[Federal Register Volume 80, Number 73 (Thursday, April 16, 2015)]
[Proposed Rules]
[Pages 20574-20687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-05528]



[[Page 20573]]

Vol. 80

Thursday,

No. 73

April 16, 2015

Part II





Department of Labor





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Employment and Training Administration





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20 CFR Parts 676, 677, and 678





Department of Education





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34 CFR Parts 361 and 463





Workforce Innovation and Opportunity Act; Joint Rule for Unified and 
Combined State Plans, Performance Accountability, and the One-Stop 
System Joint Provisions; Notice of Proposed Rulemaking; Proposed Rule

  Federal Register / Vol. 80 , No. 73 / Thursday, April 16, 2015 / 
Proposed Rules  

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DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Parts 676, 677, and 678

[Docket No. ETA-2015-0002]
RIN 1205-AB74

DEPARTMENT OF EDUCATION

34 CFR Parts 361 and 463

RIN 1830-AA21


Workforce Innovation and Opportunity Act; Joint Rule for Unified 
and Combined State Plans, Performance Accountability, and the One-Stop 
System Joint Provisions; Notice of Proposed Rulemaking

AGENCY: Office of Career, Technical, and Adult Education, 
Rehabilitation Services Administration, Education; Employment and 
Training Administration (ETA), Labor.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: The Departments of Education (ED) and Labor (DOL) are 
proposing, through this Notice of Proposed Rulemaking (NPRM), to 
implement jointly-administered activities authorized by title I of the 
Workforce Innovation and Opportunity Act (WIOA). Through these 
regulations, the Departments propose to implement job training system 
reforms and strengthen the nation's workforce development system to put 
Americans back to work and make the United States more competitive in 
the 21st Century. This joint proposed rule provides guidance for State 
and local workforce development systems that increase the skill and 
credential attainment, employment, retention, and earnings of 
participants, especially those with significant barriers to employment, 
thereby improving the quality of the workforce, reducing welfare 
dependency, and enhancing the productivity and competitiveness of the 
nation.
    WIOA strengthened the alignment of the workforce development 
system's six core programs by imposing unified strategic planning 
requirements, common performance accountability measures, and 
requirements governing the one-stop delivery system. In so doing, WIOA 
placed heightened emphasis on coordination and collaboration at the 
Federal, State, and local levels to ensure a streamlined and 
coordinated service delivery system for job seekers, including those 
with disabilities, and employers. To that end, the Departments of 
Education and Labor propose to issue this joint NPRM to implement 
jointly-administered activities under title I of WIOA. These 
regulations lay the foundation, through coordination and collaboration 
at the Federal level, for implementing the vision and goals of WIOA.
    In addition to this joint NPRM, the Departments have proposed 
separate NPRMs to implement program-specific requirements of WIOA that 
fall under each Department's purview. The Department of Labor is 
proposing a NPRM governing program-specific requirements under titles I 
and III of WIOA. The Department of Education is proposing three NPRMs: 
one implementing program-specific requirements of the Adult Education 
and Family Literacy Act (AEFLA), as reauthorized by title II of WIOA; 
and two NPRMs implementing all program-specific requirements for all 
programs authorized under the Rehabilitation Act of 1973, as amended by 
title IV of WIOA. The Department-specific NPRMs have been 
simultaneously published in this issue of the Federal Register. 
Developing and issuing all five WIOA NPRMs in a coordinated manner 
reinforces WIOA's heightened emphasis on collaboration to ensure an 
integrated and seamless service delivery system for job seekers and 
employers.

DATES: To be ensured consideration, comments must be submitted in 
writing on or before June 15, 2015.

