agency.
(2) To the extent that an applicable State or local legal
requirement regarding nepotism is more restrictive than this provision,
such State or local requirement shall be followed.
Sec. 645.233 What are the time limitations on the expenditure of
Welfare-to-Work grant funds?
(a) Formula grant funds. The maximum time limit for the expenditure
of a given fiscal year allotment is three years from the effective date
of the Federal grant award to the State. The maximum time limit will be
allowed and will be specified in the Department's formula grant
document for each fiscal year of funds provided to the State. Any
remaining funds that have not been expended at the end of the
expenditure period must be returned to the Department in accordance
with the applicable closeout procedures for formula grants.
(b) Competitive grant funds. The maximum time limit for the
expenditure of these funds is three years from the effective date of
award, but will, in all cases, be determined by the grant period and
the terms and conditions specified in the Federal grant award agreement
(including any applicable grant modification documents). Any remaining
funds that have not been expended at the end of the approved grant
period must be returned to the Department in accordance with the
applicable closeout procedures for competitive grants (section
503(a)(5)(C)(vii) of the Act).
Sec. 645.235 What types of activities are subject to the
administrative cost limit on Welfare-to-Work grants?
(a) Administrative cost limitation (section 404(b)(1)). (1) Formula
grants to States. Expenditures for administrative purposes under WtW
formula grants to States are limited to fifteen percent (15%) of the
grant award.
(2) Competitive grants. The limitation on expenditures for
administrative purposes under WtW competitive grants will be specified
in the grant agreement but in no case shall the limitation be more than
fifteen percent (15%) of the grant award.
(b) The costs of administration are that allocable portion of
necessary and allowable costs associated with the overall management
and administration of the WtW program and which are not directly
related to the provision of services to participants. These costs can
be both personnel and non-personnel and both direct and indirect. Costs
of administration shall include:
(1) Except as provided in paragraph (c)(1) of this section, costs
of salaries, wages, and related costs of the recipient's,
subrecipient's or PIC's staff engaged in:
(i) Overall program management, program coordination, and general
administrative functions, including the salaries and related costs of
the executive director, WtW director, project director, personnel
officer, fiscal officer/bookkeeper, purchasing officer, secretary,
payroll/insurance/property clerk and other costs associated with
carrying out administrative functions;
(ii) Preparing program plans, budgets, schedules, and amendments
thereto;
(iii) Monitoring of programs, projects, subrecipients, and related
systems and processes;
(iv) Procurement activities, including the award of specific
subgrants, contracts, and purchase orders;
(v) Providing State or local officials and the general public with
information about the program (public relations);
(vi) Developing systems and procedures, including management
information systems (except as provided in paragraph (c)(3) of this
section), for assuring compliance with program requirements;
(vii) Preparing reports and other documents related to the program
requirements;
(viii) Coordinating the resolution of audit findings;
(ix) Evaluating program results against stated objectives; and
(x) Performing administrative services, including such services as
general legal services, accounting services, audit services; and
managing purchasing, property, payroll, and personnel;
(2) Except as provided at paragraph (c)(3) of this section, costs
for goods and services required for administration of the program,
including such goods and services as rental or purchase of equipment,
utilities, office supplies, postage, and rental and maintenance of
office space;
(3) The costs of organization-wide management functions; and
(4) Travel costs incurred for official business in carrying out
program management or administrative activities.
(5) These Interim Final WtW regulations adopt the description of
the term ``Administrative Costs'' found in the JTPA regulations at 29
CFR 627.440 to minimize the burden on PICs. The Secretary reserves the
right to change the definition to be consistent with the TANF
definition when final TANF regulations are issued.
(c) Other cost classification guidance. (1) Personnel and related
non-personnel costs of the recipient's or subrecipient's staff,
including project directors, who perform both administrative and
programmatic services or activities may be allocated to the benefitting
cost objectives/categories based on documented distributions of actual
time
[[Page 61608]]
worked or other equitable cost allocation methods.
(2) Indirect or overhead costs normally shall be charged to
administration, except that specific costs charged to an overhead or
indirect cost pool that can be identified directly with a cost
objective/category other than administration may be charged to the cost
objective/category directly benefitted. Documentation of such charges
shall be maintained.
(3) The costs of information technology--computer hardware and
software--needed for tracking or monitoring under a WtW grant shall not
be charged to the administration of the grant (section 404(b)(2) of the
Act).
