[Federal Register Volume 68, Number 234 (Friday, December 5, 2003)]
[Notices]
[Pages 68122-68123]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-30249]



[[Page 68122]]

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DEPARTMENT OF LABOR

Employment and Training Administration


Workforce Security Programs: Training and Employment Guidance 
Letter Interpreting Federal Law

    The Employment and Training Administration interprets federal law 
requirements pertaining to unemployment compensation (UC) and public 
employment services (ES). These interpretations are issued in Training 
and Guidance Letters (TEGLs) to the State Workforce Agencies. The TEGL 
described below is published in the Federal Register in order to inform 
the public.

TEGL 18-01, Change 1

    TEGL 18-01, Change 1, using a Q & A format, answers additional 
questions related to the appropriate uses of the Reed Act distribution 
made on March 13, 2002.

    Dated: December 1, 2003.
Emily Stover DeRocco,
Assistant Secretary of Labor.

Employment and Training Administration Advisory System, U.S. Department 
of Labor, Washington, DC 20210

CLASSIFICATION: Reed Act
CORRESPONDENCE SYMBOL: DL
DATE: March 19, 2003

Training and Employment Guidance Letter No. 18-01Change 1

To: All State Workforce Liaisons,Allstate Workforce 
Agencies,Allstate Worker Adjustment Liaisons,Allone-Stop Center 
System Leads
From: Emily Stover DeRocco, Assistant Secretary
Subject: Reed Act--Questions and Answers

    1. Purpose. To answer questions related to the use of Reed Act 
funds that have arisen since the issuance of Training and Employment 
Guidance Letter (TEGL) 18-01.
    2. References. Section 209 of the Temporary Extended 
Unemployment Compensation Act of 2002 (TEUCA), which is Title II of 
the Job Creation and Worker Assistance Act of 2002, P.L. No. 107-
147, signed by the President on March 9, 2002; Title IX of the 
Social Security Act (SSA); the Federal Unemployment Tax Act (FUTA); 
the Wagner-Peyser Act; TEGL 18-01 (67 FR 34730 (May 15, 2002)); TEGL 
24-01; and Unemployment Insurance Program Letter (UIPL) 39-97 (62 FR 
63960 (December 3, 1997)), UIPL 39-97, Change 1 (January 16, 2002) 
and UIPL 20-02 (April 4, 2002).
    3. Background. TEGL 18-01 described the permissible uses of the 
$8 billion Reed Act distribution that was made to the states' 
accounts in the Unemployment Trust Fund on March 13, 2002. In 
general, this distribution is available for the payment of 
unemployment compensation (UC) and the administration of state UC 
laws and public employment offices.

RESCISSIONS: None
EXPIRATION DATE: Continuing

    Since the issuance of TEGL 18-01, the Department has received 
questions concerning permissible uses of Reed Act funds. In 
addition, the Department has reviewed state legislative proposals 
appropriating the Reed Act funds, some of which raised issues of 
consistency with federal law. The following Questions and Answers 
address these matters.
    4. Action. State administrators should distribute this advisory 
to appropriate staff. States must adhere to the requirements of 
Federal law that are contained in this advisory.
    5. Inquiries. Questions should be addressed to your Regional 
Office.
    6. Attachment.

Reed Act Distributions Under the Temporary Extended Unemployment 
Compensation Act of 2002--Questions and Answers

Attachment--Reed Act Distributions Under the Temporary Extended 
Unemployment Compensation Act of 2002--Questions and Answers