ADDRESSES: You may submit comments, identified by docket number ETA-
2015-0002, for Regulatory Information Number (RIN) 1205-AB74 and/or 
1830-AA21, by one of the following methods:
    Federal e-Rulemaking Portal: http://www.regulations.gov. Follow the 
Web site instructions for submitting comments.
    Mail and hand delivery/courier: Written comments, disk, and CD-ROM 
submissions may be mailed to Adele Gagliardi, Administrator, Office of 
Policy Development and Research, U.S. Department of Labor, 200 
Constitution Avenue NW., Room N-5641, Washington, DC 20210.
    Instructions: Label all submissions with ``RIN 1205-AB74'' and/or 
``RIN 1830-AA21.'' Please submit your comments by only one method. 
Please be advised that the Departments will post all comments received 
that are related to this NPRM on http://www.regulations.gov without 
making any change to the comments or redacting any information. The 
http://www.regulations.gov Web site is the Federal eRulemaking portal 
and all comments posted there are available and accessible to the 
public. Therefore, the Departments recommend that commenters remove 
personal information such as Social Security Numbers, personal 
addresses, telephone numbers, and email addresses included in their 
comments as such information may become easily available to the public 
via the http://www.regulations.gov Web site. It is the responsibility 
of the commenter to safeguard personal information.
    Also, please note that due to security concerns, postal mail 
delivery in Washington, DC may be delayed. Therefore, the Departments 
encourage the public to submit comments on http://www.regulations.gov.
    Docket: All comments on this proposed rule will be available on the 
http://www.regulations.gov Web site and can be found using RIN 1205-
AB74 or RIN 1830-AA21. The Departments also will make all the comments 
it receives available for public inspection by appointment during 
normal business hours at the above addresses. If you need assistance to 
review the comments, the Departments will provide appropriate aids such 
as readers or print magnifiers. The Departments will make copies of 
this proposed rule available, upon request, in large print and 
electronic file on computer disk. To schedule an appointment to review 
the comments and/or obtain the proposed rule in an alternative format, 
contact the Office of Policy Development and Research (ETA) at (202) 
693-3700 (this is not a toll-free number). You may also contact these 
offices at the addresses listed below.
    Comments under the Paperwork Reduction Act: In addition to filing 
comments with ETA or the Department of Education, persons wishing to 
comment on the information collection aspects of this rule may send 
comments to: Office of Information and Regulatory Affairs, Attn: OMB 
Desk Officer for DOL-ETA, Office of Management and Budget, Room 10235, 
725 17th Street NW., Washington, DC 20503, Fax: 202-395-6881 (this is 
not a toll-free number), email: [email protected].

FOR FURTHER INFORMATION CONTACT: 
    DOL: Adele Gagliardi, Administrator, Office of Policy and Research 
(OPDR), U.S. Department of Labor, Employment and Training 
Administration, 200 Constitution Avenue NW., Room N-5641, Washington, 
DC 20210, Telephone: (202) 693-3700 (voice) (this is not a toll-free 
number) or 1-800-326-2577 (TDD).

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    ED: Lekesha Campbell, U.S. Department of Education, OCTAE, 400 
Maryland Avenue SW., Room 11-145, PCP, Washington, DC 20202-7240, 
Telephone: (202) 245-7808; Janet LaBreck, U.S. Department of Education, 
RSA, 400 Maryland Avenue SW., Room 5086 PCP, Washington, DC 20202-2800, 
Telephone: (202) 245-7408.

SUPPLEMENTARY INFORMATION:

Preamble Table of Contents

I. Executive Summary
II. Acronyms and Abbreviations
III. Background
IV. Section-by-Section Discussion of Proposed Regulations
    A. Unified and Combined State Plans Under Title I of the 
Workforce Innovation and Opportunity Act (20 CFR part 676; 34 CFR 
part 361, subpart D; 34 CFR part 463, subpart H)
    B. Performance Accountability Under Title I of the Workforce 
Innovation and Opportunity Act (20 CFR part 677; 34 CFR part 361, 
subpart E; 34 CFR part 463, subpart I)
    C. Description of the One-Stop System Under Title I of the 
Workforce Innovation and Opportunity Act (20 CFR part 678; 34 CFR 
part 361, subpart F; 34 CFR part 463, subpart J)
V. Rulemaking Analyses and Notices
    A. Executive Orders 12866 and 13563: Regulatory Planning and 
Review
    B. Regulatory Flexibility Act
    C. Small Business Regulatory Enforcement Fairness Act of 1996
    D. Paperwork Reduction Act
    E. Executive Order 13132 (Federalism)
    F. Unfunded Mandates Reform Act of 1995
    G. Plain Language
    H. Assessment of Federal Regulations and Policies on Families
    I. Executive Order 13175 (Indian Tribal Governments)
    J. Executive Order 12630 (Government Actions and Interference 
with Constitutionally Protected Property Rights)
    K. Executive Order 12988 (Civil Justice Reform)
    L. Executive Order 13211 (Energy Supply)