Only the costs of information technology that is ``year 2000
compliant'' shall be allowable under WtW grants. To meet this
requirement, information technology must be able to accurately process
date/time data (including, but not limited to, calculating, comparing
and sequencing) from, into and between the twentieth and twenty-first
centuries, and the years 1999 and 2000. The information technology must
also be able to make leap year calculations. Furthermore, ``year 2000
compliant'' information technology when used in combination with other
information technology shall accurately process date/time data if the
other information technology properly exchanges date/time data with it.
Sec. 645.240 What are the reporting requirements for Welfare-to-Work
programs?
(a) General. All States and other direct grant recipients shall
report pursuant to instructions issued by DOL (financial data) and by
DHHS (participant data only). Reports shall be submitted no more
frequently than quarterly within a time period specified in the
reporting instructions. In addition, DOL will establish supplemental
reporting requirements for competitive grant recipients through the
grant agreements pursuant to Sec. 645.515 of this part.
(b) Subrecipient reporting. A State or other direct grant recipient
may impose different forms or formats, shorter due dates, and more
frequent reporting requirements on subrecipients. However, the
recipient is required to meet the reporting requirements imposed by DOL
and DHHS.
(c) Financial reports. Financial reports shall be submitted to DOL
by each grant recipient. Reported expenditures and program income must
be on the accrual basis of accounting and cumulative by fiscal year of
appropriation. If the recipient's accounting records are not normally
kept on the accrual basis of accounting, the recipient shall develop
accrual information through an analysis of the documentation on hand.
(d) Due date. Financial reports will be due no later than 45 days
after the end of each quarter. A final financial report is required 90
days after the expiration of a funding period or the termination of
grant support.
(e) Optional SPIR Reporting. DOL may also provide instructions for
an optional modified SPIR for internal program management (section
411(a) of the Act).
Sec. 645.245 Who is responsible for oversight and monitoring of
Welfare-to-Work grants?
(a) The Secretary may monitor all recipients and subrecipients of
all grants awarded and funds expended under WtW. Federal oversight will
be conducted primarily at the State level for formula grants and at the
recipient level for competitive grants.
(b) The Governor shall monitor PICs (or other approved
administrative entities) funded under the State's formula allocated
grants on a periodic basis for compliance with applicable laws and
regulations. The Governor shall develop and make available for review a
State monitoring plan.
Sec. 645.250 What procedures apply to the resolution of findings
arising from audits, investigations, monitoring and oversight reviews?
(a) Resolution of subrecipient level findings. (1) The Governor is
responsible for the resolution of findings that arise from the State's
monitoring reviews, investigations and audits (including OMB Circular
A-133 audits) of subrecipients.
(2) A State shall utilize the audit resolution, debt collection and
appeal procedures that it uses for other Federal grant programs.
(3) If a State does not have such procedures, it shall prescribe
standards and procedures to be used for this grant program.
(b) Resolution of State level findings. (1) The Secretary is
responsible for the resolution of findings that arise from federal
audits, monitoring reviews, investigations, incident reports, and
recipient level OMB Circular A-133 audits.
(2) The Secretary will use the DOL audit resolution process,
consistent with the Single Audit Act of 1996 and OMB Circular A-133.
(3) A final determination issued by a grant officer pursuant to
this process may be appealed to the DOL Office of Administrative Law
Judges under the procedures at Sec. 645.800.
(c) Resolution of nondiscrimination findings. Findings arising from
investigations or reviews conducted under nondiscrimination laws shall
be resolved in accordance with those laws and the applicable
implementing regulations.
Sec. 645.255 What nondiscrimination protections apply to participants
in Welfare-to-Work programs?
(a) All participants in WtW programs under this part shall have
such rights as are available under all applicable Federal, State and
local laws prohibiting discrimination including:
(1) The Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.);
(2) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794);
(3) The Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et
seq.); and
(4) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et
seq.).
(b) Complaints alleging discrimination in violation of any
applicable Federal, State or local law, including those listed in
paragraph (a) of this section, shall be processed in accordance with
those laws and the implementing regulations.
(c) Questions about or complaints alleging a violation of the
nondiscrimination laws in paragraph (a) of this section may be directed
or mailed to the Director, Civil Rights Center, U.S. Department of
Labor, Room N4123, 200 Constitution Avenue, NW, Washington, D.C. 20210
for processing.
(d) Participants in job readiness and employment activities
operated with WtW funds, as defined in Sec. 645.220 of this part, shall
not be discriminated against because of gender. Participants alleging
gender discrimination may file a complaint using the State's grievance
system procedures as described in Sec. 645.270 of this part (section
403(a)(5)(J)(iii) of the Act).
Sec. 645.260 What health and safety provisions apply to participants
in Welfare-to-Work programs?
