[Federal Register Volume 64, Number 80 (Tuesday, April 27, 1999)]
[Notices]
[Pages 22770-22773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10473]



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Part VI





Department of Labor





_______________________________________________________________________



Employment and Training Administration



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Consultation Paper on Awarding Incentive Grants and Applying Sanctions 
for Title I Programs Under Sections 503 and 136 of the Workforce 
Investment Act; Notice

  Federal Register / Vol. 64, No. 80 /Tuesday, April 27, 1999 / 
Notice  

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DEPARTMENT OF LABOR

Employment and Training Administration


Consultation Paper on Awarding Incentive Grants and Applying 
Sanctions for Title I Programs Under Sections 503 and 136 of the 
Workforce Investment Act (WIA)

AGENCY: Employment and Training Administration, Labor.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The purpose of this notice is to disseminate a consultation 
paper for interested parties on the awarding of Incentive Grants and 
application of Sanctions pertaining to the Performance Accountability 
Measurement System for Title I of WIA. This is the third of a series of 
consultation papers on the implementation of the Performance 
Accountability System under Title I of WIA. On March 24, 1999 two 
consultation papers were published in the Federal Register, the 
framework for Core Performance and Customer Satisfaction Measures and 
the framework for Negotiating State Adjusted Levels of Performance. 
Interested parties have 30 days to provide comments on this paper.

DATES: Comments must be received by May 27, 1999.

ADDRESSES: Send comments to Mr. Eric Johnson, Workforce Investment 
Implementation Taskforce Office, U.S. Department of Labor, 200 
Constitution Avenue, NW, Room S-5513, Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Mr. Eric Johnson, Workforce Investment 
Implementation Taskforce Office, U.S. Department of Labor, 200 
Constitution Avenue, NW, Room S5513, Washington, DC, Telephone: (202) 
219-0316.(voice) (This is not a toll-free number), or 1-800 326-2577 
(TDD). Information may also be found or comments provided, at the 
website--http://usworkforce.org.

SUPPLEMENTARY INFORMATION: The Workforce Investment Act , Pub. L. 105-
220 (August 7, 1998) provides the framework for a reformed National 
workforce and employment system designed to meet the needs of the 
Nation's employers, job seekers and those who want to further their 
careers.
    The Workforce Investment Act requires that a performance and 
accountability system be developed and implemented. The system must 
include certain core measures regarding performance and customer 
satisfaction. Adjusted levels of performance must be negotiated between 
the Governor and the Secretary of Labor for each core and customer 
satisfaction measure, and applicable incentives or sanctions applied.
    The U.S. Department of Labor in establishing this performance 
accountability system and is interested in comments and suggestions 
concerning the process for awarding Incentive Grants and applying 
Sanctions. Some of the questions on which the Department of Labor is 
seeking input are the following:
     Whether a ``range'' vs. a single value should be used to 
differentiate between being eligible for an incentive award and 
application of sanctions;
     How the bottom of such a ``range'' should be determined 
(ie. a nationally determined percentage from the negotiated State 
Adjusted Level of Performance, different percentages based on specific 
factors, etc.);
     The proposed methodology for determining when a State 
should be considered eligible for an incentive grant;
     The factors to be used in determining the level of 
monetary sanctions; and
     The proposed methodology for calculating failure to meet 
the adjusted levels.
    Please consider these issues as you review this consultation paper, 
and provide comments.

    Signed at Washington, D.C., this 21st day of April 1999.
Raymond L. Bramucci,
Assistant Secretary of Labor, Employment and Training Administration.