    1. Question: Since my state's legislature meets in session only 
for short periods each year, my state's law delegates certain 
legislative functions, including certain appropriation functions, to 
the Governor. May the Governor ``appropriate'' Reed Act funds under 
this delegation?
    Answer: No. Question and Answer 9 in Attachment I to TEGL 18-01 
explains that Section 903(c)(2), SSA, provides that a state may use 
Reed Act funds for administrative purposes only ``pursuant to a 
specific appropriation made by the legislative body of the State.'' 
(Emphasis added.) That section of the SSA goes on to provide that a 
withdrawal may be made for the payment of administrative expenses 
``if and only if'' the appropriation law meets certain requirements. 
Among these requirements is that ``the purposes and the amounts'' 
must be ``specified in the law making the appropriation.'' Senate 
Report No. 1621 elaborated on the appropriation requirement. It 
states that a state may use Reed Act funds for administrative 
expenses only ``through a special appropriation act of its 
legislature'' and that such use of Reed Act funds is ``subject to 
rigid control by the state legislature (which control is specified 
in the bill in detail).'' (Emphasis added. 1954 U.S.C.C.A.N. 2909, 
2910, 2914.)
    2. Question: May Reed Act funds be used for administrative 
expenses incurred before the date of enactment of the state 
appropriations?
    Answer: No. Under Section 903(c)(2)(C), SSA, a state's Reed Act 
appropriation law must provide that ``the expenses are incurred 
after'' the date of the enactment of the appropriation.
    3. Question: May my state use Reed Act funds to deliver 
employment services outside its One-Stop system?
    Answer: In general, no. Reed Act funds may be used for expenses 
incurred by a state ``for the administration of its unemployment 
compensation law and public employment offices.'' As noted in TEGL 
18-01, ``administration of * * * public employment offices'' means 
``any function fundable under the Wagner-Peyser Act.'' Section 7(e), 
Wagner-Peyser, provides that ``all job search, placement, 
recruitment, labor employment statistics, and other labor exchange 
services authorized under subsection (a) shall be provided, 
consistent with the other requirements of this Act, as part of the 
one-stop delivery system established by the state.''
    Section 7(b)(2), Wagner-Peyser, does authorize provisions of 
services outside the One-Stop. However, these services may be 
provided only to ``groups with special needs, carried out pursuant 
to joint agreements between the employment service and the 
appropriate local workforce investment board and chief elected 
official or officials or other public agencies or private nonprofit 
organization.'' (Emphasis added.) Thus, for Reed Act purposes, 
moneys may be expended outside the one-stop system on these groups 
with special needs only if there is an agreement with the state's ES 
agency.
    Note that the state's share of the $100 million Reed Act 
distributions made in each of fiscal years 2000 through 2002 may be 
used only for UC administration. (See Question and Answer 20 in 
Attachment I to TEGL 18-01.)
    4. Question: May my state legislature appropriate Reed Act funds 
to an agency other than the state agency (or agencies) administering 
the UC program and the employment service (ES) program?
    Answer: No. While nothing prohibits the UC or ES agencies from 
providing Reed Act funds to other agencies to perform permissible 
Reed Act activities (e.g., information technology services 
supporting the UC and ES agencies), the appropriation must be made 
to the UC and/or ES agency.
    The intent behind the Reed Act was to allow states to supplement 
their federal UC and ES grants. (See, for example, H. Rep. 21 (1954 
U.S.C.C.A.N. 2909-2911); H. Rep. 251, 107th Cong. 1st Sess. 58-59.) 
Therefore, just as the state agency administering the state's UC law 
receives the federal UC administrative grant, the same agency is to 
receive Reed Act funds for administering the UC law. Similarly, just 
as the state agency administering the state's ES program receives 
the Wagner-Peyser grant, the same agency is to receive Reed Act 
funds for administering its public employment offices.
    Appropriating Reed Act funds only to the state UC and/or ES 
agencies, which have expertise in determining what are permissible 
UI and Wagner-Peyser Act functions, helps assure that Reed Act funds 
are used only for permissible purposes. This in turn will help avoid 
federal questions regarding use.
    If the state legislature appropriated Reed Act funds to an 
agency other than the state agency administering the state UC or ES 
programs prior to the effective date of this TEGL, the Department 
will not raise any issues with respect to the appropriation to such 
other agency. However, the state UC and/or ES agencies, as 
appropriate, should work with such other state agency to assure that 
Reed Act funds are used consistently with federal law requirements.
    5. Question: May Reed Act funds be used to pay travel expenses 
incurred by trainees?

[[Page 68123]]

    Answer. Only to the same extent Wagner-Peyser Act funds may be 
used for this purpose. Generally, Wagner-Peyser Act funds may not 
pay for transportation costs, but there are two exceptions:
    [sbull] Section (7)(b)(2) of the Wagner-Peyser Act discusses 
``services for groups with special needs, carried out pursuant to 
joint agreements between the employment service and the appropriate 
workforce investment board and chief elected official or officials 
or other public agencies or private nonprofits organization.'' Costs 
of transporting members of such groups may be funded from Reed Act 
funds.
    [sbull] Section 7(b)(3), Wagner-Peyser, identifies ``the extra 
costs of exemplary models for delivering'' Wagner-Peyser services as 
an allowable use of Wagner-Peyser funds. If transportation were part 
of an exemplary service delivery model for such services, it may be 
funded from Reed Act.
    In both cases, transportation costs would be allowable only if 
the transportation involves transporting customers to enable them to 
access and receive employment services funded under the Wagner-
Peyser Act or the Reed Act.

[FR Doc. 03-30249 Filed 12-4-03; 8:45 am]
BILLING CODE 4510-30-P