(a) Participants in an employment activity operated with WtW funds,
as defined in Sec. 645.220 of this part, are subject to the same health
and safety standards established under State and Federal law which are
applicable to similarly employed employees, of the same employer, who
are not participants in programs under WtW.
(b) Participants alleging a violation of these health and safety
standards may file a complaint pursuant to the procedures contained in
Sec. 645.270 of this part (section 403(a)(5)(J)(ii) of the Act).
[[Page 61609]]
Sec. 645.265 What safeguards are there to ensure that participants in
Welfare-to-Work employment activities do not displace other employees?
(a) An adult participating in an employment activity operated with
WtW funds, as described in Sec. 645.220 of this part, may fill an
established position vacancy subject to the limitations in paragraph
(c) of this section.
(b) An employment activity operated with WtW funds, as described in
Sec. 645.220 of this part, shall not violate existing contracts for
services or collective bargaining agreements. Where such an employment
activity would violate a collective bargaining agreement, the
appropriate labor organization and employer shall provide written
concurrence before the employment activity is undertaken.
(c) An adult participating in an employment activity operated with
WtW funds, as described in Sec. 645.220 of this part, shall not be
employed or assigned:
(1) When any other individual is on layoff from the same or any
substantially equivalent job within the same organizational unit;
(2) If the employer has terminated the employment of any regular,
unsubsidized employee or otherwise caused an involuntary reduction in
its workforce with the intention of filling the vacancy so created with
the WtW participant; and,
(3) If the employer has caused an involuntary reduction to less
than full time in hours of any employee in the same or substantially
equivalent job within the same organizational unit.
(d) Regular employees and program participants alleging
displacement may file a complaint pursuant to Sec. 645.270 of this part
(section 403(a)(5)(J)(i) of the Act).
Sec. 645.270 What procedures are there to ensure that currently
employed workers may file grievances regarding displacement and that
Welfare-to-Work participants in employment activities may file
grievances regarding displacement, health and safety standards and
gender discrimination?
(a) The State shall establish and maintain a grievance procedure
for resolving complaints from:
(1) Regular employees that the placement of a participant in an
employment activity operated with WtW funds, as described in
Sec. 645.220 of this part, violates any of the prohibitions described
in Sec. 645.265 of this part; and
(2) Program participants in an employment activity operated with
WtW funds, as described in Sec. 645.220 of this part, that any
employment activity violates any of the prohibitions described in
Secs. 645.255(d), 645.260, or 645.265 of this part.
(b) Such grievance procedure should include an opportunity for
informal resolution.
(c) If no informal resolution can be reached within the specified
time as established by the State as part of its grievance procedure,
such procedure shall provide an opportunity for the dissatisfied party
to receive a hearing upon request.
(d) The State shall specify the time period and format for the
hearing portion of the grievance procedure, as well as the time period
by which the complainant will be provided the written decision by the
State.
(e) A decision by the State under paragraph (d) of this section may
be appealed by any dissatisfied party within 30 days of the receipt of
the State's written decision, according to the time period and format
for the appeals portion of the grievance procedure as specified by the
State.
(f) The State shall designate the State agency which will be
responsible for hearing appeals. This agency shall be independent of
the State or local agency which is administering, or supervising the
administration of the State TANF and WtW programs.
(g) No later than 120 days of receipt of an individual's original
grievance, the State agency, as designated in paragraph (f) of this
section, shall provide a written final determination of the
individual's appeal.
(h) The grievance procedure shall include remedies for violations
of Secs. 645.255(d), 645.260, and 645.265 of this part which may
continue during the grievance process and which may include:
(1) Suspension or termination of payments from funds provided under
this part;
(2) Prohibition of placement of a WtW participant with an employer
that has violated Secs. 645.255(d), 645.260, and 645.265 of this part;
(3) Where applicable, reinstatement of an employee, payment of lost
wages and benefits, and reestablishment of other relevant terms,
conditions, and privileges of employment; and
(4) Where appropriate, other equitable relief (section
403(a)(5)(J)(iv) of the Act).
Subpart C--Additional Formula Grant Administrative Standards and
Procedures
Sec. 645.300 What constitutes an allowable match?
(a) A State is entitled to receive two (2) dollars of Federal funds
for every one (1) dollar of State match expenditures, up to the amount
available for allotment to the State based on the State's percentage
for WtW formula grant for the fiscal year. The State is not required to
provide a level of match necessary to support the total amount
available to it based on the State's percentage for WtW formula grant.
However, if the proposed match is less than the amount required to
support the full level of federal funds, the grant amount will be
reduced accordingly (section 403(a)(5)(A)(i)(I) of the Act).
