[Federal Register Volume 69, Number 128 (Tuesday, July 6, 2004)]
[Proposed Rules]
[Pages 40724-40728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-15078]



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Part II





Department of Labor





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Veterans' Employment and Training Service



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20 CFR Part 1001



Funding Formula for Grants to States; Proposed Rule

  Federal Register / Vol. 69, No. 128 / Tuesday, July 6, 2004 / 
Proposed Rules  

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DEPARTMENT OF LABOR

Veterans' Employment and Training Service

20 CFR Part 1001

RIN 1293-AA11


Funding Formula for Grants to States

AGENCY: Veterans' Employment and Training Service (VETS), Department of 
Labor.

ACTION: Notice of proposed rulemaking; request for comments.

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SUMMARY: The Department of Labor is issuing a Notice of Proposed 
Rulemaking (NPRM) with a request for comments to implement section 
4(a)(1) of the Jobs for Veterans Act (Act). This proposed rule closely 
adheres to the interim final rule (IFR) published June 30, 2003, which 
expires September 30, 2004. Like the IFR, this proposed rule 
establishes formula criteria for making funds available for veterans' 
employment services and the Transition Assistance Program (TAP). Minor 
changes to section 1001.151 of title 20 appear in this proposed rule to 
clarify funding issues related to TAP. This proposed rule adds a new 
subpart F to 20 CFR part 1001. This rule, once it becomes final, will 
replace the IFR that expires September 30, 2004.

DATES: To ensure consideration, comments must be received on or before 
September 7, 2004.

ADDRESSES: You may submit comments, identified by RIN number 1293-AA11, 
by any of the following methods: Federal Rulemaking Portal: http://www.regulations.gov.
    Follow the instructions for submitting comments.
    Comments may also be sent to Paul Robertson, Legislative Analysis 
Division, VETS. Electronic mail (e-mail) is the preferred method for 
submitting comments. Comments must be clearly identified as pertaining 
to this Notice of Proposed Rulemaking. E-mail may be sent to 
[email protected]. Brief comments, limited to ten pages or fewer 
may be transmitted by facsimile (FAX) at (202) 693-4754 (this is not a 
toll free number). Individuals with hearing impairments may call (800) 
670-7008 (TTY/TDD).
    Where necessary, hard copies of comments also may be mailed or 
delivered to Paul Robertson, Legislative Analysis Division, VETS, U.S. 
Department of Labor, Room S-1325, 200 Constitution Avenue NW., 
Washington, DC 20210. Because of heightened security measures, mail in 
Washington, DC is sometimes delayed. We will only consider comments 
postmarked on or before the deadline for comments.
    Receipt of submissions, whether by e-mail, FAX transmittal, or U.S. 
Mail, will not be acknowledged; however, the sender may request 
confirmation that a submission has been received, by telephoning VETS 
at (202) 693-4714 (individuals with hearing impairments may call (800) 
670-7008 (TTY/TDD)), or by making a request for confirmation (separate 
from the submission) via the above e-mail.
    Comments will be available for public inspection during normal 
business hours at the above address. Persons who need assistance to 
review the comments will be provided with appropriate aids such as 
readers or print magnifiers. Copies of this Notice of Proposed 
Rulemaking will be made available in the following formats: large 
print, electronic file on computer disk, and audiotape. To schedule an 
appointment to review the comments and/or to obtain the Notice of 
Proposed Rulemaking in an alternate format, contact VETS at the e-mail 
address, telephone number, or mail address listed above.

FOR FURTHER INFORMATION: Contact Paul Robertson, Legislative Analysis 
Division, VETS, U.S. Department of Labor, Room S-1325, 200 Constitution 
Avenue NW., Washington, DC 20210, or by e-mail at 
[email protected] or call 202-693-4714.