I. Executive Summary

    President Barack Obama signed WIOA into law on July 22, 2014. WIOA 
is landmark legislation designed to strengthen and improve our nation's 
public workforce system and help put Americans, especially youth and 
those with significant barriers to employment, back to work. WIOA 
supports innovative strategies to keep pace with changing economic 
conditions and seeks to improve coordination between the core WIOA and 
other Federal programs that support employment services, workforce 
development, adult education and literacy, and vocational 
rehabilitation activities.
    In WIOA, Congress directed the Departments of Education and Labor 
to issue an NPRM to implement new statutory requirements to ensure that 
the workforce system operates as a comprehensive, integrated, and 
streamlined system to provide pathways to prosperity for those it 
serves and continuously improve the quality and performance of its 
services. Therefore, the Departments of Labor and Education are issuing 
this joint NPRM to implement jointly-administered activities authorized 
under title I of WIOA, specifically those related to the Unified and 
Combined State Plans, performance accountability, and the one-stop 
system.
    The Departments of Education and Labor are publishing this joint 
NPRM to implement those provisions of WIOA that affect all of the WIOA 
core programs (titles I-IV) and which will be jointly administered by 
both Departments. In addition to this joint NPRM, the Departments are 
publishing separately four agency-specific NPRMs that implement the 
provisions of WIOA that are administered separately by the 
Departments--one published by the Department of Labor implementing the 
agency-specific provisions of title I, and three published by the 
Department of Education implementing the agency-specific provisions of 
titles II and IV. Readers should note that there are a number of cross-
references in this joint NPRM to the agency-specific NPRMs. Finally, 
this NPRM has been structured so that the proposed Code of Federal 
Regulations (CFR) parts will align with the CFR parts in the agency-
specific regulations once all of the proposed rules have been 
finalized.

II. Acronyms and Abbreviations

AEFLA--Adult Education and Family Literacy Act
CBO--Community-based organization
CEO--Chief elected official
CFR--Code of Federal Regulations
CSBG--Community Services Block Grant
DINAP--Division of Indian and Native American Programs
DOL--U.S. Department of Labor
ED--U.S. Department of Education
E.O.--Executive Order
ESL--English-as-a-second-language
ETA--Employment and Training Administration
ETP--Eligible training provider
FEIN--Federal employer identification number
FR--Federal Register
HHS--Department of Health and Human Services
INA--Indian and Native American
INAP--Indian and Native American Programs
IPE--Individualized Plan for Employment
IT--Information technology
JTPA--Job Training Partnership Act
JVSG--Jobs for Veterans State Grants
LMI--Labor market information
MOU--Memorandum of Understanding
NACTP--Native American Career and Technical Education Program
NPRM--Notice of Proposed Rulemaking
OJT--On-the-job training
OMB--Office of Management and Budget
OPRD--Office of Policy and Research
PRA--Paperwork Reduction Act of 1995
Pub.L.--Public Law
PY--Program year
RFA--Regulatory Flexibility Act
RFI--Requests for Information
RFP--Request for Proposals
RIN--Regulatory Information Number
ROI--Requests of Information
SBA--Small Business Administration
SBREFA--Small Business Regulatory Enforcement Fairness Act of 1996
sec.--Section of a Public Law or the United States Code
SNAP--Supplemental Nutrition Assistance Program
SSA--Social Security Administration
TANF--Temporary Assistance for Needy Families
TEGL--Training and Employment Guidance Letter
UC--Unemployment compensation
UI--Unemployment insurance
U.S.C.--United States Code
VETS--Veterans' Employment and Training Service
VR--Vocational rehabilitation
WDB--Workforce Development Board
WIA--Workforce Investment Act of 1998
WIOA--Workforce Innovation and Opportunity Act
WISPR--Workforce Investment Streamlined Performance Reporting
WRIS--Wage Record Interchange System