(b) States shall follow the match or cost-sharing requirements of
the ``Common Rule'' Uniform Administrative Requirements for Grants and
Cooperative Agreements to State and Local Governments (codified for DOL
at 29 CFR 97.24). Paragraphs (b)(1) (i) and (ii), (b)(3), (b)(4) and
(c)(1) of this section are in addition to the common rule requirements.
Also, paragraphs included in the common rule which relate to the use of
donated buildings and other real property as match have been excluded
from this provision.
(1) Only costs that would be allowable if paid for with WtW grant
funds will be accepted as match.
(i) Because the use of Federal funds is prohibited for construction
or purchase of facilities or buildings except where there is explicit
statutory authority permitting it, costs incurred for the construction
or purchase of facilities or buildings shall not be acceptable as match
for a WtW grant.
(ii) Because the costs of construction or purchase of facilities or
buildings are unallowable as match, the donation of a building or
property as a third party in-kind contribution is also unallowable as a
match for a WtW grant.
(2) A match or cost-sharing requirement may be satisfied by either
or both of the following:
(i) Allowable costs incurred by the grantee, subgrantee or a cost
type contractor under the assistance agreement. This includes allowable
cost borne by non-Federal grants or by others and cash donations from
non-Federal third parties.
(ii) The value of third party in-kind contributions applicable to
the FY period to which the cost-sharing or matching requirement apply.
(3) No more than one-half (\1/2\) of the total match expenditures
may be in the form of third party in-kind contributions.
(4) Match expenditures must be recorded in the books of account of
the entity that incurred the cost or received the contribution. These
amounts may be
[[Page 61610]]
rolled up and reported as aggregate State level match.
(c) Qualifications and exceptions. (1) The matching requirements
may not be met by the use of an employer's share of participant wage
payments (e.g., employer share of OJT wages).
(2) Costs borne by other Federal grant agreements. A cost-sharing
or matching requirement may not be met by costs borne by another
Federal grant. This prohibition does not apply to income earned by a
grantee or subgrantee from a contract awarded under another Federal
grant.
(3) General revenue sharing. For the purpose of this section,
general revenue sharing funds distributed under 31 U.S.C. 6702 are not
considered Federal grant funds.
(4) Cost or contributions counted towards other Federal cost-
sharing requirements. Neither costs nor the values of third party in-
kind contributions may count towards satisfying a cost-sharing or
matching requirement of a grant agreement if they have been or will be
counted towards satisfying a cost-sharing or matching requirement of
another Federal grant agreement, a Federal procurement contract, or any
other award of Federal funds.
(5) Costs financed by program income. Costs financed by program
income, as defined in 29 CFR 97.25, shall not count towards satisfying
a cost-sharing or matching requirement unless they are expressly
permitted in the terms of the assistance agreement. (This use of
general program income is described in Sec. 97.25(g)).
(6) Services or property financed by income earned by contractors.
Contractors under a grant may earn income from the activities carried
out under the contract in addition to the amounts earned from the party
awarding the contract. No costs of services or property supported by
this income may count toward satisfying a cost-sharing or matching
requirement unless other provisions of the grant agreement expressly
permit this kind of income to be used to meet the requirement.
(7) Records. Costs and third party in-kind contributions counting
towards satisfying a cost-sharing or matching requirement must be
verifiable from the records of grantees and subgrantee or cost-type
contractors. These records must show how the value placed on third
party in-kind contributions was derived. To the extent feasible,
volunteer services will be supported by the same methods that the
organization uses to support the allocability of regular personnel
costs.
(8) Special standards for third party in-kind contributions. (i)
Third party in-kind contributions count towards satisfying a cost-
sharing or matching requirement only where, if the party receiving the
contributions were to pay for them, the payments would be allowable
costs.
(ii) Some third party in-kind contributions are goods and services
that, if the grantee, subgrantee, or contractor receiving the
contribution had to pay for them, the payments would have been an
indirect costs. Cost sharing or matching credit for such contributions
shall be given only if the grantee, subgrantee, or contractor has
established, along with its regular indirect cost rate, a special rate
for allocating to individual projects or programs the value of the
contributions.
(iii) A third party in-kind contribution to a fixed-price contract
may count towards satisfying a cost-sharing or matching requirement
only if it results in:
(A) An increase in the services or property provided under the
contract (without additional cost to the grantee or subgrantee) or
(B) A cost savings to the grantee or subgrantee.
(iv) The values placed on third party in-kind contributions for
cost-sharing or matching purposes will conform to the rules in the
succeeding sections of this part. If a third party in-kind contribution
is a type not treated in those sections, the value placed upon it shall
be fair and reasonable.