Attachment

I. Incentives and Sanctions Under WIA

    WIA contains performance accountability provisions intended to 
hold States accountable for the results obtained by their workforce 
programs and system. Performance accountability revolves around the 
planning, assisting, rewarding and sanctioning performance measured 
by agreed-upon levels for a set of core and customer satisfaction 
indicators.
    WIA requires that the Secretary reach agreement with each State 
on the expected levels of performance for core indicators of 
performance. Section 136(b)(3)(A)(iv)(III) of WIA requires that the 
agreement between the Secretary and the State take into account the 
extent to which the levels for years 1, 2 and 3 of the 5 year 
strategic State plans (and subsequently years 4 and 5) promote 
continuous improvement and ensure optimal return on investment.
    WIA section 503 provides that the Secretary shall award an 
incentive grant to each State that exceeds the State adjusted levels 
of performance for WIA Titles I and II and the Vocational and 
Applied Technology Education Act (Perkins Act). States that exceed 
the performance levels for WIA Titles I and II and the Perkins Act 
may apply for an incentive award for the purpose of carrying out an 
innovative program consistent with the requirements of any one or 
more of the programs within WIA Title I, WIA Title II, or the 
Perkins Act. The application must assure that the State legislature 
was consulted and that the Governor and the cognizant adult 
education and post-secondary vocational education agencies approved 
the application.
    WIA section 136(g)(1)(B) provides that the Secretary may reduce 
the Title I grant by not more than 5 percent for a State's failure 
to meet adjusted performance levels under Title I for a second 
consecutive year or for failure to submit the annual performance 
progress report required under section 136(d).
    State responsibilities for providing incentive grants to local 
areas are described under WIA section 134(a)(2)(B). Sanctions for 
local areas failing to meet local performance measures are discussed 
under section 136(h).
    Some of the key issues for developing incentives and sanctions 
policy include:
    (a) The nature of the WIA Title I state adjusted levels of 
performance;
    (b) The definition or standard for exceeding the WIA Title I 
adjusted levels;
    (c) The measures to be included for determining incentive 
awards;
    (d) The criteria for qualifying for incentive grants;
    (e) the amount of the incentive award;
    (f) The definition or standard for failing to meet the adjusted 
levels;
    (g) the criteria for receiving monetary sanctions;
    (h) The amount of the monetary sanction; and
    (i) sanctions for failing to submit annual performance progress 
reports.

A. The Nature of the WIA Title I State Adjusted Levels of Performance

    WIA provides for establishment of state adjusted levels of 
performance which become the baseline performance levels for 
subsequent decisions related to incentives and sanctions. States 
that exceed the agreed-upon performance levels may receive incentive 
awards; and States that fail to meet the agreed upon levels may be 
sanctioned. A strict reading of the law might lead to the conclusion 
that the planned performance level is a single number or point, 
which is either exceeded or failed. If planned levels are driven 
high through negotiation, then fewer States will exceed the level 
and more states will fail it. If the planned levels are allowed to 
be low through negotiation, then just the opposite will occur and 
many States will be rewarded, some for quite low performance.
    Stakeholders have suggested that incentives be awarded for high 
performance and that sanctions be reserved for truly low 
performance. These ideas suggest that a range of performance should 
be established so that only performance that exceeds the top of the 
range will receive incentive grants and only performance that falls 
below the bottom of the range will be subject to sanctions. States 
with performance within the range will neither qualify for 
incentives nor be subject to sanctions.
    The state adjusted levels of performance constitute the top of 
the range and will be

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arrived at through negotiation between the State and Department of 
Labor. As part of negotiation process, and in consideration of the 
factors described in WIA section 136(b)(3)(A)(iv), it is expected 
that the levels will assist the State to attain high levels of 
customer satisfaction, promote continuous improvement, and ensure 
optimal return on investment. The bottom of the range will be set 
initially by multiplying the State adjusted levels of performance by 
some appropriate percentage (e.g. 80 percent). This will be 
necessary in the initial years of WIA operation due to the lack of 
comparable performance data under WIA. However, establishment of the 
bottom of the range will be periodically reviewed as more comparable 
performance data under WIA becomes available and in the future the 
bottom of the range will be based on experience.
    The use of a range acknowledges that performance can vary over 
time due to random events that cannot always be anticipated or 
necessarily prevented. The range could be expressed as a percentage 
or value; and it generally would not be the same for each measure, 
depending on the degree of variation of performance under each 
measure nationally. There are many possibilities for creating an 
appropriate ``range.'' Once national WIA performance data becomes 
available, the breadth of the range can be refined and calibrated to 
assure that the lower limit is set at a level that reasonably 
represents unacceptable performance.

B. The Definition or Standard for Exceeding the Title I Adjusted Levels 
of Performance

    WIA section 503 provides that the Secretary must award a grant 
to each State that exceeds the State adjusted levels of performance 
for WIA Titles I and II and the Perkins Act. WIA Title I will 
operate with 15 core and 2 customer satisfaction performance 
indicators. The determination for whether the adjusted levels of 
performance were exceeded will be based on the State's cumulative 
achievement across all measures. This will be done by calculating 
the percent of the State adjusted level achieved for each measure; 
and then averaging the percentages achieved across all measures. 
When the cumulative average across all measures exceeds 100 percent, 
the State will be determined to have exceeded the adjusted 
indicators overall. There is no minimum number of measures that must 
be exceeded; however, both customer satisfaction measures must be 
exceeded and a State may not fall below the bottom of the ``range'' 
for any measure. See Table A for an example as to how the cumulative 
averaging would work.