SUPPLEMENTARY INFORMATION: The Preamble to this Notice of Proposed 
Rulemaking is organized as follows:

I. Background--provides a brief description of the development of 
the Notice of Proposed Rulemaking.
II. Authority--cites the statutory provisions for the Notice of 
Proposed Rulemaking.
III. Section-by-Section Review of the Rule--summarizes pertinent 
aspects of the regulatory text, describes its purposes and 
application, and summarizes and responds to comments received on the 
Interim Final Rule published June 30, 2003 (68 FR 39000).
IV. Administrative Information--sets forth the applicable 
information as required by law.

I. Background

    The President signed the Jobs for Veterans Act (Pub. L. 107-288) 
into law on November 7, 2002. The Act amends title 38 of the United 
States Code to revise and improve employment, training, and placement 
services furnished to veterans. This rule implements the provisions of 
38 U.S.C. 4102A(c) as amended by section 4 of the Act that establishes 
a new funding formula for making funds available to each State, with an 
approved State Plan, to support the Disabled Veterans Outreach Program 
(DVOP) and the Local Veterans Employment Representative (LVER) 
programs. Additionally, funding will be made available to support TAP 
and respond to exigent circumstances.
    On June 30, 2003, an Interim Final Rule with a request for comments 
during a 60-day comment period was published in the Federal Register, 
at 68 FR 39000 through 39003. We thoroughly reviewed every comment 
received during the comment period. These comments are summarized and 
responded to in section III of this Preamble.
    Congress allowed for the phasing in of the new statutory funding 
formula ``over the three fiscal-year period'' beginning in fiscal year 
2003, which started on October 1, 2002 (38 U.S.C. 4102A(c)(2)(B)(ii)). 
Because of the late enactment of the law, funding for year one of the 
phase-in had already occurred by the date of enactment. Congress 
intended that the formula be phased-in and fully implemented by the 
beginning of fiscal year 2006, which is October 1, 2005. The phase-in 
provision was not intended to delay the anticipated date of full 
implementation of the formula. In order to adhere to the implementation 
expectations of Congress, the phase-in process began in fiscal year 
2004, through publication of an Interim Final Rule for one year. In 
order to ensure full public comment and adequate public notice of the 
new funding criteria applicable after fiscal year 2004, the Department 
issues this Notice of Proposed Rulemaking and requests comments.

II. Authority

    The statutory authority for this Notice of Proposed Rulemaking is 
38 U.S.C. 4102A(c)(2)(B), as amended by the Jobs for Veterans Act, 
enacted November 7, 2002, as Public Law 107-288.

III. Section-by-Section Review of the Rule

A. Funding Formula--Basic Grant

    The Act requires the Secretary to make funds available to each 
State, upon approval of an ``application'' (i.e., a State Plan), to 
support the DVOP and LVER programs designed to provide employment 
services to veterans and transitioning servicemembers (38 U.S.C. 
4102A(c)(2)(B)). The Act further allows the Secretary to use such 
criteria as the Secretary may establish in regulation, including 
civilian labor force and unemployment data in determining the funding 
levels (38 U.S.C. 4102A(c)(B)(i), as amended by the Act). The statute 
requires that the amount of funding

