[Federal Register Volume 62, Number 95 (Friday, May 16, 1997)]
[Pages 27077-27078]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12930]



Governmentwide Implementation of the President's Welfare-to-Work 
Initiative for Federal Grant Programs

AGENCY: Office of Management and Budget.

ACTION: Notice.


SUMMARY: This Notice provides information, in the form of nonbinding 
questions and answers, to assist the Federal grantmaking agencies, 
grantees, and subrecipients in responding to the President's Welfare-
to-Work Initiative. The Office of Management and Budget worked with the 
major Federal grantmaking agencies in developing this governmentwide 
non-regulatory guidance.

FOR FURTHER INFORMATION CONTACT: Barbara F. Kahlow, Office of Federal 
Financial Management, Office of Management and Budget (telephone 202-
395-3053). The text of this Notice is available electronically on the 
OMB home page at http://www.whitehouse.gov/WH/EOP/omb.

SUPPLEMENTARY INFORMATION: On March 8, 1997, the President issued a 
memorandum to the heads of the executive departments and agencies 
entitled ``Government Employment for Welfare Recipients.'' This 
memorandum directed all Federal agencies to ``hire people off the 
welfare rolls into available job positions in the Government'' and to 
submit proposed plans for ``on-the-job training and/or mentoring 
    To supplement this initiative, Federal agencies were asked to 
encourage their grantees and their subrecipients to hire welfare 
recipients and to provide additional needed training and/or mentoring. 
This Notice, which the Office of Management and Budget (OMB) developed 
with the major Federal grantmaking agencies, provides nonbinding 
questions and answers to assist the Federal grantmaking agencies, 
grantees, and subrecipients in responding to the President's Welfare-
to-Work Initiative. The Federal Government recognizes and appreciates 
that many grantees and subrecipients have been hiring welfare 
recipients in meaningful jobs for some time.
    The Federal procurement community has a ``Welfare to Work 
Procurement Information'' link on its Acquisition Reform Network home 
page (http://www.arnet.gov). Its welfare to work information page links 
to the White House welfare reform information page (http://
www.whitehouse.gov/WH/Welfare), the Department of Labor's welfare to 
work page (http:/www.doleta.gov/ohrw2w) (which contains welfare 
recipient recruiting and hiring information), the Social Security 
Administration's welfare reform information page, the Health Care 
Financing Administration's welfare reform and Medicaid page, and the 
Department of Agriculture's food assistance program page.
    Additionally, the National Performance Review will be assembling a 
data base with examples of employer success stories, innovative 
approaches, and problems encountered by employers which need to be 
addressed (http://w2w.fed.gov). Employers are requested to provide such 
examples which can be shared with other employers. Please send such 
examples to the National Performance Review, 750-17th Street--Suite 
200, Washington, DC 20006 or e-mail them to 
    As part of this welfare-to-work initiative, OMB does not expect to 
propose amendments to any Federal laws, governmentwide common rules, or 
its grants management circulars.
    1. Question--Is the provision of training for hired welfare 
recipients an allowable cost under Federal assistance programs?
    Answer--Yes. The cost of training provided for employee development 
is allowable under OMB's cost principles circulars.
    2. Question--Are supportive services, such as transportation and 
day care services, for hired welfare recipients allowable costs under 
Federal assistance programs?
    Answer--Yes, to the extent that an organization's internal and 
established policy permits charging of such costs in a consistent 
manner. These costs are usually classified as fringe benefit costs and, 
like salaries and wages, are distributed to all of the organization's 
activities. In any case, fringe benefits in the form of transit 
benefits are an allowable cost under Federal grants. Section 132 of the 
Internal Revenue Code of 1986 allows up to $65 per month to be provided 
to employees tax free in the form of a ``transit pass,'' or cash if a 
``transit pass'' is not readily available, for distribution to 
employees. This benefit cannot be used in lieu of compensation, but 
must be paid in addition to any compensation otherwise payable to the 
    3. Question--Are there any available Federal tax credits to 
employers for hiring welfare recipients?
    Answer--Yes. The Work Opportunity Tax Credit (WOTC), authorized by 
the Small Business Job Protection Act of 1996, is a Federal tax credit 
that encourages employers to hire certain job seekers and can reduce 
employer Federal tax liability by as much as $2,100 for each qualified 
new worker. Welfare recipients who have received Aid to Families with 
Dependent Children (AFDC) or Temporary Assistance for Needy Families 
(TANF) assistance for at least a 9-month period, ending during the 9-
month period which ends on the hiring date, are eligible for the 
credit. The existing WOTC expires September 30, 1997, but the 
Administration has proposed to extend it for one year. The 
Administration has also proposed an enhancement to the WOTC for long-
term welfare recipients that would increase the maximum annual credit 
to $5,000 (claimable for two years) and allow the costs of employer-
provided training, health care, and child care to count as wages for 
purposes of the credit. The Administration has proposed to authorize 
the enhanced credit for three years ending September 30, 2000. For more 
information on claiming the present WOTC credit, employers should call 
or visit the State employment service office, or call the nearest U.S. 
Department of Labor Regional WOTC Coordinator.
    4. Question--What are examples of successful private sector 
initiatives to hire welfare recipients?

