[Federal Register Volume 59, Number 131 (Monday, July 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16698]


[[Page Unknown]]

[Federal Register: July 11, 1994]


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DEPARTMENT OF LABOR

Employment and Training Administration

 

Job Training Partnership Act; Title II-A, Title II-C, Title III, 
and Section 204(d) Performance Standards for Program Years (PY) 1994 
and 1995

AGENCY: Employment and Training Administration, Labor.

ACTION: Notice of performance standards for PY 1994-95.

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SUMMARY: The Department of Labor is announcing performance standards 
for Job Training Partnership Act (JTPA) Title II-A (Adult Training), 
Title II-C (Youth Training), Title III (Dislocated Workers Training), 
and section 204 (Older Workers Training) for Program Years (PY) 1994-95 
(July 1, 1994-June 30, 1996). The proposed issuance appended to this 
notice contains revised performance standards levels and implementation 
instructions to conform the Title II performance management system with 
the Job Training Reform Amendments of 1992.

EFFECTIVE DATE: July 1, 1994.

FOR FURTHER INFORMATION CONTACT: Steven Aaronson, Chief, Adult and 
Youth Standards Unit, Telephone (202) 219-5487, extension 107 (this is 
not a toll-free number).

PAPERWORK REDUCTION ACT: Information collection related to this 
regulation has been approved previously by the Office of Management and 
Budget, No. 1205-0321. No further information collections or other 
paperwork requirements of the public are needed.

SUPPLEMENTARY INFORMATION: Under section 106 of the amended Job 
Training Partnership Act (JTPA), the Secretary of Labor is required to 
set performance standards for programs serving: (1) adults and youth 
under Title II-A and Title II-C; (2) dislocated workers under Title 
III; and (3) older workers under section 204(d). The Job Training 
Reform Amendments of 1992 (Amendments) also introduced significant 
changes in the way job training programs are designed and operated at 
the local levels. These statutory changes, combined with recent 
legislative and administrative initiatives to promote high-quality, 
results-driven, customer-oriented services throughout the Federal 
Government, are not only reshaping the way JTPA delivers its services, 
but also how to measure its effectiveness.
    National job training objectives have remained unchanged since 1990 
and focus on enhancing the long-term employability and economic self-
sufficiency of those most at risk of becoming or remaining unemployed. 
Current measures of the program's progress in achieving these 
objectives relate directly to near-term employment and earnings levels 
of adult program completers and levels of employment and skill 
enhancements of youth program completers. These outcomes do not, by 
themselves, measure the quality of the services received or the extent 
to which the program is able to improve upon participants' prior 
employment, earnings and welfare dependency.
    For this reason, the Department will be undertaking a comprehensive 
review of its performance standards over the next year to examine 
alternative program measures and more cost efficient ways of assessing 
the program's long-term effects on its graduates. Ongoing surveys of 
JTPA's customers will also provide invaluable feedback on how helpful 
JTPA services are to its users, what other services are needed but not 
provided by the program, and the extent to which good outcomes are 
related to levels of customer satisfaction. Finally, the Employment and 
Training Administration will initiate a nationwide JTPA Report Card 
that will highlight programs showing the greatest returns on their 
human resource investments in terms of obtaining high-quality 
employment for those participants most at-risk of failure.
    Outcome measures for Title II-A and C will be retained until this 
performance standards review is completed. Numerical levels for these 
core standards have been updated to reflect the most recent JTPA 
program experience.
    The Department is also undertaking a comprehensive review of its 
Title III programs; therefore, changes in outcome measures will be 
deferred until the results of this critical assessment are available. 
Governors will continue to be required to set an entered employment 
rate standard for their Title III programs and are encouraged to 
establish an average wage at placement goal. At the same time, the 
Department will be exploring ways to use performance standards to 
improve the quality of services provided to dislocated workers, and to 
achieve higher levels of customer satisfaction.
    Under section 204(d) of JTPA, older worker programs are now subject 
to performance standards. However, no incentive awards or sanctions are 
associated with these standards. Outcomes for these programs focus on 
increasing employment and earnings similar to those programs serving 
other disadvantaged adults. Because field evidence suggests that older 
workers are much more likely to remain employed once they are placed in 
jobs, employment and wages will be measured at program completion 
rather than at a later follow-up period. Together, these measures 
underscore the employment focus of the program, particularly in jobs 
that are higher paying.
    To comply with the legislative provisions, the Department 
considered adding specific outcome measures for hard-to-serve 
participants and separate outcomes for in-school and out-of-school 
youth. In the interest of avoiding a proliferation of performance 
measures and limiting local flexibility in programming, additional 
measures for these three separate groups were not established. Rather, 
the requirement to promote services to hard-to-serve individuals will 
be addressed from an incentive policy perspective and the issue of in-
school and out-of-school standards will continue to be addressed 
through the performance standards adjustment process. When judging 
service delivery area (SDA) performance and awarding incentive funds, 
States will need to design incentive policies that will promote more 
effective services to out-of-school youth and reward placements into 
jobs with employer-assisted benefits.
    The policy of excluding cost measures from incentive awards will 
remain unchanged; however, States are reminded of the integral role of 
financial oversight in program management. States are also encouraged 
to utilize available administrative data to relate overall costs of job 
training to more direct measures of long-term employment, earnings and 
reductions in welfare. The Office of the Inspector General will be 
collaborating with ETA in developing a mechanism for measuring the 
program's return on its investments. The wider JTPA community will also 
be invited to participate in this effort.