(d) Valuation of donated services. (1) Volunteer services. Unpaid
services provided to a grantee or subgrantee by individuals will be
valued at rates consistent with those ordinarily paid for similar work
in the grantee's or subgrantee's organization. If the grantee or
subgrantee does not have employees performing similar work, the rates
will be consistent with those ordinarily paid by other employers for
similar work in the same labor market. In either case, a reasonable
amount for fringe benefits may be included in the valuation.
(2) Employees of other organizations. When an employer other than a
grantee, subgrantee, or cost-type contractor furnishes free of charge
the services of an employee in the employee's normal line of work, the
services will be valued at the employee's regular rate of pay exclusive
of the employee's fringe benefits and overhead costs. If the services
are in a different line of work, paragraph (d)(1) of this section
applies.
(e) Valuation of third party donated supplies and loaned equipment
or space. (1) If a third party donates supplies, the contribution will
be valued at the market value of the supplies at the time of donation.
(2) If a third party donates the use of equipment or space in a
building but retains title, the contribution will be valued at the fair
rental rate of the equipment or space.
Sec. 645.310 What assurance must a State provide that it will make the
required matching expenditures?
In its State plan, a State must provide a written estimate of
planned matching expenditures and describe the process by which the
funds will be tracked and reported to ensure that the State meets its
projected match (section 403(a)(5)(A)(i)(I) of the Act).
Sec. 645.315 What actions are to be taken if a State fails to make the
required matching expenditures?
(a) The Department will implement an annual reconciliation and
grant adjustment for WtW grants.
(1) The reconciliation will be based on reported match expenditures
through the end of the FY report, which is due 45 days after the end of
the fiscal year.
(2) If the end of FY report has not been received by December 1 of
that year, then the reconciliation will be based on the most current
report received.
(b) If match expenditures do not satisfy the requirement of the FY
grant, the subsequent FY grant amount will be reduced by the
appropriate corresponding amount (i.e., the grant will reduced by two
(2) dollars for each one (1) dollar shortfall in State matching funds).
Sec. 645.320 When will formula funds be reallotted, and what
reallotment procedures will the Secretary use?
(a) No reallotment of funds among States will occur during FY 98;
(b) For subsequent fiscal years, a reconciliation will be made
during the first quarter of the fiscal year under Sec. 645.315 of this
part to determine whether or not a State has satisfied its required
level of matching funds for the prior year.
(c) If a State has failed to expend the required level of matching
funds, the required reduction in the State grant will be made during
the second quarter of the fiscal year.
(d) Also, any funds which become available as a result of
underexpenditures of required match, or failure to obligate 100 percent
of the funds by either States or substate entities by the end of the
fiscal year of the grant, will be reallotted among qualifying States
(i.e., those which have committed a sufficient match to qualify for
additional funds). The reallotment
[[Page 61611]]
will occur during the second quarter of the following fiscal year
(section 403(a)(5)(A)(i)(I) of the Act).
Subpart D--State Formula Grants Administration
Sec. 645.400 Under what conditions may the Governor request a waiver
to designate an alternate local administering agency?
(a)(1) The Governor may include in the State's WtW Plan a waiver
request to select an agency other than the PIC to administer the
program for one or more SDAs in a State; or
(2) When the Governor determines the PIC, or alternative agency,
has not coordinated its expenditures with the expenditure of funds
provided to the State under TANF, pursuant to section
403(a)(5)(A)(vii)(II) of the Act, the Governor shall request a waiver.
(b) The Governor shall bear the burden of proving that the
designated alternative agency, rather than the PIC or other
administering agency, would improve the effectiveness or efficiency of
the administration of WtW funds in the SDA. The Governor's waiver
request shall include information to meet that burden. The Governor
shall provide a copy of the waiver request and any supporting
information submitted to the Secretary to the PIC and CEO of the SDA
for which an alternative administering agency is requested.
(c) The PIC and CEO shall have fifteen (15) days in which to submit
his or her written response to the Department. The PIC and CEO shall
provide a copy of such response to the Governor.
(d) The Secretary will assess the waiver information submitted by
the Governor, including input from the PIC and CEO in reaching the
decision whether to permit the use of an alternate administrative
agency.
(e) The Secretary shall approve a waiver request if she determines
that the Governor has established that the designated alternative
administering agency, rather than the PIC or other administering
agency, will improve the effectiveness or efficiency of the
administration of WtW funds provided for the benefit of the SDA.