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available to each State reflect the ratio of: (1) The total number of 
veterans residing in the State who are seeking employment; to (2) the 
total number of veterans seeking employment in all States (38 U.S.C. 
4102A(c)(B)(i)(I) and (II)). Additionally, the Act permits the 
Secretary to establish minimum funding levels and hold harmless 
criteria, in order to mitigate the impact upon States whose funding 
levels may be significantly affected by the implementation of the new 
formula (38 U.S.C. 4102A(c)(B)(iii)).
    The Act states that the use of this formula will be phased-in over 
the three fiscal-year period beginning October 1, 2002. Since the 
statute was not enacted until November 7, 2002, after the beginning of 
fiscal year 2003, we interpret this to mean that the first phase-in 
year for the funding formula will be fiscal year 2004, which began on 
October 1, 2003. This will only allow a two-year phase-in period, 
fiscal years 2004 and 2005, instead of the three years as contemplated 
by the statute. To give the States the maximum phase-in period 
possible, an Interim Final Rule was published on July 30, 2003, which 
expires September 30, 2004. Once this regulation becomes a Final Rule, 
it will replace the Interim Final Rule.
1. Basic Grant Funding Formula and Data and Methodology
    We propose to use the same data sources as those used in the FY 
2004 formula established by the IFR. The ratio of the number of 
veterans seeking employment in each State to the number of veterans 
seeking employment in all States is best determined using data 
collected through the Current Population Survey (CPS) and the Local 
Area Unemployment Statistics (LAUS), both of which are administered by 
the Bureau of Labor Statistics (BLS). We are using LAUS data to 
determine the number of unemployed persons in the civilian labor force 
because LAUS data are considered to be the most reliable data on the 
levels of general unemployment at the State level; and the Office of 
Management and Budget (OMB) requires Agencies allocating federal funds 
that include unemployment as a factor to use LAUS as the indicator of 
unemployment, unless the authorizing statute specifies otherwise (OMB 
Statistical Policy Directive 11). We are using the CPS data to 
determine the number of veterans in the civilian labor force because 
the CPS is considered to be the most reliable source of data on the 
levels of veteran participation in the civilian labor force at the 
State level. A subset of the CPS data on veterans in the civilian labor 
force does provide State level estimates of the number of unemployed 
veterans. However, because the sample size of veterans at the State 
level is so small, these estimates are subject to large sampling 
errors. Therefore, the funding levels would be subject to undue 
variability/volatility if that subset of the CPS data were used alone 
to determine the number of unemployed veterans at the State level.
    Because LAUS data are based on the total unemployment level for a 
State, we concluded that LAUS data are the best available measure of 
persons who are seeking work. Accordingly, we concluded the number of 
unemployed veterans in each State can be best determined by using a 
ratio of the general unemployment level in each State compared to the 
general unemployment level in all States (LAUS for the individual 
States/LAUS for all States) and the number of veterans in the civilian 
labor force in each State compared to the number of veterans in the 
civilian labor force in all States (CPS for the individual States/CPS 
for all States). The result of these two ratios will be averaged and 
converted to a single ratio of the number of veterans seeking 
employment in each State compared to the number of veterans seeking 
employment in all States. Three-year averages of the CPS and LAUS data 
are used in calculating the funding formula to stabilize the effect of 
annual fluctuations in the data in order to avoid undue fluctuations in 
the annual amounts allocated to States.
    We received seven comments on the use of these data sources in 
response to the issuance of the Interim Final Rule. One commenter 
expressed the concern that stakeholders were asked to comment on the 
rule without being given the data for analysis.
    Response: CPS and LAUS data are in the public domain and can be 
obtained through information requests to the Bureau of Labor 
Statistics, Division of Local Area Unemployment Statistics, 2 
Massachusetts Avenue, NE., Room 4675, Washington, DC 20212 or by e-mail 
request [email protected].
    We have determined that our choice of data sources provides the 
most meaningful and reliable data on veterans seeking employment, given 
the factors that are required by statute.
    Three commenters objected to the use of LAUS data based on a 
concern that too many veterans who use employment services are excluded 
from the LAUS computation such as veterans who are either ineligible 
for or have exhausted their unemployment benefits. Additionally, three 
commenters requested the use of DOL's Employment and Training 
Administration data from the ETA 9002 report rather than LAUS.
    Response: The Jobs for Veterans Act mandates the use of State 
civilian labor force and unemployment data. See 38 U.S.C. 
4102A(c)(2)(B)(i). The Office of Management and Budget requires 
Agencies allocating federal funds that include unemployment as a factor 
to use LAUS as the indicator of unemployment, unless the authorizing 
statute specifies otherwise (OMB Statistical Policy Directive 11). In 
addition, LAUS unemployment data includes all individuals who had no 
employment and had looked for work, whether or not they draw 
unemployment benefits.
    We are not using data from the ETA 9002 report on labor exchange 
services provided to job seekers instead of LAUS data. The ETA 9002 
would not provide a reliable measure of the unemployed in each State 
because many of those registering for those labor exchange services are 
employed. Our proposed analysis considers both unemployment statistics 
and civilian labor force data. The LAUS data are considered the most 
reliable source available for area unemployment statistics. For 
civilian labor force data, the CPS household survey is the official 
measure of the labor force for the nation. Annual average labor force 
data for all States and the District of Columbia are currently derived 
directly from the CPS. BLS has published detailed descriptions of the 
concepts and methodology used on their website at www.bls.gov. Based on 
the foregoing, we propose to make no change from the Interim Final Rule 
on this issue.
    Two commenters expressed the concern that the new funding formula 
does not take into account States with large landmass. It was suggested 
that we include a provision providing extra funding for those States or 
that we identify such a situation as a per se exigent circumstance 
warranting additional funds from the monies set aside for exigent 
circumstances.
    Response: The Jobs for Veterans Act mandates that the proportion of 
funding reflect the ratio between the total number of veterans residing 
in the State who are seeking employment to the total number of veterans 
seeking employment in all States (38 U.S.C. Sec.  4102A(c)(2)(B)(i)). 
The authorization for setting criteria for the funding formula relates 
to how we determine the number of veterans seeking employment, not how 
or where they are served. Although we are sympathetic that coverage in 
a large geographical area can present unique challenges to States, we 
have not included this