Discussion of Comments

    On March 1, 1994, proposed revisions to the performance standards 
for JTPA Title II-A, Title II-C, Title III, and newly instituted 
section 204(d) performance standards were published in the Federal 
Register at 59 FR 9910. Interested parties were invited to submit 
written comments through March 31, 1994.
    The Department of Labor (DOL) received 96 written comments on the 
proposed performance standards issuance. Eighteen of the letters 
explicitly endorsed the overall direction which the Department is 
taking in establishing performance standards policy for Program Years 
1994 and 1995. In general, the majority of comments requested 
clarifications or raised issues about specific aspects of the proposed 
requirements. While the concept of imposing a hard-to-serve ``gate'' 
for incentive awards eligibility received support, its application to 
terminees rather than enrollments drew considerable local and State 
criticism.
    The following summarizes the major issues raised by the commenters 
and the Department's respective responses.

Use of Participants Rather Than Terminees as the Basis for Determining 
SDA Eligibility for Incentive Awards

    The Department specifically sought comments on whether the hard-to-
serve ``gate'' for incentive award eligibility fully addresses the need 
to emphasize this population in the performance standards system, and 
whether compliance with the gate should be measured against those 
enrolled in training or those completing the program. A majority of 
those commenting on this issue agreed with the Department's approach of 
restricting eligibility for incentive awards to those programs that 
enroll in training at least a minimum (65%) hard-to-serve adults as 
well as youth.
    However, fully three-fourths of States and SDAs submitting comments 
specifically recommended that the basis for the gate should be 
participants (all individuals served during the year, including those 
still enrolled at the end of the program year) rather than terminees. 
Basing the 65% hard-to-serve level on program terminees was seen as 
pressuring SDAs to ``manipulate'' their terminations. Local programs 
can manage the recruitment process to ensure that adequate numbers of 
hard-to-serve are enrolled. Ensuring comparable numbers of hard-to-
serve individuals will graduate each year is more problematic because 
of the clients' varying training needs. Participants with multiple 
barriers typically need to remain in programs longer than those with 
fewer barriers.
    The Department concurs with the arguments made for changing the 
basis of the incentive award ``gate'' from terminations to 
participants. Particularly compelling is the rationale that hard-to-
serve participants need longer-term interventions and the adverse 
effects that such a gate might create in prompting SDAs to terminate 
participants prematurely. Thus, beginning in FY 1994 for SDAs to become 
eligible for incentives, at least 65 percent of both the SDAs' Title 
II-A and Title II-C (in-school and out-of-school combined) participants 
receiving training, and/or other services beyond objective assessment, 
must be hard-to-serve. For the purpose of determining compliance with 
this requirement, those individuals with SDA-defined barriers that have 
been approved by the Governor are to be included as well as 
participants in school-wide projects under section 263(g) and 
participants in five percent-funded projects.
    To further reinforce JTPA's focus on serving hard-to-serve 
participants, the Department encourages Governors to design incentive 
policies that explicitly promote increased service to that group. For 
example, Governors may wish to adjust themselves based on the degree to 
which SDAs exceed the incentive eligibility ``gate'' or on a sliding 
scale of continuous improvement.

Improved Service to Out-of-School Youth and Employer-Assisted Benefits 
Incentive Award Criteria

    About 30 percent of all commenters mentioned this issue. Most of 
the comments requested additional guidance and clarification on how 
these two items could be incorporated into incentive award policies and 
asked whether Governors could ignore or ``zero weight'' either one of 
them in the awarding of incentives. The Department is sensitive to 
concerns about establishing incentive criteria without sufficient 
information on the program's prior experience in placing individuals in 
jobs with employer-assisted benefits; or in the case of out-of-school 
youth, in the absence of effective program models that have a positive 
impact on a youth's long-term earnings potential.
    In response to the field comments several changes have been made to 
the incentive policy guidance as originally proposed. First, Governors 
will be encouraged, but not required, to include these criteria in 
State incentive policy for PY 1994. States will be required to 
incorporate these criteria (i.e., they cannot be zero-weighted) 
beginning in PY 1995. In the interim States can use data from the 
Standardized Program Information Reports (SPIR) for PYs 1992 and 1993 
to establish performance benchmarks for programs serving out-of-school 
youth and job placements providing employer-assisted benefits. 
Therefore, the Department is giving Governors maximum flexibility in 
terms of how these criteria may be applied. Suggested approaches for 
rewarding improved service to out-of-school youth and placements in 
jobs providing employer-assisted benefits will be included in the 
Training and Employment Guidance Letter appended to this Notice.
    Several commenters noted that the intent of the incentive 
provisions is to encourage service to more out-of-school youth; thus, 
SDAs should be rewarded solely on the extent to which they exceed the 
statutory minimum service levels. The Department's position is that 
rewarding SDAs simply on the basis of increasing the numbers of out-of-
school youth does not go far enough in addressing the disappointing 
findings from the National JTPA study. Thus, while SDAs will not be 
exempted from the statutory requirement to serve at least 50% out-of-
school youth, ETA is encouraging States to use incentive funds to pilot 
innovative youth models and to evaluate and replicate promising 
strategies.

20-Hour Requirement

    Section 106(k) of JTPA requires for performance standards purposes 
that employment be for at least 20 or more hours per week. This 
requirement applies to Title II-A (adults), Title II-C (youth), Section 
204(d) (older workers), and Title III (dislocated workers) programs. 
About 15 percent of the comments questioned the reasonableness of this 
requirement for in-school youth, older workers, or disabled 
participants, and requested that the Department waive it in these 
cases. Since this requirement is explicitly defined in the statute, it 
cannot be waived.
    Several commenters also requested clarification about the reference 
period, i.e., whether a ``week'' means 5 or 7 days and whether follow-
up is needed to verify that an individual actually worked for at least 
20 hours. For determining compliance with this provision, a ``week'' 
means a period of 7 consecutive days, and the 20 or more hours is to be 
understood as a condition of employment. (See section 5 of the attached 
TEGL.) No formal verification is required, but the Department 
encourages States to set up a system that would, at a minimum, provide 
for random checking to assess compliance by SDAs.