III. Background

    On July 22, 2014, President Obama signed WIOA, the first 
legislative reform of the public workforce system in more than 15 
years, which passed Congress by a wide bipartisan majority. WIOA 
supersedes the Workforce Investment Act of 1998 (WIA) and amends the 
Wagner-Peyser Act and the Rehabilitation Act of 1973. WIOA reaffirms 
the role of the customer-focused one-stop delivery system, a 
cornerstone of the public workforce development system, and enhances 
and increases coordination among several key employment, education, and 
training programs.
    WIOA presents an extraordinary opportunity for the workforce system 
to accelerate its transformational efforts and demonstrate its ability 
to improve job and career options for our citizens through an 
integrated, job-driven public workforce system that links diverse 
talent to our nation's businesses. It supports the development of 
strong, vibrant regional economies where businesses thrive and people 
want to live and work.
    Most provisions in titles I-III of WIOA take effect on July 1, 
2015, the first full

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program year after enactment; however, the new State Plans and 
performance accountability system take effect July 1, 2016. Title IV 
took effect upon enactment.
    WIOA is designed to help job seekers access employment, education, 
training, and support services to succeed in the labor market and to 
match employers with the skilled workers they need to compete in the 
global economy. WIOA has six main purposes: (1) Increasing access to 
and opportunities for the employment, education, training, and support 
services that individuals, particularly those with barriers to 
employment, need to succeed in the labor market; (2) supporting the 
alignment of workforce investment, education, and economic development 
systems in support of a comprehensive, accessible, and high-quality 
workforce development system; (3) improving the quality and labor 
market relevance of workforce investment, education, and economic 
development efforts; (4) promoting improvement in the structure and 
delivery of services; (5) increasing the prosperity of workers and 
employers, the economic growth of communities, regions and States, and 
the global competitiveness of the United States; and (6) providing 
workforce investment activities, through workforce development systems, 
that increase employment, retention, and earnings of participants and 
that increase post-secondary credential attainment and, as a result, 
improve the quality of the workforce, reduce welfare dependency, 
increase economic self-sufficiency, meet skill requirements of 
employers, and enhance productivity and competitiveness of the nation.
    WIOA offers an opportunity to continue to modernize the workforce 
system, and achieve key hallmarks of a strong workforce system: A 
customer-centered system, where the needs of business and workers drive 
workforce solutions; a system where one-stop career centers and 
partners provide excellent customer service to job seekers and 
businesses, and where the workforce system supports strong regional 
economies.
    To achieve these goals, WIOA requires an integrated approach to the 
implementation, administration, service delivery, and evaluation of the 
services provided under the core programs at the Federal, State, and 
local levels. The core programs consist of: (1) The adult, dislocated 
worker, and youth formula programs administered by DOL under title I of 
WIOA; (2) the AEFLA program administered by ED under title II of WIOA; 
(3) the Wagner-Peyser Act employment services program administered by 
DOL under title III of WIOA; and (4) the vocational rehabilitation 
program administered by ED under title IV of WIOA. Integration of the 
core programs essential to the effective operation of the workforce 
development system is achieved through the development of a Unified or 
Combined State Plan, the implementation of a common performance 
accountability system, and the design of the one-stop service delivery 
system. Under a Unified or Combined State Plan every State collaborates 
across the core programs (adult, dislocated worker, and youth; Wagner-
Peyser; AEFLA; and Vocational Rehabilitation) and one-stop partner 
programs and other partners at the local and State levels to create a 
single unified and integrated strategic State Plan. States govern the 
core programs as one system assessing strategic needs and aligning them 
with service strategies to ensure the workforce system is designed to 
meet those needs. States use the certification process and competition 
to help achieve this vision and ensure continuous improvement.
    State and Local Boards, one-stop center operators and partners must 
increase coordination of programs and resources to support a 
comprehensive system providing integrated seamless services to all job 
seekers and workers and effective strategies that meet businesses' 
workforce needs across the business life cycle. The Departments will 
work with State and Local Boards, one-stop center operators and 
partners to achieve an integrated data system for the core programs and 
other programs to ensure interoperability and the accurate and 
standardized collection of program and participant information. 
Integrated data systems will allow for unified and streamlined intake, 
case management and service delivery; minimize the duplication of data; 
ensure consistently defined and applied data elements; facilitate 
compliance with performance reporting and evaluation requirements; and 
provide meaningful information about core program participation to 
inform operations.
    To facilitate the integration of the core programs, the Departments 
of Labor and Education have jointly developed this NPRM to implement 
the jointly-administered activities authorized under title I of WIOA, 
specifically those related to the Unified and Combined State Plan, 
performance accountability, and one-stop requirements. In so doing, the 
Departments agreed, for purposes of this NPRM, that the joint 
regulations would be identical across all core programs in order to 
ensure consistency. However, we recognize that some of the proposed 
regulations may not be applicable for a particular core program. For 
example, proposed provisions related to local areas would not be 
applicable to the Vocational Rehabilitation program because it operates 
solely at a State level.
    Furthermore, various provisions of these proposed regulations 
reference joint guidance that the Departments plan to develop in the 
near future. The guidance may include: (1) Procedural requirements, 
such as how to submit a State Plan to the Department of Labor; (2) 
interpretative rules; and (3) the information that will be collected by 
the Departments pursuant to the Paperwork Reduction Act (PRA) 
information collection process, which includes an opportunity for 
public comment.