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criterion in the new Proposed Rule because we believe that, as written, 
the Proposed Rule complies with the law while maintaining much needed 
flexibility within the formula. Furthermore, we have not proposed to 
create a per se category for geographically large States in order to 
maintain flexibility and maximize the most effective use of limited 
resources. Exigent circumstances can vary from State to State and year 
to year; therefore we believe the best course is to review each 
situation on a case-by-case basis. Funds will be distributed based on 
need as supported by an approved State Plan or a modification to the 
State Plan.
    Four commenters also articulated the concern that the formula would 
not include ``underemployed'' veterans, e.g., a veteran who is employed 
by necessity in a job that pays less than the veteran should receive 
based on his/her education, skills, and/or experience. Additionally, 
one commenter was concerned that neither survey asks the question ``are 
you looking for work?'' in the context of a veteran who is currently 
employed but seeking alternative employment.
    Response: With respect to the question, ``Are you looking for 
work?'' not being asked of those who are employed, the commenter is 
correct that this question is not asked of those CPS survey respondents 
who are employed. The question, ``Are you looking for work?'' is only 
included in a series of questions asked of those respondents identified 
as ``not employed'' to determine those who are ``unemployed.'' 
Furthermore, the comment applies to the LAUS data because the CPS 
survey is an important foundation of the LAUS data, which are derived 
by supplementing the CPS survey data with data from a variety of other 
sources.
    While there is no direct measure of the underemployed, veterans or 
other workers, in the CPS or LAUS data, underemployed veterans are 
taken into account in the funding formula. Those veterans who are 
considered to be underemployed because they seek alternative employment 
while currently employed are counted among the employed veterans in the 
civilian labor force. Thus, they are included in the data used to 
determine the funding allocations.
2. Minimum Funding Levels and Hold Harmless Criteria
    The Act authorizes the Secretary to establish hold harmless 
criteria and minimum funding levels (38 U.S.C. 4102A(c)(2)(B)(iii)). 
This Notice of Proposed Rulemaking establishes a hold harmless rate of 
eighty percent for the second phase-in year (fiscal year 2005) to 
mitigate the impact of the most significant reductions to States' prior 
funding levels. This is the same rate as that set forth in the Interim 
Final Rule. With the eighty percent hold harmless during fiscal year 
2005 each State will be provided no less than eighty percent of its 
previous year's allocation. The eighty percent hold harmless rate will 
allow the reduction of funding, to those States impacted, to be 
implemented incrementally. After the funding phase-in period is 
completed in fiscal year 2005, we propose that a ninety percent hold 
harmless rate be applied, ensuring each State will receive at least 
ninety percent of their previous year's allocation. This will align the 
hold harmless level with the hold harmless level established by Section 
6 of the Wagner-Peyser Act (29 U.S.C. 49e(b)(2)). In addition to the 
hold harmless provisions in any year, a State minimum funding level of 
0.28 percent (.0028) of the prior year's total funding level for all 
States will be applied, meaning that no State may receive less than 
that amount. This is the same percentage applied in Section 6 of the 
Wagner-Peyser Act (29 U.S.C. 49e(b)(3)).
    One commenter requested that the hold harmless provision be applied 
to amounts actually received (e.g., including additional money received 
due to reallocation from another State) rather than the funds 
allocated.
    Response: The existence of reallocated funds is usually due to 
unusual circumstances experienced by States such as hiring freezes that 
result in vacant positions, which, in turn, may lead to the 
reallocation of funds. If the hold harmless provision were applied to 
the larger amount, States would receive more than their fair share of 
funding since the allocation would no longer be based on the service 
population. Furthermore, such a scheme may result in penalizing a State 
that was unable to expend its full allocation due to unforeseen 
circumstances. No changes have been made on this basis.