C. The Measures to be Included for Considering Incentive Awards

    In addition to the core indicators of performance, WIA Titles I 
and II and the Perkins Act each allows States to identify additional 
indicators of performance which are subsequently defined to be part 
of the State adjusted levels of performance. Section 503 directs the 
Secretary to award incentives to states exceeding the state adjusted 
levels of performance. In order to promote equity and uniformity for 
award of incentive funds, only the Federally required core and 
customer satisfaction indicators will be considered in the 
methodology for determining eligibility for incentive awards.

D. The criteria for qualifying for incentive grants

    WIA section 503 provides that the Secretary must award a grant 
to each State that exceeds the State adjusted levels of performance 
for WIA Title I, the expected levels of performance for WIA Title 
II, and the levels of performance under the Perkins Act. Qualifying 
for award of an incentive grant is dependent upon exceeding levels 
of performance for all three programs. To arrive at the decision to 
award incentive funds, DOL and DoED will determine if performance 
was exceeded for its respective programs; however, DOL and DoED will 
cooperate towards the development and use of a similar methodology 
to define what it means to exceed planned performance levels. In 
order to receive an incentive grant, performance must exceed planned 
performance in each of the three program areas.

E. The Amount of the Incentive Award

    WIA section 503 indicates that incentive grants will be awarded 
in an amount that is not less than $750,000 and not more than 
$3,000,000. The primary issues related to determining the amount of 
award concern the equity of the size of the award among the states 
and the incentive power of the award. WIA section 503(c)(2) requires 
a proportionate reduction in the minimum and maximum amounts when 
total available funds are insufficient. Based upon achieved 
performance levels for Titles I and II of WIA and the Perkins Act, 
the DOL and DoED will publish a list of States qualifying for 
incentive grants along with the maximum amount of the grant based 
upon available funds. The methodology for determining award amounts 
will be developed at a later time. Section 666.230 of the interim 
final regulations for WIA Title I provides factors that may be 
considered in the determination.

F. The Definition or Standard for Failing to Meet the Adjusted Levels

    Section 136(g) addresses sanctions for State failure to meet 
State performance measures for the core indicators or the customer 
satisfaction indicators under Title I of WIA. The Act indicates that 
failure should be defined as failing to meet levels established for 
each separate program or for the customer satisfaction indicators.
    Failure will be defined using a calculation methodology similar 
to that used for defining exceeding; that is, calculating across 
relevant indicators the cumulative average achieved of the lower 
limit of the range. This will be done by calculating the percentage 
achieved of the lower limit of the range established for each 
measure; and then calculating the average achieved across all 
measures. When the cumulative average across relevant program 
measures falls below 100 percent of the lower limit, the State will 
be determined to have failed to meet the adjusted levels of 
performance. See Table B for an example of how the calculation of 
failure would work.
    Determinations of failure will be established separately for 
each program (adult, dislocated workers, and youth) and for the 
program overall considering customer satisfaction measures. States 
that fail for any program year to achieve an average of at least 100 
percent of the lower limit of the range for the relevant indicators 
for any single program, or the overall program measured by customer 
satisfaction, may request and receive technical assistance for the 
Secretary.

G. The Criteria for Receiving Monetary Sanctions

    Section 136(g)(1)(B) provides that the Secretary may reduce the 
grant by not more than 5 percent of the amount payable under a 
program should the State fail to meet adjusted performance levels 
for a program for a second consecutive year. The failure must occur 
for the same program area for two consecutive years; in other words, 
the State must achieve an average below 100 percent of the lower 
limit of the range for two consecutive years for either the adult 
measures, the dislocated worker measures, the youth measures, or the 
customer satisfaction measures. The sanction system will be totally 
objective and will automatically invoke monetary sanctions when a 
State fails to achieve the minimum average performance for the same 
program for a second consecutive year. The grant may also be reduced 
by up to 5 percent for failure to submit the annual performance 
progress report required under section 136(d).
    Since data will not be available in sufficient time to actually 
determine that there was a failure for a second consecutive year, 
the monetary sanction will be invoked with respect to the funding 
allocation for the next full program year following the year in 
which data about ``the second consecutive year'' became available. 
This approach assures that funding is not affected after-the-fact.

H. The Amount of the Monetary Sanction

    Section 136(g)(1)(B) provides that the Secretary may reduce the 
grant by not more than 5 percent of the amount that would be payable 
under the program; and the penalty shall be based on the degree of 
failure to meet State adjusted levels of performance. Using the 
average percent achieved across relevant indicators for each 
program, and for the overall program based on customer satisfaction, 
there will be a one percent monetary sanction for every three 
percent below 100 percent cumulative attainment of the lower limit 
of the ranges established. As an example, achievement between 97.0 
and 99.99 percent of the lower limit would result in a one percent 
reduction; achievement between 94.0 and 96.99 percent would result 
in a two percent deduction, etc.