Definition of ``Failure to Meet Standards''

    Section 106(j)(i)(A) of JTPA requires the Secretary to establish 
uniform criteria of determining whether a service delivery area fails 
to meet performance standards. To comply with this provision, the 
Department specified the number of failed standards which constitute 
overall failure. Commenters generally agreed with the concept of a 
uniform definition of performance failure; however, there was minor 
opposition to defining overall failure as missing a combination of any 
three standards or simply missing both youth standards. The Department 
was criticized for placing too much weight on the youth standards. 
Given Congressional interest in improving the quality of service to 
youth, as reflected in various provisions in the amended JTPA, and 
given the need to respond to the programmatic issues raised by the 
National JTPA Study, the Department believes its emphasis on youth 
program performance is appropriate.
    Several commenters requested clarification on whether SDAs had to 
fail the same standards two consecutive years to trigger a 
reorganization. The sanction policy does not apply to the same 
standards over the two-year period. Thus, for the purpose of 
identifying whether an SDA has failed to meet performance standards for 
two consecutive years, overall failure means failing any three core 
standards or both youth standards for two consecutive years. 
Definitions for meeting and failing individual standards will be 
established by Governors.

Performance Standards for Older Worker Programs Under Section 204(d)

    The other major area of comment involved the performance standards 
for older worker programs under Section 204(d). A total of 27 letters 
was received from advocates/service providers and State agencies on 
aging. These letters questioned the methodology and data used for 
setting the performance standards levels. Many indicated that the 
proposed levels were too high, particularly the level of the average 
wage at placement standard.
    Since March 1, 1994, when the notice appeared in the Federal 
Register, additional data became available from the PY 1992 SPIR. 
Reported information on the Section 204(d) Older Worker program was 
analyzed and used to establish revised levels for the standards that 
are more closely related to actual experience for that program. This 
has resulted in a lower entered employment rate standard, but the 
average wage at placement standard remains unchanged. It should be 
remembered, however, that the Secretary's standards are merely 
departure points which will be adjusted to account for local economic 
conditions and the characteristics of the terminees. The Department 
will be providing States with a methodology for making these 
adjustments.

Performance Standards Levels

    A total of 9 comments was received about the overall performance 
levels for Titles II-A and II-C standards. Comments were mixed with 
hard-to-serve advocates supporting both higher and lower levels. The 
majority of comments advocating lower levels were from youth advocates 
who felt that the standard for youth employment was too high given the 
recent decline in the rate of placing youth in jobs.
    The numerical values of the standards are generally set so that if 
local programs continue to perform unchanged from the prior program 
year, 75 percent of the system are expected to exceed their standards. 
The proposed numerical standards for five of the six core measures (all 
but the YEER) and the Title III Entered Employment Rate measure are set 
in this manner, using PY 1992 performance. Further adjustments were 
made to reflect the new 20 hour per week minimum requirement for 
employment. To arbitrarily raise the level of all standards, as 
suggested by certain advocate groups, appeared counterproductive when 
the Department was imposing new targeting requirements and employment 
caveats.
    One exception is the numerical standard for the YEER which if 
similarly set, would lead to reduced standards for SDAs. The recently 
published 30-month results from the National JTPA Study suggest that 
employment and earnings experienced by out-of-school youth in JTPA fall 
short of acceptable levels. Therefore, to foster improved services to 
out-of-school youth, the numerical standard for the YEER will remain at 
its current level of 41 percent.
    The Secretary's standards for the new older worker performance 
measures were derived from an analysis of available PY 1992 Section 
204(d) data from the SPIR. The same general rules that were used for 
setting the levels for the Titles II-A, II-C, and III programs, 
including the adjustment for 20-hour employment, were used for the 
Section 204(d) program. Again, it must be emphasized that these 
national standards are merely departure points and States must make 
adjustments to account for local conditions.

Certifications

    This issuance is procedural in character and gives directions to 
States and local service deliverers on the implementation of 
performance standards under Title II-A, Title II-C, Section 204(d), and 
Title III of JTPA. Therefore, it is not classified as ``major'' under 
Executive Order 12291 and no impact analysis is required. This issuance 
has been assessed according to the Federalist policymaking criteria 
outlined in Executive Order 12612. The Department believes that this 
issuance will not materially limit the policymaking discretion of the 
States. This issuance both addresses Departmental policy objectives and 
permits States discretionary authority in the application of 
performance standards. The procedural framework included in this 
issuance enables States to better assist localities in more effective 
and efficient program design and management.

    Signed at Washington, DC, this 5th day of July, 1994.
Doug Ross,
Assistant Secretary of Labor.

Appendix--Revisions to the Performance Management System, and 
Performance Standards for Program Years (PY's) 1994 and 1995

Training and Employment Guidance Letter________

Training and Employment Guidance Letter No. ________

From: Barbara Ann Farmer, Administrator for Regional Management
Subject: Job Training Partnership Act (JTPA) Title II and Title III 
Performance Standards for PY's 1994-1995