B. Other Funding Criteria

    In addition to requiring the Secretary to use civilian labor force 
and unemployment data in establishing States' funding levels, the Act 
states that the Secretary ``shall make available to each State * * * an 
amount of funding * * * using such criteria as the Secretary may 
establish in regulation * * *'' (38 U.S.C. 4102A(c)(2)(B)(i)). 
Accordingly, the proposed rule provides that in addition to the amount 
awarded based on the basic grant funding formula, described in section 
IV.A.1 of this document, the Secretary may distribute up to four 
percent of the total amount available for allocation based on TAP 
workload and exigent circumstances (38 U.S.C. 4102, 4102A(b), and 10 
U.S.C. 1141). These other funding criteria are discussed more fully 
below.
1. Transition Assistance Program (TAP) Workload
    The Act requires the Secretary to implement programs to ease the 
transition of servicemembers to civilian careers (38 U.S.C. 4102. See 
also 10 U.S.C. 1141). TAP workshops provide such employment services 
for transitioning servicemembers. Because active military personnel are 
not included in the CPS civilian labor force data, or in the LAUS 
unemployment data, the level of need for TAP workshops is not reflected 
in the funding formula for the basic grant. Therefore, supplemental 
funding is needed in order to ensure adequate funding is available to 
provide TAP workshops. In the proposed rule, the allocation to the 
States will be proportional to each State's TAP workload as identified 
in its State Plan. Policy guidance will be provided to States to assist 
them in determining the amounts needed for this additional workload, 
which will be calculated on a per workshop basis as identified in the 
State Plan.
    We received two comments supporting the proposed funding formula, 
particularly the method for allocating TAP workshop funds. One comment 
requested clarification of whether overseas TAP workshops would be 
covered by the four percent set aside proposed.
    Response: The set aside fund will be available to help support TAP 
workshops, including TAP workshops overseas. The Act requires the 
Secretary to implement programs to ease the transition of 
servicemembers to civilian careers. (38 U.S.C. 4102. See also 10 U.S.C. 
1141). There are approximately 20,000 servicemembers and their spouses 
who are eligible to participate in TAP workshops at overseas locations 
annually. In order to clarify that the four percent funds may be 
available for TAP, we have changed the proposed language contained in 
Sec.  1001.151 by deleting ``to the States'' from subsection (a). That 
section, as currently proposed in this Notice of Proposed Rulemaking, 
now reads ``[f]our percent of the total amount available at the 
national level will be available based on Transition Assistance Program 
(TAP) workload and other exigencies.'' For similar reasons we propose 
to modify section (b) as follows:

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``[f]unding for TAP workshops will be allocated on a per workshop 
basis. Funding to the States will be provided based on the workload 
shown in the approved State Plan''.
2. Exigent Circumstances
    Supplemental funding will be made available for exigencies, 
including but not limited to, needs based on sharp or unanticipated 
fluctuations in State unemployment levels and services to transitioning 
servicemembers (as required by the Act). Economic and unemployment 
conditions projected at the time of the grant application may not 
reflect actual conditions. In such cases, program needs may warrant 
additional funding. These funds will be made available based on need.

IV. Administrative Information

Regulatory Flexibility and Regulatory Impact Analysis

    The Regulatory Flexibility Act of 1980, as amended in 1996 (5 
U.S.C. chapter 6), requires the Federal government to anticipate and 
minimize the impact of rules and paperwork requirements on small 
entities. ``Small entities'' are defined as small businesses (those 
with fewer than 500 employees, except where otherwise provided), small 
non-profit organizations (those with fewer than 500 employees, except 
where otherwise provided), and small governmental entities (those in 
areas with fewer than 50,000 residents). We have assessed the potential 
impact of this rule on small entities. This proposed rule implements 
reforms to the funding of the State operated veterans' employment and 
training services and transitional assistance programs for separating 
servicemembers. Because the rule affects only the distribution of 
appropriated funds among the States, we have determined that the rule 
will not have a significant impact on a substantial number of small 
governments or other small entities. We are transmitting a copy of our 
certification to the Chief Counsel for Advocacy for the Small Business 
Administration. In addition, while these rules govern the distribution 
and administration of funds appropriated by Congress, the rules 
themselves do not result in an annual effect on the economy of 
$100,000,000 or more; a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions; or significant adverse effects on 
competition, employment, investment, productivity, innovation, or on 
the ability of United States-based enterprises. Accordingly, under the 
Small Business Regulatory Enforcement Fairness Act (SBREFA) (5 U.S.C. 
Chapter 8), the Department has determined that these are not ``major 
rules,'' as defined in 5 U.S.C. 804(2).

Paperwork Reduction Act

    This proposed rule does not require any information to be 
collected, therefore is not subject to review by the Office of 
Management and Budget (OMB) under the Paperwork Reduction Act of 1995.

Executive Order 12866, Regulatory Planning and Review

    The Department of Labor has determined that this proposed rule is a 
``significant regulatory action''. However, it is not an economically 
significant rule, therefore does not fall under Executive Order 12866. 
While this rule affects the distribution among States of funds 
appropriated by Congress, the rule itself will not materially alter the 
rights and obligations of the State recipients, particularly in light 
of the hold harmless provisions included in the rule. Furthermore, the 
rule itself will not: Materially alter the budgetary impact of 
entitlements, grants, user fees, or loan programs; have an annual 
effect on the economy of $100 million or more, or adversely affect in a 
material way the economy, a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local, or tribal governments or communities; create a serious 
inconsistency, or otherwise interfere with an action taken or planned 
by another agency; or raise novel legal or policy issues arising out of 
legal mandates, the President's priorities, or the principles set forth 
in Executive Order 12866.

Unfunded Mandates

    Executive Order 12875--This proposed rule does not create an 
unfunded Federal Mandate upon any State, local, or tribal government.
    Unfunded Mandate Reform Act of 1995--This proposed rule will not 
include any Federal mandate that may result in increased expenditures 
by State, local and tribal governments in the aggregate of $100 million 
or more, or increased expenditures by the private sector of $100 
million or more.

Executive Order 13132, Federalism

    We have assessed this proposed rule under Executive Order 13132 and 
found that it will not have substantial direct effects on the States or 
the relationship between the national government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government, within the meaning of the Executive Order.