(f) Where an alternate administering agency is approved by the
Secretary, such administrative entity shall coordinate with the CEO for
the applicable SDA(s) regarding the expenditure of WtW grant funds in
the SDA(s).
(g) The decision of the Secretary to approve or deny a waiver
request will be issued promptly and shall constitute final agency
action.
Sec. 645.410 What elements will the State use in distributing funds
within the State?
(a) Of the WtW funds allotted to the State, not less than 85
percent of the State allotment must be distributed to the SDAs in the
State.
(1) The State shall prescribe a formula for determining the amount
of funds to be distributed to each SDA in the State using no factors
other than the three factors described in paragraphs (a)(2) and (3) of
this section;
(2) The formula prescribed by the Governor must include as one of
the formula factors for distributing funds the provision at section
403(a)(5)(A)(vi)(I)(aa) of the Act. The Governor is to distribute funds
to an SDA based on the number by which the population of the area with
an income that is less than the poverty line exceeds 7.5 percent of the
total population of the area, compared to all such numbers in all such
areas in the State. The Governor must assign a weight of not less than
50 percent to this factor;
(3) The Governor shall distribute the remaining funds, if any, to
the SDAs utilizing only one or both of the following factors:
(i) The SDA's share of the number of adults receiving assistance
under TANF or the predecessor program in the SDA for 30 months or more
(whether consecutive or not), relative to the number of such adults
residing in the State;
(ii) The SDA's share of the number of unemployed individuals
residing in the SDA, relative to the number of such individuals
residing in the State.
(4) If the amount to be distributed to a service delivery area by
the Governor's formula is less than $100,000, the funds shall be
available to be used by the Governor to fund projects described at
paragraph (b) of this section.
(5) States shall use the guidance provided at section 403(a)(5)(D)
of the Act in determining the number of individuals with an income that
is less than the poverty line.
(6) PICs (or alternate administering agency) shall determine,
pursuant to section 403(a)(5)(A)(vii)(I) of the Act, on which
individual(s) and on which allowable activities to expend its WtW fund
allocation.
(7) The State shall distribute the SDAs' allocations in a timely
manner, but not later than 30 days from receipt of the State's fund
allotment.
(b) Of the funds allocated to the State, up to 15 percent of the
funds may be retained at the State level to fund projects that appear
likely to help long-term recipients of assistance enter unsubsidized
employment. Any additional funds available as a result of the process
described at paragraph (a)(4)of this section, shall also be available
to be used to fund projects to help long-term recipients of assistance
enter unsubsidized jobs.
(c) The Governors may distribute the funds retained pursuant to
paragraph (b) of this section to a variety of workforce organizations,
in addition to PICs, and other entities such as One-Stop systems,
private sector employers, labor organizations, business and trade
associations, education agencies, housing agencies, community
development corporations, transportation agencies, community-based and
faith-based organizations, disability community organizations,
community action agencies, and colleges and universities which provide
some of the assistance needed by the targeted population.
Sec. 645.415 What planning information must a State submit in order to
receive a formula grant?
(a) Each State seeking financial assistance under the formula grant
portion of the WtW legislation must submit an annual plan meeting the
requirements prescribed by the Secretary. This plan shall be in the
form of an addendum to the TANF State plan and shall be submitted to
the Secretaries of Labor and Health and Human Services.
(b) The Secretary shall review the State plan for compliance with
the statutory and regulatory provisions of the WtW program. The
Secretary's decision whether to accept a State plan as in compliance
with the Act shall constitute final agency action.
(c) If the Governor has requested a waiver to permit the selection
of an alternative administering agency in the State plan, the
provisions of Sec. 645.400 of this part shall apply (section
403(a)(5)(A)(ii) of the Act).
Sec. 645.420 What factors will be used in measuring State performance?
(a) State performance will be measured by a formula issued by the
Secretary after consultation with DHHS, the National Governors
Association (NGA) and the American Public Welfare Association (APWA).
(b) The formula shall be the basis for measuring the success of
States in placing individuals in private sector employment or any kind
of employment, the duration of such placements, any increase in
earnings of such individuals and other additional factors that the
Secretary of Labor deems to be appropriate. The formula will provide
for adjustments due to general economic conditions on a State-by-State
basis.
[[Page 61612]]
(c) The formula shall serve as the basis for the award of FY 2000
bonus grants based on successful performance (section 403(a)(5)(E) of
the Act).
Sec. 645.425 What are the roles and responsibilities of the State(s)
and PIC(s)?