    1. Purpose. To transmit guidance on the Secretary's required 
performance measures and the Secretary's implementing instructions for 
performance standards for Program Years (PY's) 1994 and 1995 (July 1, 
1994-June 30, 1995; July 1, 1995-June 30, 1996).
    2. Background. Sec. 106 of JTPA, as amended, directs the Secretary 
to establish performance standards for adult, youth, and dislocated 
worker programs. These standards may be updated every two years based 
on the most recent JTPA program experience, as well as program emphases 
and goals established by the Department of Labor. The Secretary also 
issues instructions for implementing standards and parameter criteria 
for States to follow in adjusting the Secretary's standards for service 
delivery areas (SDAs) and substate areas (SSAs).
    The Job Training Reform Amendments (JTRA) of 1992 mandated 
significant changes in the design and operation of local job training 
programs, as well as the criteria used to assess their performance. 
Revised Section 106 requires that performance standards for Title II-A, 
Title II-C, Section 204(d) and Title III programs measure the number of 
job placements that provide a minimum of 20 hours of work per week, and 
that programs be rewarded based on high performance, increased service 
to the ``hard-to-serve,'' and quality job placements that are both 
high-paying and offer employer-assisted benefits. Incentive and 
sanction policies are to be structured around more explicit criteria, 
and performance standards failure is now federally defined to ensure 
greater uniformity in assessing underperformance nationwide. As a 
result of the JTPA amendments, section 204(d) now mandates performance 
measures for the older worker program.
    To assist the Department in responding to the substantive changes 
required in the section 106 amendments, a Technical Workgroup was 
convened in Washington, DC, in mid-July 1993. The workgroup had 
representatives from State and local JTPA programs; public interest 
groups, including the Partnership for Training and Employment Careers; 
the U.S. Conference of Mayors; the National Association of Counties; 
the National Governors' Association; and the National Council on the 
Aging; and staff from the Department of Labor (DOL) Office of the 
Inspector General. This Guidance Letter incorporates, to a large 
extent, the workgroup's findings.
    3. Performance Management Goals for PY's 1994-1995. Departmental 
goals, initially established for PY 1990 in anticipation of the 
amendments, remain unchanged and are as follows:
    --Targeting services to a more at-risk population;
    --Improving the quality and intensity of services that lead to 
skills acquisition, long-term employability and increased earnings;
    --Placing greater emphasis on basic skills acquisition to qualify 
for employment or advanced education or training; and
    --Promoting comprehensive, coordinated human resource programs to 
address the multiple needs of at-risk populations.
    In addition, with the passage of the 1992 JTPA Amendments, the 
performance management system has been tasked, through its performance 
incentive policies, to improve service to out-of-school youth and also 
to foster employment in better quality jobs which offer high wages and 
employer-assisted benefits.
    These goals are reflected in the Secretary's six Title II-A and 
Title II-C (core) measures, national numerical standards for these 
measures, new incentive award criteria, and associated reporting 
requirements. Governors still retain authority to establish additional 
standards which reflect State policy and to develop the specific 
approach to determining incentive awards.
    This issuance specifies the national standards for PY's 1994-1995 
and introduces the new criteria which must be a part of State incentive 
grant policies. Data to support additional non-cost measures will 
continue to be reported and Governors may use these measures, or others 
in making State incentive award determinations. Data on costs together 
with program performance will provide critical information for State 
monitoring, fiscal oversight, and assist States in measuring returns on 
their human resource investments.
    The Department has identified two additional goals for PY 1994-
1995. These are:
    --Establishing a strong customer focus and orientation toward 
improving the program's responsiveness in meeting the individual needs 
of participants; and
    --Seeking and using customer feedback to monitor the 
appropriateness of JTPA services and to promote continuous program 
improvements.
    States and SDAs are encouraged to survey customers on a regular 
basis as an integral part of their program oversight to identify 
program weaknesses and to improve program services. Technical 
assistance will be made available on cost-effective ways to gather and 
utilize such information.
    4. Secretary's National Standards for PY's 1994-1995. The 
Secretary's performance measures and national standards for Title II-A, 
Title II-C, section 204(d), and Title III (all of section 302(c)(1) 
State activities, and sections 302(c)(2) and 302(d) substate area 
activities) are as follows:

PY 1994-1995 Performance Standards

Title II-A

Adult Follow-up Employment Rate
59%
Adult Weekly Earnings at
    Follow-up
$245
Welfare Follow-up Employment
    Rate
47%
Welfare Weekly Earnings at
    Follow-up
$223

Title II-C

Youth Entered Employment Rate
41%
Youth Employability Enhancement Rate
40%

Section 204(d) Older Worker Programs

Entered Employment Rate
52%
Average Hourly Wage at Placement
$5.45

Title III

Entered Employment Rate
67%
Average Wage at Placement
State Determined

    The Title II-A adult and welfare follow-up measures will continue 
to be based on individuals who terminate during the first three 
quarters of the program year and the last quarter of the previous 
program year.
    5. Explanation of Performance Standards Levels. The Title II-A and 
II-C numerical standards were derived from PY 1992 aggregate 
performance data reported on the JTPA Annual Status Report (JASR) and 
are generally set at a minimally-acceptable level that approximately 
75% of the SDA's can be expected to exceed.
    Revising the numerical standard for the Youth Entered Employment 
Rate (YEER) in the same way would lead to reduced standards for SDAs. 
However, recent National JTPA Study results suggest that employment and 
earnings experienced by out-of-school youth in JTPA fall short of 
acceptable levels. Therefore, to encourage improved services to out-of-
school youth, the numerical standard for the YEER will remain at its 
current level of 41 percent.
    Earnings standards have been adjusted to account for expected 
future inflation. Finally, an additional special adjustment has been 
made to employment-related standards to account for the requirement in 
section 106(k) that permits credit, for performance standards purposes, 
only for employment that is scheduled for 20 or more hours per week.
    Similar to the Title II-A and Title II-C standards, the Title III 
standard was derived from PY 1992 performance data reported on the 
Worker Adjustment Program Annual Program Report (WAPR). This standard 
is set at a level that, approximately, 75 percent of the substate areas 
can be expected to exceed. As with the employment measures for Titles 
II-A and II-C, an adjustment has been made to take into account the 20-
hour per week employment requirement.
    Since discrete aggregate data were not available for PY 1992 
Section 204(d) Older Worker program performance, available SPIR data 
were used to assist in setting performance standards levels for that 
program. As with the employment measures for Titles II-A, II-C, and 
III, an adjustment has been made to take into account the 20-hour per 
week employment requirement.

    Note: Programs operated under section 204(d) are State programs 
even though they may be managed by various local entities. 
Therefore, performance standards will be applied to the total older 
worker programs State-wide. Unlike the adult and youth programs 
under Title II-A/C, however, no incentive awards or sanctions are 
associated with these standards.