I. Sanctions for Failure To Submit Annual Performance Progress Reports

    Section 136(g)(1)(B) provides that the Secretary may reduce the 
grant amount by up to five percent for failure by a State to submit 
the annual performance progress report to the Secretary. States that 
are more than 45 days late in submitting complete and sufficiently 
accurate reports will be sanctioned by one percent, plus an 
additional one percent for each addition 45-day period of lateness. 
Any state sanctioned for not submitting its

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performance progress report within the specified time will not be 
eligible to apply for incentive funds.

                                           Incentives Example State A
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                                                                                      Percent
                    Measures                      Adjusted level      Actual         achieved      Lower limit*
----------------------------------------------------------------------------------------------------------------
                      Adult
 
Entered Employment..............................             74%             82%           110.8           59.2%
6-Month Retention...............................             86%             89%           103.5           68.8%
6-Month Earnings Change.........................          $4,000          $3,579            89.5          $3,200
Credential Attainment Rate......................             20%             19%            95.0           16.0%
 
               Dislocated Workers
 
Entered Employment..............................             82%             89%           108.5           65.6%
6-Month Retention...............................             88%             92%           104.5           70.4%
6-Month Earnings Change.........................          $1,000            $910            91.0            $800
Credential Attainment Rate......................             20%             25%           125.0           16.0%
 
                   Youth 19-21
 
Entered Employment..............................             55%             67%           121.8           44.0%
6-Month Retention...............................             60%             70%           116.7           48.0%
6-Month Earnings Change.........................          $3,000          $3,557           118.6          $2,400
Credential Attainment Rate......................             35%             47%           134.3           28.0%
 
                   Youth 14-18
 
Skill Attainment................................             67%             72%           107.5           53.6%
Diplomas or Equivalent Attainment...............             25%             27%           108.0           20.0%
Placement and Retention.........................             65%             62%            95.4           52.0%
 
              Customer Satisfaction
 
Employer........................................             87%             94%           108.0           69.6%
Participant.....................................             87%             92%           105.7           69.6%
                                                 ---------------------------------------------------------------
    Average Achieved Over All...................  ..............  ..............           108.5  ..............
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State A has exceeded the adjusted levels for WIA Title I: the overall average percent achieved is over 100%;
  actual performance didn't fall below the lower limit for any measure; and both customer satisfaction adjusted
  levels were met.
*In this example, the lower limit was calculated at 80% of Adjusted Level for all measures.


                                            Sanctions Example State B
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                                                                                                      Percent
                            Measures                                Lower limit       Actual         achieved
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                              Adult
 
Entered Employment..............................................             56%             75%           133.9
6-Month Retention...............................................             65%             80%           123.1
6-Month Earnings Change.........................................          $3,000          $2,579            86.0
Credential Attainment Rate......................................             15%             14%            93.3
                                                                 -----------------------------------------------
    Adult Program Average.......................................  ..............  ..............           109.1
 
                       Dislocated Workers
 
Entered Employment..............................................             62%             80%           129.0
6-Month Retention...............................................             66%             76%           115.2
6-Month Earnings Change.........................................            $750            $605            80.7
Credential Attainment Rate......................................             15%             20%           133.3
                                                                 -----------------------------------------------
    DW Program Average..........................................  ..............  ..............           114.5
 
                           Youth 19-21
 
Entered Employment..............................................             41%             39%            95.1
6-Month Retention...............................................             45%             46%           102.2
6-Month Earnings Change.........................................          $2,250          $1,998            88.8
Credential Attainment Rate......................................             26%             24%            92.3
 
                           Youth 14-18
 
Skill Attainment................................................             50%             54%           108.0
Diplomas or Equivalent Attainment...............................             19%             20%           105.3
Placement & Retention...........................................             49%             47%            95.9
                                                                 -----------------------------------------------
    Youth Program Average.......................................  ..............  ..............            98.2
 
                      Customer Satisfaction
 
Employer........................................................             65%             77%           118.5
Participant.....................................................             65%             81%           124.6
                                                                 -----------------------------------------------

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    Customer Satisfaction Average...............................  ..............  ..............          121.5
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State B failed the Youth Program measures: 98.2% of lower limit achieved on average. If these youth measures
  depict failure in the second consecutive year, a monetary sanction equal to one percent would be applied to
  the youth allocation.

[FR Doc. 99-10473 Filed 4-26-99; 8:45 am]
BILLING CODE 4510-30-P