Executive Order 12988

    This proposed rule has been drafted and reviewed in accordance with 
Executive Order 12988, Civil Justice Reform, and will not unduly burden 
the Federal court system. The rule has been written so as to minimize 
litigation and provide a clear legal standard for affected conduct, and 
has been reviewed carefully to eliminate drafting errors and 
ambiguities.

List of Subjects in 20 CFR Part 1001

    Employment, Grant programs, Labor, Reporting and recordkeeping 
requirements, Veterans.

    For the reasons set forth in the preamble, 20 CFR chapter IX is 
amended as set forth below.

PART 1001--SERVICES FOR VETERANS

    1. The authority citation for part 1001 is revised to read as 
follows:

    Authority: 29 U.S.C. 49k; 38 U.S.C. chapters 41 and 42. Subpart 
F is also issued under the authority of Sec. 4(a), Pub. L. 107-288, 
38 U.S.C. 4102A.

    2. Part 1001 is amended by adding subpart F to read as follows:

Subpart F--Formula for the Allocation of Grant Funds to State Agencies
Sec.
1001.150 Method of calculating State base grant awards.
1001.151 Other funding criteria.
1001.152 Hold harmless criteria and minimum funding level.

Subpart F--Formula for the Allocation of Grant Funds to State 
Agencies


Sec.  1001.150  Method of calculating State base grant awards.

    (a) In determining the amount of funds available to each State, the 
ratio of the number of veterans seeking employment in the State to the 
number of veterans seeking employment in all States will be used.
    (b) The number of veterans seeking employment will be determined 
based on the number of veterans in the civilian labor force and the 
number of unemployed persons. The civilian labor force data will be 
obtained from the Current Population Survey (CPS) and the unemployment 
data will be obtained from the Local Area Unemployment Statistics 
(LAUS), both of which are compiled by the Department of Labor's Bureau 
of Labor Statistics.

[[Page 40728]]

    (c) Each State's allocation will be determined by dividing the 
number of unemployed persons in each State by the number of unemployed 
persons across all States (LAUS for the individual States/LAUS for all 
States) and by dividing the number of veterans in the civilian labor 
force in each State by the number of veterans in the civilian labor 
force across all States (CPS for the individual States/CPS for all 
States). The result of these two ratios will be averaged and converted 
to a percentage of veterans seeking employment in the State compared to 
the percentage of veterans seeking employment in all States. Three-year 
averages of the CPS and LAUS data will be used in calculating the 
funding formula to stabilize the effect of annual fluctuations in the 
data in order to avoid undue fluctuations in the annual amounts 
allocated to States.


Sec.  1001.151  Other funding criteria.

    (a) Four percent of the total amount at the national level will be 
available based on Transition Assistance Program (TAP) workload and 
other exigencies.
    (b) Funding for TAP workshops will be allocated on a per workshop 
basis. Funding to the States will be provided pursuant to the approved 
State Plan.
    (c) Funds for exigent circumstances, such as unusually high levels 
of unemployment, surges in the demand for transitioning services, 
including the need for TAP workshops, will be allocated based on need.


Sec.  1001.152  Hold harmless criteria and minimum funding level.

    (a) A hold harmless rate of 90 percent of the prior year's funding 
level will be applied after the funding formula phase-in period is 
completed (beginning fiscal year 2006 and subsequent years).
    (b) A hold harmless rate of 80 percent of the prior year's funding 
level will be applied for fiscal year 2005.
    (c) A minimum funding level is established to ensure that in any 
year, no State will receive less than 0.28 percent (.0028) of the 
previous year's total funding for all States.

    Signed at Washington, DC, this 29th day of June, 2004.
Frederico Juarbe Jr.,
Assistant Secretary for Veterans' Employment and Training.
[FR Doc. 04-15078 Filed 7-2-04; 8:45 am]
BILLING CODE 4510-79-P