    6. Implementing Provisions. The following implementing requirements 
must be followed:
    A. Required Standards. For Titles II-A and II-C, Governors are 
required to set, for each SDA, a numerical performance standard for 
each of the six Secretary's measures; for the Older Worker program, 
Governors are required to set numerical Entered Employment Rate and 
Average Wage at Placement standards for programs operated under section 
204(d); for Title III, Governors are required to set for each substate 
area a numerical performance standard for the Entered Employment Rate 
and are encouraged to establish an Average Wage at Placement goal
    B. Setting the Standards. Consistent with new legislative 
provisions, Governors are now required to adjust the Secretary's 
performance standards to reflect local area circumstances (section 
106(d)). Such adjustments apply to Title II-A, Title II-C, section 
204(d) and Title III programs, and must conform to the Secretary's 
parameters described below:

1. Procedures must be:
    --Responsive to the intent of the Act,
    --Consistently applied among the SDA's/SSA's,
    --Objective and equitable throughout the State,
    --In conformance with widely accepted statistical criteria;

2. Source data must be:
    --Of public use quality,
    --Available upon request;

3. Results must be:
    --Documented,
    --Reproducible; and

4. Adjustment factors must be limited to:
    --Economic factors,
    --Labor market conditions,
    --Geographic factors,
    --Characteristics of the population to be served,
    --Demonstrated difficulties in serving the population (this 
adjustment factor is new), and
    --Type of services to be provided.

    The Department offers Governors an adjustment methodology that 
conforms both to these parameters and to the requirement in section 
106(d). This methodology covers Title II-A, Title II-C Section 204(d), 
and Title III programs and will be provided to States in a soon-to-be 
issued Training and Employment Information Notice. Should the Governor 
choose to use an alternate methodology, or make adjustments not 
addressed by the Departmental model, it must conform to the parameter 
criteria and be documented in the Governor's Coordination and Special 
Services Plan (GCSSP) prior to the program year to which it applies. 
The State Job Training Coordinating Council and, where appropriate, the 
State Human Resources Investment Council must have an opportunity to 
consider adjustments to the Secretary's standards and to recommend 
variations. To determine whether an SDA has met or exceeded a 
performance standard, Governors must use actual end-of-year program 
data to recalculate the performance standards.
    C. Performance Standards Definitions. Governors must calculate the 
performance of their SDA's, SSA's, and section 204(d) programs 
according to the definitions included in the Attachments.
    D. Titles II-A and II-C Incentive and Sanction Policies. 
Performance standards are to be established for programs funded under 
Titles II and III of the Act. In applying the Secretary's standards for 
Titles II-A and II-C, Governors must use the six core measures and also 
consider criteria relating to programs successfully serving out-of-
school youth and placement in jobs providing employer-assisted 
benefits. Governors are encouraged to begin using these criteria in PY 
1994 incentive policies; these criteria are required (i.e., they cannot 
be zero-weighted) to be incorporated into State incentive policies 
beginning in PY 1995. Governors may select additional non-cost 
measures, such as increased service to hard-to-serve participants, to 
form the basis of incentive policies as long as the following criteria 
are met:
    1. As the basis for making incentive awards, the Governors must use 
all (i.e., cannot ``zero weight'' any) of the six Secretary's core 
measures. Beginning in PY 1995, Governors will also be required to 
reward innovative out-of-school youth program models either identified 
by the Department of Labor or recognized by the State as having a 
demonstrated record of success, and placements in jobs providing 
employer-assisted benefits. Although successful programs for out-of-
school youth remain the cornerstone of out-of-school incentives, SDA's 
will still be expected to exceed the 50 percent minimum service level 
to be rewarded under that criterion. Governors have considerable 
flexibility in implementing the new incentive criteria. Suggested 
approaches to addressing these criteria are included as Attachments 3 
and 4 to this TEGL. Decisions regarding the relative weight or emphasis 
of each core measure (e.g., the Youth Entered Employment Rate) and 
incentive criterion (e.g., placement in jobs with employer-assisted 
benefits) in a State's incentive award formula rest with the Governor.
    The core measures will be the basis for identifying SDA's that are 
candidates for technical assistance and for imposing sanctions. At 
least 75 percent of the funds set aside for performance incentives must 
be related to these measures and the out-of-school youth and employer-
assisted benefits criteria, in accordance with section 106(b)(7)(E).
    2. Cost standards cannot be used for incentive award purposes. 
However, States are reminded of the integral role of financial reviews 
in program management. States are encouraged to explore ways of 
relating overall costs of job training to more direct measures of long-
term employment, earnings and reductions in welfare.
    3. Incentive policies may include adjustments to incentive award 
amounts based upon factors such as grant size, additional services to 
the hard-to-serve, intensity of service, and expenditure level.
    4. A Secretary's standard for service to the hard-to-serve, as 
required by section 106(b)(7)(B) of JTPA, has been established in the 
form of a stand-alone eligibility criterion (``gate'') for incentive 
awards. In order for an SDA to be eligible to receive any incentive 
award, at least 65 percent of both the SDA's (a) Title II-A and (b) 
Title II-C (in-school and out-of-school youth combined) participants 
receiving training and/or other service beyond objective assessment 
must be hard-to-serve. The definitions of hard-to-serve are to be 
consistent with the definitions in sections 203(b), 263(b), and 263(d) 
of the Act. For the purpose of determining compliance with this 
requirement, Governors are to include any SDA-defined barriers that 
have been approved by the Governor, as well as the characteristics of 
participants in school-wide projects under section 263(g) and 
participants in five percent-funded projects.
    5. For those SDA's that successfully ``pass through'' the gate, 
three criteria (in addition to any funds set aside for Governors' 
standards) will determine the amount of the incentive award: (1) 
exceeding the Secretary's performance standards, (2) providing quality 
service to out-of-school youth, and (3) placing participants in 
employment that provides employer-assisted benefits.
    --The definition of ``employer-assisted benefits'' is to be 
consistent with the SPIR definition (see Attachment 4). For the 
purposes of reporting and performance standards, fringe benefits count 
so long as they are an acknowledged component of employment conditions, 
whether actually received at the time of placement or not. Thus, State 
incentive policies will be structured to include benefit information 
for those participants who entered employment at termination, and 
Governors will have considerable latitude in implementing this 
incentive policy requirement.
    6. Consistent with present DOL policy, SDA's that pass through the 
``gate'' and exceed all six of the Secretary's Titles II-A and II-C 
standards must receive an incentive award.
    7. Determination of an SDA's failure to meet these standards and 
the consequent imposition of technical assistance and reorganization 
requirements under section 106(j) will be based only on the Secretary's 
Title II-A and Title II-C core measures.
    --``Meeting Performance Standards'' overall is defined as meeting 
at least four of the six core standards, one of which must be a youth 
standard. Conversely, overall ``Failure'' is defined as failing any 
three (3) or more of the core standards or failing both youth 
standards. Definitions for meeting and failing individual standards 
will be established by Governors.
    --Failure for the first year precludes an SDA from receiving any 
incentive awards and requires Governors to provide technical assistance 
to the underperforming SDA.
    --Failure in the second consecutive year precludes an SDA from 
receiving any incentive award and requires Governors to impose a 
reorganization plan.
    8. Section 106(j)(3) requires each State to report to the 
Secretary, not later than 90 days after the end of each program year, 
the actual performance and performance standards for each SDA within 
that State. Within the same timeframe, technical assistance plans 
developed by the State are required for each SDA ``failing'' for the 
first year. A 90-day timeframe also applies to the imposition of a 
reorganization plan, which is mandatory when an SDA ``fails'' for a 
second consecutive year. Specific procedures for the formal performance 
standards report and required State action will be provided under 
separate cover. However, in addition to the formal annual process, 
there should be ongoing oversight of SDA performance and continuous 
technical assistance and capacity-building aimed at addressing areas 
where program performance can be improved. In addition, the Employment 
and Training Administration will initiate a national JTPA Report Card 
that will highlight programs showing the greatest returns on their 
human resource investments in terms of high-quality employment (type of 
job, wages and fringe benefits) for those participants most at-risk of 
failure. Further information on the content and procedures for 
preparing the ``report card'' will be provided separately.
    9. Governors must specify in the GCSSP their incentive award policy 
under section 202(c)(1)(B) and 202(c)(3)(A) and imposition of sanctions 
policy under section 106(j). It is recognized that the timing of this 
issuance may preclude some States from submitting complete incentive 
policies with their PY 1994-95 GCSSPs. States are to provide as much 
information as possible in compliance with required due dates and 
submit a GCSSP amendment containing complete information no later than 
August 31, 1994.
    10. In PY 1994 and 1995, Governors will continue to have the 
authority to exclude pilot projects serving ``hard-to-serve'' 
individuals funded from the 5 percent incentive fund set-aside in 
computing their standards and actual performance. States and SDA's are 
encouraged to use such funds to develop or replicate model programs 
serving out-of-school youth, particularly those based on contextual 
learning models.