[[Page 27078]]

    Answer--Eight successful private sector initiatives are described 
    Since 1984, a private for-profit placement and support organization 
in New York, Indianapolis, Albany and Baltimore has helped more than 
12,000 welfare recipients find full-time private sector jobs. 
Recipients are hired permanently at an average wage of $16,000 per 
year, including benefits. This organization works under contract with 
State and local governments and is reimbursed only for successful 
outcomes, typically defined as a job retained at least six months. The 
state of New York found that 81 percent of those placed by this 
organization are still off welfare after one year.
    Since 1985, a private non-profit organization in Chicago has 
followed an incremental ladders-of-work approach, encouraging its 
participants to begin with work at their level of ability, including, 
if necessary, volunteer or part-time work. Clients move one step up the 
ladder of work at a time, with the ultimate goal being full-time, 
unsubsidized work. The program also provides retention, replacement and 
advancement services. Since inception, over 850 clients have 
participated in the program. While 54 percent lose their first job 
within six months and 75 percent lose their first job within a year, at 
the end of a 5-year period, 54 percent have worked at least all 12 
months of the year either full-time or part-time.
    Since 1986, a private non-profit organization in Cleveland, funded 
by public grants, foundations, and private money, has placed more than 
3,000 welfare recipients in full-time jobs, enabling 7,000 men, women, 
and children to no longer receive welfare benefits. Over 80 percent of 
the families have not returned to the welfare rolls and have stayed in 
the workforce, a remarkable result considering that the typical family 
had been on and off welfare for ten years. The organization provides 
its clients with 8-10 weeks of general job readiness training and in 
some cases with basic education and occupation-specific courses. It 
then matches clients with jobs offered by some 650 local employers, 
including employer-paid health benefits. Once hired, clients receive 
transitional services and support from corporate counselors to ensure 
that they stay employed.
    Since 1987, a private non-profit organization in Sarasota, Florida 
and Lafayette, Louisiana has offered job placement and support services 
to chronically unemployed members of the surrounding community. In 
1996, the organization placed and kept over 500 people in unsubsidized 
private sector employment; since the program's inception, it has placed 
a total of more than 1,500 people in jobs. The organization works hard 
to build relationships with local employers and, after providing its 
clients with basic job readiness and on-the-job work skills, places 
people permanently into unsubsidized jobs and offers follow-up support 
to make sure they stay in jobs.
    In 1988, a small private non-profit organization in the Nation's 
capital was organized for the purposes of preparing and distributing 
meals to local homeless shelters and transitional homes from surplus 
food from hotels, restaurants, and catered events. Since 1990, the 
kitchen has provided a training center for jobless individuals to learn 
food preparation for employment in the food service industry, while 
they help prepare over 3000 meals a day. Its 12-weeks training program 
for 12 participants at a time has graduated 150 participants, with a 60 
percent 180-day job retention rate overall and a 75 percent job 
retention rate in the last year.
    In 1990, a major for-profit organization began a pre-employment 
training program which provides six weeks of training (180 total hours, 
composed of 60 classroom hours and 120 occupational skills hours, 
including job shadowing and hands-on practice) for 12-18 participants 
at a time for employment in the hospitality industry. Over the last six 
years, the program has had 600 graduates, with a 90 percent graduation 
rate, a 90 percent retention rate after 90 days, and a 77 percent 
retention rate after 360 days. After graduates are placed into full-
time jobs, the program provides six months of follow-up services to 
promote job retention. The training program not only teaches skills 
necessary to obtain a job but also addresses life management factors 
associated with being able to retain a job, such as maintaining a 
positive attitude, being dependable and reliable, building confidence 
and self-esteem, communicating effectively, completing job applications 
and resumes, grooming and hygiene, and personal issues, such as 
transportation and day care. A keystone of the program is that trainees 
do not displace current employees of the organization or cause a 
reduction in their work hours.
    Since mid 1994, a private non-profit organization in Milwaukee has 
stressed job placement. Clients go through eight weeks of job search. 
Those who do not find private sector jobs are offered minimum wage 
community service positions at non-profit organizations for a maximum 
of one year. When necessary, the organization subsidizes its clients' 
wages to bring them up to at least the poverty line. It also provides 
health and child care benefits based on income and helps clients 
receive the Earned Income Tax Credit (EITC). Preliminary results are 
very encouraging; 57 percent are currently employed in private or 
public sector jobs.
    In early 1995, a private non-profit organization in Columbus began 
providing intensive human capital development. Its per person job 
placement costs are about $2300. Services include six weeks of full-
time daily job readiness and skills, academic skills including GED 
preparation, job development, placement, and follow-up, a $6-$8 per day 
transportation allowance, and in-house legal counsel. To date, 193 
participants have completed the program. Also, to date, 91 recipients 
were placed in full-time jobs that currently average wages of $6.84 an 
hour and a 90-day retention rate around 60 percent.
    5. Question--What are examples of appropriate jobs, requiring 
minimum on-the-job training, for which welfare recipients could be 
    Answer--A welfare recipient's job placement should be commensurate 
with his or her education, skills, and abilities. Thus, a person with 
the required education, experience or skills for a specific position 
may be placed in such a position; however, persons without such needed 
education, experience or skills may be placed in an entry-level 
position. Several Federal departments have identified appropriate 
entry-level job positions, including: File clerk, mail and file clerk, 
office automation clerk, office automation trainee, computer clerk/
assistant, claims processing clerk, custodial worker, printing plant 
worker, laborer, and motor vehicle operator. Generally, employees hired 
into these positions will be expected to perform such duties as the 
following: photocopy, receive and deliver mail, file, answer 
telephones, operate fax machines, maintain and distribute supplies, and 
clean laboratory equipment in research facilities.
G. Edward DeSeve,
[FR Doc. 97-12930 Filed 5-15-97; 8:45 am]