Legal Basis

    On July 22, 2014, the President signed WIOA (Pub. L. 113-128) into 
law. WIOA repeals WIA (29 U.S.C. 2801 et seq.). As a result, the WIA 
regulations no longer reflect current law, thus necessitating this NPRM 
for jointly-administered activities. Furthermore, sec. 503(f) of WIOA 
requires the Departments of Education and Labor to issue NPRMs and then 
final rules that implement the changes made by WIOA. To that end, the 
Departments of Labor and Education are issuing this joint NPRM to 
implement jointly-administered activities authorized under title I of 
WIOA. The Departments of Labor and Education will each issue separate 
NPRMs, simultaneously with this joint NPRM, to implement program-
specific requirements imposed by WIOA.

IV. Section-by-Section Discussion of Proposed Regulations

A. Unified and Combined State Plans Under Title I of the Workforce 
Innovation and Opportunity Act (20 CFR Part 676; 34 CFR Part 361, 
Subpart D; 34 CFR Part 463, Subpart H)

    WIOA requires the Governor of each State to submit a Unified or 
Combined State Plan to the Secretary of DOL that outlines a 4-year 
strategy for the State's workforce development system. States must have 
approved State Plans in place to receive funding for the six core 
programs under WIOA--the adult, dislocated worker, and youth programs 
(title I of WIOA); the AEFLA program (title II of WIOA); the Wagner-
Peyser Act employment services program (title III of WIOA); and the 
Vocational Rehabilitation program under title I of the Rehabilitation 
Act of 1973 (title IV of WIOA). Previously, WIA gave States the option 
of submitting a plan similar