    Note: For those SDA's in which ``incentive projects'' are 
indistinguishable from those that provide general training, these 
programs would not be considered exempt from performance standards.

    7. State Action. States are to distribute this Guidance Letter to 
all officials within the State who need such information to implement 
the new performance standards policies and requirements for PY 1994-95. 
It is especially critical that States, State Councils, Private Industry 
Councils and SDA operational staff become thoroughly familiar with the 
new provisions concerning incentive and sanctions policies.
    A copy of this Guidance Letter is also being sent to your State 
JTPA Liaison, the State Wagner-Peyser Administering Agency, and the 
State Worker Adjustment Liaison.
    8. Inquiries. Questions concerning this issuance may be directed to 
Steven Aaronson at (202) 219-5487, ext. 107.
    9. Attachments.
    1. Definitions for Performance Standards;
    2. Youth Employability Enhancement Definitions;
    3. Rewarding Model Programs for Out-of-School Youth;
    4. Rewarding Placements in Jobs Providing Employer-Assisted 
Benefits.

Attachment 1--Definitions for Performance Standards

    Those terminees who receive only objective assessment and/or 
supportive services (or only objective assessment and/or supportive 
services and entered employment) are to be excluded from the 
calculation of performance outcomes for Title II-A, Title II-C, and 
section 204(d) older worker programs. Participants in special 5-
percent-funded projects may, at the discretion of the Governor, also be 
excluded from the calculation of performance outcomes for Title II-A 
and Title II-C.
    The following defines the Title II-A performance standards:
    1. Adult Follow-Up Employment Rate--Total number of adult 
respondents who were employed (for at least 20 hours per week) during 
the 13th full calendar week after termination, divided by the total 
number of adult respondents (i.e., terminees who completed follow-up 
interviews).
    2. Adult Follow-Up Weekly Earnings--Total weekly earnings for all 
adult respondents who were employed (for at least 20 hours per week) 
during the 13th full calendar week after termination, divided by the 
total number of adult respondents employed (for at least 20 hours per 
week) at the time of follow-up.

Welfare

    3. Welfare Follow-Up Employment Rate--Total number of adult welfare 
respondents who were employed (for at least 20 hours per week) during 
the 13th full calendar week after termination, divided by the total 
number of adult welfare respondents (i.e., terminees who completed 
follow-up interviews).
    4. Welfare Follow-Up Weekly Earnings--Total weekly earnings for all 
adult welfare respondents employed (for at least 20 hours per week) 
during the 13th full calendar week after termination, divided by the 
total number of adult welfare respondents employed (for at least 20 
hours per week) at the time of follow-up.