(a) State roles and responsibilities. A State:
(1) Designates State WtW administering agency;
(2) Provides overall administration of WtW funds, consistent with
the WtW statute, WtW regulations and the State's WtW Plan;
(3) Develops the State WtW Plan in consultation and coordination
with appropriate entities in substate areas, such as One-Stop systems,
private sector employers, labor organizations, business and trade
associations, education agencies, housing agencies, community
development corporations, transportation agencies, community-based and
faith-based organizations, disability community organizations,
community action agencies, and colleges and universities which provide
some of the assistance needed by the targeted population (section
403(a)(5)(A)(ii)(I)(cc) of the Act);
(4) Distributes funds to SDAs, consistent with the provisions
described at Sec. 645.410(a) (section 403(a)(5)(A)(ii)(I)(bb));
(5) Conducts oversight and monitoring of WtW activities and fund
expenditures at the State and local levels for compliance with
applicable laws and regulations, consistent with the provisions at
Sec. 645.245 and provides technical assistance as appropriate;
(6) Ensures coordination of PIC fund expenditures with the State
TANF expenditures and other programs (section 403(a)(5)(A)(ii)(I)(dd));
(7) Determines whether to request waivers to select an alternate
administering agency consistent with the provisions described at
Sec. 645.400 of this part (sections 403(a)(5)(A)(ii)(I)(ee) and
403(a)(5)(A)(vii)(III));
(8) Manages and distributes State level WtW funds (15 percent),
consistent with the provisions at Secs. 645.410(b) and (c) (section
403(a)(5)(A)(vi)(III));
(9) Ensures that the 15 percent administration limitation and the
match requirement are met;
(10) Ensures that worker protections provisions are observed and
establishes an appropriate grievance process, consistent with
Secs. 645.255 through 645.270 of this part (section 403(a)(5)(J));
(11) Provides comments on Competitive Grant Application(s) from
eligible entities within the State, consistent with Sec. 645.510 of
this part (section 403(a)(5)(B)(ii));
(12) Cooperates with the Department of Health and Human Services on
the evaluation of WtW programs (section 403(a)(5)(A)(ii)(III));
(13) Provides technical assistance to PICs or alternate
administering agencies; and
(14) Establishes internal reporting requirements to ensure Federal
reports are accurate, complete and are submitted on a timely basis,
consistent with Sec. 645.240 of this part.
(b) Private Industry Council (or alternate administering agency)
roles and responsibilities. A PIC:
(1) Has sole authority, in coordination with CEOs, to expend
formula funds (section 403(a)(5)(A)(vii)(I) of the Act);
(2) Has authority to determine the individuals to be served in the
SDA (section 403(a)(5)(A)(vii)(I));
(3) Has authority to determine the services to be provided in the
SDA (section 403(a)(5)(A)(vii)(I));
(4) Ensures funds are expended on eligible recipients and on
allowable activities, consistent with Sec. 645.410(a)(5) of this part;
(5) Coordinates WtW fund expenditures with State TANF expenditures
and other programs (section 403(a)(5)(A)(ii)(dd));
(6) Ensures that there is an assessment and an individual service
strategy in place for each WtW participant, consistent with
Secs. 645.225(a) and (b) of this part;
(7) Conducts oversight and monitoring of subrecipients, consistent
with the provisions at Sec. 645.245 of this part;
(8) Ensures worker protection provisions and grievance process are
observed, consistent with State guidelines (section 403(a)(5)(J)); and
(9) Consults with and provides comments on private entity
Competitive Grant Application(s), consistent with the provisions at
Sec. 645.500(b)(1)(i) of this part.
Subpart E--Welfare-To-Work Competitive Grants
Sec. 645.500 Who are eligible applicants for competitive grants?
(a) Eligible applicants for competitive grants are:
(1) PICs;
(2) Political subdivisions of a State; and
(3) Private entities including nonprofit organizations such as
community development corporations, community-based and faith-based
organizations, disability community organizations, community action
agencies, and public and private colleges and universities, and other
qualified private organizations.
(b) Entities other than a PIC or a political subdivision of the
State must submit an application for competitive grant funds in
conjunction with the applicable PIC or political subdivision.
(1) The term ``in conjunction with'' shall mean that the
application submitted by such an entity must include a signed
certification by both the applicant and either the applicable PIC or
political subdivision that:
(i) The applicant has consulted with the applicable PIC/political
subdivision during the development of the application; and
(ii) The activities proposed in the application are consistent
with, and will be coordinated with, WtW efforts of the PIC/political
subdivision.
(2) If the applicant is unable to include such a certification in
its application, the applicant will be required to certify, and provide
information indicating that efforts were undertaken to consult with the
PIC/political subdivision and that the PIC/political subdivision was
provided a sufficient opportunity to cooperate in the development of
the project plan and to review and comment on the application prior to
its submission to the Secretary. ``Sufficient opportunity for PIC/
political subdivision review and comment'' shall mean at least 30
calendar days.