    Note: The Title II-A adult and welfare follow-up employment 
measures will continue to be based on individuals who terminate 
during the first three quarters of the program year and the last 
quarter of the previous program year. If the response rates for 
those employed at termination and those not employed at termination 
in an SDA differ by more than 5 percentage points in either the 
adult or welfare samples, then the calculations of the follow-up 
outcomes for that group must be modified to adjust for non-response 
bias. The following defines the Title II-C performance standards:

    5. Youth Entered Employment Rate (YEER)--Total number of youth who 
entered employment at termination (for at least 20 hours per week), 
divided by the total number of youth who terminated, excluding those 
potential dropouts who are reported (on the Standardized Program 
Information Report [SPIR]) as remained-in-school and dropouts who are 
reported (on the SPIR) as returned-to-school.

    Note: As in past practice, youth terminees who remain-in-school 
or return-to-school and who also enter employment will not be 
excluded from the termination pool reflected in the denominator of 
the Youth Entered Employment Rate. However, only employment of at 
least 20 hours per week satisfies the requirement for 
``employment.''

    6. Youth Employability Enhancement Rate (YEEN)--Total number of 
youth who attained one of the employability enhancements at 
termination, whether or not they also obtained a job, divided by the 
total number of youth who terminated.

Youth Employability Enhancements include:
    a. Attained (two or more) PIC-recognized Youth Employment 
Competencies.
    b. Completed major level of education following participation of at 
least 90 calendar days or 200 hours in JTPA activity.
    c. Entered and retained for at least 90 calendar days or 200 hours 
in non-Title II training or received a certification of occupational 
skill attainment.

    Note: It is expected that the ultimate result of this outcome 
will be the attainment of a job-specific skill competency on the 
part of the terminee.

    d. Returned to and retained in full-time school (dropouts only) for 
one semester or at least 120 calendar days, attained a basic or job-
specific skill competency, and made satisfactory progress.

    Note: For the purposes of this outcome, and the remained in 
school outcome described below, ``school'' includes alternative 
schools, defined as a specialized, structured curriculum offered 
inside or outside of the public school system which may provide 
work/study and/or General Educational Development (GED) test 
preparation.

    e. Remained in school for one semester or at least 120 calendar 
days (for youth at risk of dropping out of school), attained a basic or 
job-specific skill competency, and made satisfactory progress.

    Note: For youth aged 14 and 15, the acceptable competencies will 
be basic skills or pre-employment/work maturity.

    The following defines Section 204(d) Older Worker program 
performance standards:
    1. Entered Employment Rate--Total number of individuals who entered 
employment of at least 20 hours per week at termination, divided by the 
number of total terminations.
    2. Average Wage at Placement--Total hourly wage rate of all 
terminees who entered employment of at least 20 hours per week at 
termination, divided by the number of terminees who entered employment 
of at least 20 hours per week at termination.
    The following defines the Title III performance standard:
    1. Entered Employment Rate--Total number of individuals who entered 
employment of at least 20 hours per week at termination, excluding 
those who were recalled or retained by the original employer after 
receipt of a layoff notice, divided by the total terminations, 
excluding those who were recalled or retained by the original employer 
after receipt of a layoff notice.

    Note: As indicated in the definitions listed above, for 
performance standards purposes, the term ``employment'' means 
employment for 20 or more hours per week. For determining compliance 
with this provision, a ``week'' means a period of 7 consecutive 
days, and the 20 or more hours is to be understood as a condition of 
the employment. No formal verification is required, but the 
Department encourages States to set up a system that would, at a 
minimum, provide for random checking to assess compliance by SDA's.

Attachment 2--Youth Employability Enhancement Definitions

    ``Youth Employability Enhancement'' means an outcome for youth, 
other than entered unsubsidized employment, which is recognized as 
enhancing long-term employability and contributing to the potential for 
a long-term increase in earnings and employment. Outcomes which meet 
this requirement shall be restricted to the following:
    (1) Attained PIC-Recognized Youth Employment Competencies (two or 
more reported from SPIR items 36a, 36d, and 36e);
    (2) Returned to Full-Time School;
    (3) Remained in School;
    (4) Completed Major Level of Education; or
    (5) Entered Non-Title II Training.
    1. Attained PIC-Recognized Youth Employment Competencies--The total 
number of youth who demonstrated proficiency, as defined by the PIC in 
two or more of the following three skill areas in which the terminee 
was deficient at enrollment: (1) pre-employment/work maturity (SPIR 
item 36a); (2) basic education (SPIR item 36d); or (3) job-specific 
skills (SPIR item 36e). Competency gains must be achieved through 
program participation and be tracked through sufficiently developed 
systems that must include: quantifiable learning objectives, related 
curricula/training modules, pre and post-assessment, employability 
planning, documentation, and certification.
    The completely detailed definition for Youth Employment Competency 
systems is located in the Standardized Program Information Reporting 
System (SPIR) instructions.
    2. Returned to Full-Time School--The total number of youth who: (1) 
had returned to full-time secondary school (e.g., junior high school, 
middle school and high school) including an alternative school if, at 
the time of intake, the participant was not attending school (exclusive 
of summer school) and had not obtained a high school diploma or 
equivalent; and (2) prior to termination, had been retained in school 
for one semester or at least 120 calendar days.
    Alternative School--A specialized, structured curriculum offered 
inside or outside of the public school system which may provide work/
study and/or GED preparation.

    Note: To obtain credit for Returned to Full-Time School and 
Remained in School (described below), SDA's must be prepared to 
demonstrate that retention results from continuing, active 
participation in JTPA activities and the youth must: (1) be making 
satisfactory progress in school; and (2) (for youth aged 16-21) 
attain a PIC-approved Youth Employment Competency in Basic Skills or 
Job-Specific Skills; or (3) (for youth aged 14-15) attain a PIC-
approved Youth Employment Competency in Pre-employment/Work Maturity 
or Basic Skills.

    Satisfactory Progress in School--An SDA, in cooperation with the 
local school system, must develop a written policy that defines an 
individual standard of progress for each participant that he or she is 
required to meet. Such a standard should, at a minimum, include both a 
qualitative element of a participant's progress (e.g., performance on a 
criterion-referenced test or a grade point average) and a quantitative 
element (e.g., a time limit for completion of the program or course of 
study). This policy may provide for exceptional situations in which 
students who do not meet the standard of progress are nonetheless 
making satisfactory progress during a probationary period because of 
mitigating circumstances.
    3. Remained in School--The total number of youth who, prior to 
termination, had been retained in full-time secondary school, including 
alternative school, for one semester or at least 120 calendar days. A 
youth may be reported as Remained-in-School only if he/she was 
attending school at the time of intake, had not received a high school 
diploma or its equivalent, and was considered ``at risk of dropping out 
of school,'' as defined by the Governor in consultation with the State 
Education Agency.
    4. Completed Major Level of Education--The total number of adults/
youth who, prior to termination, had completed, during enrollment in 
the program, a level of educational achievement which had not been 
reached at entry. Levels of educational achievement are secondary and 
post-secondary. Completion standards shall be governed by State 
standards and shall include a high school diploma, GED Certificate or 
equivalent at the secondary level, and shall require a diploma or other 
written certification of completion at the post-secondary level.

    Note: To obtain credit, completion of a major level of education 
must result primarily from active JTPA program participation of at 
least 90 calendar days or 200 hours, usually prior to the completion 
of the major level of education.

    5. Entered Non-Title II Training--The total number of adults/youth 
who, prior to termination, had entered an occupational skills 
employment/training program not funded under Title II of the JTPA, that 
builds upon and does not duplicate training received under Title II.

    Note: To obtain credit, the participant must have been retained 
in that program for at least 90 calendar days OR 200 hours or must 
have received a certification of occupational skill attainment. 
During the period the participant is in non-Title II training, he/
she may or may not have received JTPA services. It is expected that 
the ultimate result of this outcome will be the attainment of a job-
specific skill competency on the part of the terminee.

Attachment 3--Rewarding Model Programs for Out-of-School Youth

    One of the Department of Labor's high priorities is to improve the 
effectiveness of JTPA programs for out-of-school youth. Results from 
the National JTPA Study show that outcomes achieved by out-of-school 
youth 30 months after entering the program are disappointing. To 
implement section 107(b)(7)(C) of the amended JTPA, the Department 
encourages in PY 1994, and will require in PY 1995, that Governors 
reward out-of-school youth programs that are identified by the 
Department or recognized by the State as having a demonstrated record 
of success. States need to develop ways to identify such programs. 
Possible approaches include:
    --Using outcomes achieved to identify successful programs. Outcomes 
could include both the two youth performance measures and measures such 
as learning gains and earnings/retention in full-time employment.
    --Alternatively, States could offer SDA's ``seed money'' from 
incentive funds to plan/operate programs that provide innovative or 
high-quality training to out-of-school youth based on criteria 
established by the Governor. Examples of such criteria include training 
that integrates occupational and basic skills training, and training 
that emphasizes acquiring job skills in demand in the emerging 
workplace.

    Note: Whatever method is used to reward successful out-of-school 
youth programs, access to such incentives must be limited to those 
SDA's that serve in excess of 50 percent out-of-school youth in 
their overall Title II-C program.

Attachment 4--Rewarding Placements in Jobs Providing Employer-
Assisted Benefits

    PY 1994 is the first year Governors are asked to reward SDA's for 
placements in jobs with employer-assisted benefits, including health 
benefits. (Governors will be required to do so beginning in PY 1995.) 
Rewarding such placements is intended to increase the focus on overall 
job quality. To include placements in jobs with employer-assisted 
benefits in their incentive policies, States will need to:
    1. Specify how the criterion will be measured. The definition must 
be consistent with that for SPIR Item 35c (i.e., consisting of, at a 
minimum, health insurance benefits and coverage under Social Security 
or an equivalent pension plan). Note that it is not necessary for an 
individual to actually receive benefits when employment begins as long 
as they are an acknowledged component of employment conditions. For 
example, health benefits available after a waiting-period and benefits 
that are refused because of availability from another source both count 
as employer-assisted benefits. Examples of measures of jobs with 
benefits, using data from SPIR Item 35c are:
    --among terminees who enter employment, the percent who are in jobs 
providing employer-assisted benefits; and
    --among all terminees, the percent who enter employment and are in 
jobs providing employer-assisted benefits.
    2. Determine how to reward placement in jobs with employer-assisted 
benefits. One possible approach would require the State to determine a 
departure point or benchmark to use in setting rewards levels for 
benefits. This departure point would serve the same function served by 
the numerical national standards for the Secretary's core measures. It 
would be the level that, before any adjustment for local factors, 
identifies rewardable performance. Under this approach, a State would 
also decide whether and how the departure point should be adjusted for 
local clientele and economic conditions when setting reward levels for 
each SDA.
    Rather than setting reward levels for employer-assisted benefits 
using a process akin to setting standards for the Secretary's core 
measures, States may choose a simpler approach. Because there are no 
sanctions based on this criterion, it is not absolutely necessary to 
set a minimally acceptable performance level. It is possible to reward 
SDA's at all levels of performance on employer-assisted benefits. One 
way to do this would be to set aside a portion of incentive funds to 
reward such placements. This reward pool could be divided among SDA's 
based on their proportionate share of all placements in jobs with 
employer-assisted benefits. This procedure is equivalent to giving a 
fixed amount for each placement (i.e., the amount is the value of the 
pool divided by the total number of placements into jobs with benefits 
in the State.
    Because this approach may be viewed as favoring SDA's in areas 
where benefits are widely prevalent, it should be viewed as interim 
until better data on employer-assisted benefits are available.

[FR Doc. 94-16698 Filed 7-8-94; 8:45 am]
BILLING CODE 4510-30-M