(3) The certification described in paragraph (b)(1) of this
section, or the evidence of efforts to consult described in paragraph
(b)(2), must be with each PIC or political subdivision included in the
geographic area in which the project proposed in the application is to
operate (section 403(a)(5)(B)(ii) of the Act).
Sec. 645.510 What is the required consultation with the Governor?
(a) All applicants for competitive grants, including PICs and
political subdivisions, must consult with the Governor by submitting
their application to the Governor or the designated State
administrative entity for the WtW program for review and comment prior
to submission of the application to the Secretary. The application
submitted to the Secretary must include:
(1) Comments on the application from the State; or
(2) Information indicating that the State was provided a sufficient
opportunity for review and comment prior to submission to the
Secretary. ``Sufficient opportunity for State review and comment''
shall mean at least 15 calendar days.
[[Page 61613]]
(b) For private entity applicants, the submission of the
application for State review and comment must follow the 30 day period
provided for PIC/political subdivision review. Evidence of PIC/
political subdivision review should be included in the submission to
the State (section 403(a)(5)(B)(ii) of the Act).
Sec. 645.515 What are the program and administrative requirements that
apply to both the formula grants and competitive grants?
(a) All of the general program requirements and administrative
standards set by 29 CFR part 645 subpart B apply (section 403(a)(5)(C)
and section 404(b) of the Act).
(b) In addition, competitive grants will be subject to:
(1) Supplemental reporting requirements; and
(2) Additional monitoring and oversight requirements based on the
negotiated scope-of-work of individual grant awards (section
403(a)(5)(B)(iii) and (v)).
Sec. 645.520 What are the application procedures and timeframes for
competitive grant funds?
(a) The Secretary shall establish appropriate application
procedures, selection criteria and an approval process to ensure that
grant awards accomplish the purpose of the competitive grant funds and
that available funds are used in an effective manner.
(b) The Secretary shall publish such procedures in the Federal
Register and establish submission timeframes in a manner that allows
eligible applicants sufficient time to develop and submit quality
project plans (section 403(a)(5)(B)(i) and (iii) of the Act).
Sec. 645.525 What special consideration will be given to rural areas
and cities with large concentrations of poverty?
(a) Competitive grant awards will be targeted to geographic areas
of significant need. In developing application procedures, special
consideration will be given to rural areas and cities with large
concentrations of residents living in poverty.
(b) Grant application guidelines will clarify specific requirements
for documenting need in the local area (section 403(a)(5)(B)(iv) of the
Act).
Subpart F--Administrative Appeal Process
Sec. 645.800 What administrative remedies are available under this
part?
(a) Within 21 days of receipt of a final determination that has
directly imposed a sanction or corrective action pursuant to
Sec. 645.250(b) of this part, a recipient, subrecipient, or a vendor
directly against which the Grant Officer has imposed a sanction or
corrective action, may request a hearing before the Department of Labor
Office of Administrative Law Judges, pursuant to the provisions of 29
CFR part 96 subpart 96.6.
(b) In accordance with 29 CFR 96.603(b)(2), the rules of practice
and procedure published at 29 CFR part 18 shall govern the conduct of
hearings under this section, except that a request for hearing under
this section shall not be considered a complaint to which the filing of
an answer by DOL or a DOL agency is required. Technical rules of
evidence shall not apply to a hearing conducted pursuant to this part;
however, rules or principles designed to assure production of the most
credible evidence available and to subject testimony to cross-
examination shall apply.
(c) The decision of the Administrative Law Judge (ALJ) shall
constitute final agency action unless, within 20 days of the decision,
a party dissatisfied with the decision of the ALJ has filed a petition
for review with the Administrative Review Board (ARB) (established
pursuant to the provisions of Secretary's Order No. 2-96, published at
61 Fed. Reg. 19977 (May 3, 1996)), specifically identifying the
procedure, fact, law or policy to which exception is taken. Any
exception not specifically urged shall be deemed to have been waived. A
copy of the petition for review must be sent to the opposing party at
that time. Thereafter, the decision of the ALJ shall constitute final
agency action unless the ARB, within 30 days of the filing of the
petition for review, has notified the parties that the case has been
accepted for review. Any case accepted by the ARB shall be decided
within 120 days of such acceptance. If not so decided, the decision of
the ALJ shall constitute final agency action.
[FR Doc. 97-29966 Filed 11-17-97; 8:45 am]
BILLING CODE 4510-30-P