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to the Combined State Plans (referred to as Unified Plans in WIA).
    WIOA reforms State Plan requirements to foster better alignment of 
Federal investments in job training, to integrate service delivery 
across programs, and to ensure that the workforce system is job-driven 
and matches employers with skilled individuals. At a minimum, States 
must submit a Unified State Plan, which encompasses the six core 
programs under WIOA. States are strongly encouraged to submit a 
Combined State Plan, which includes the six core programs of the 
Unified State Plan, plus one or more optional programs, as described at 
Sec.  676.140. Coordination across multiple Federal programs provides a 
wider range of coordinated and streamlined services to the customer.
    One of WIOA's principal areas of reform is to require States to 
plan across the programs and include this planning process in the 
Unified or Combined State Plans, which promotes a shared understanding 
of the workforce needs of a State and a comprehensive strategy for 
addressing those needs. Unified or combined planning can support better 
alignment of resources, increased coordination among programs, and 
improved efficiency in service delivery.
    This proposed part describes the submission process and content 
requirements for the Unified and Combined State Plans under WIOA. The 
major content areas of the Unified or Combined State Plan include 
strategic and operational planning elements. Strategic planning 
elements include State analyses of economic and workforce factors, an 
assessment of workforce development activities, formulation of the 
State's vision and goals for preparing an educated and skilled 
workforce that meets the needs of employers, and a strategy to achieve 
the vision and goals. Operational planning elements include State 
strategy implementation, State operating systems and policies, program-
specific requirements, assurances, and additional requirements imposed 
by the Secretaries of Labor or Education, or other Secretaries, as 
appropriate.
    WIOA separates the strategic and operational plan elements to 
facilitate cross-program strategic planning. The separation of 
strategic elements allows the State to develop a vision for its entire 
system and identify the operational elements across the programs that 
support the system-wide vision. The plan requirements also require the 
use of economic and labor market information to ensure that the 
Governor's vision and the State's strategies are based on a thorough 
understanding of the economic opportunities and workforce needs of the 
State. This will align the best interests of job seekers and employers 
with the economic future of the State.
    The proposed regulations also describe the Unified or Combined 
State Plan modification requirements and the deadlines for the Unified 
or Combined State Plan, depending on which option the State elects. 
Given the multi-year life of the plan, States are required to revisit 
regularly strategies to ensure the plan remains responsive to economic 
conditions and labor market needs.
    State Workforce Development Boards are responsible for the 
development, implementation, and modification of the plan, and for 
convening of all relevant programs, required partners, and 
stakeholders. The Governor must ensure that the Unified or Combined 
State Plan is developed in a transparent manner and in consultation 
with representatives of Local Boards and chief elected officials 
(CEOs), businesses, representatives of labor organizations, community-
based organizations (CBOs), adult and youth education and workforce 
development providers, institutions of higher education, disability 
service entities, youth-serving programs, and other stakeholders with 
an interest in the services provided by the six core programs and any 
optional program included in a Combined Plan, as well as the general 
public, including individuals with disabilities.
    As part of the PRA process for information collections, the Unified 
or Combined State Plan information collection instrument and submission 
requirements will be published in the Federal Register pending 
completion of Office of Management and Budget (OMB) review. 
Additionally, DOL and ED will issue joint planning guidance to assist 
States in implementing the planning requirements for both the Unified 
and Combined State Plans. Additional guidance related to Combined State 
Plans may also be jointly issued in partnership with other Secretaries 
as necessary to clarify requirements for optional programs. Currently, 
the Departments issue State planning guidance separately to explain the 
Administration's priorities in relation to the planning requirements, 
explaining such requirements where necessary, submission procedures, 
and other matters. Jointly issued guidance would best meet the needs of 
State planning processes and submission requirements for WIOA.
    The Departments note that titles I, II, and the Rehabilitation Act 
of 1973 as amended by title IV of WIOA appear to raise inconsistencies 
regarding the applicability of certain jointly-administered 
requirements as they relate to the outlying areas--American Samoa, 
Guam, the U.S. Virgin Islands, and the Northern Mariana Islands. The 
apparent inconsistencies are grounded in the fact that WIOA and the 
Rehabilitation Act contain two differing definitions of ``State.'' 
Specifically, sec. 3(56) of WIOA defines ``State,'' for purposes of 
programs funded under title I of WIOA, as the 50 States, the District 
of Columbia, and Puerto Rico; the outlying areas are defined separately 
in sec. 3(45) as described above, and include Palau in certain 
circumstances. On the other hand, title IV, which amended the 
Rehabilitation Act of 1973, defines ``State'' at sec. 7(34) as the 50 
States, the District of Columbia, Puerto Rico, American Samoa, Guam, 
the U.S. Virgin Islands, and the Northern Mariana Islands, thereby 
defining any of the outlying areas as a State for purposes of programs 
funded under title IV of WIOA. Title II of WIOA does not separately 
define either ``State'' or ``outlying area,'' but defines ``eligible 
agency'' at sec. 203(3) to mean ``the sole entity or agency in a State 
or outlying area responsible for administering or supervising policy 
for adult education and literacy activities in the State or outlying 
area . . .'' These differences in definitions raise potential 
inconsistencies in the applicability of certain jointly-administered 
requirements for purposes of the outlying areas, such as those related 
to the requirements in secs. 102 and 103 of WIOA, which require States 
to submit a Unified or Combined State Plan to receive funding. Given 
the differing definitions, WIOA appears to be inconsistent across the 
core programs as to whether an outlying area must submit a Unified or 
Combined State Plan to receive funding.
    WIOA sec. 102(a) requires that, in order for a State to be eligible 
to receive allotments for the core programs, the State must submit a 
Unified State Plan. Read in isolation, sec. 102(a) does not appear to 
require that outlying areas submit a Unified State Plan as a 
prerequisite to receiving funds for the core programs.
    However, several other provisions in title I of WIOA create 
uncertainty on this point. Sections 126 (youth formula program) and 131 
(adult and dislocated worker formula programs) require States to meet 
the requirements of secs. 102 or 103 to receive a formula allotment 
under title I, while those same sections require outlying areas to 
comply with the requirements of title I, without elaboration, to 
receive an allotment

[[Page 20578]]

under title I. The requirement in WIOA secs. 126 and 131 that outlying 
areas must comply with the requirements of title I implies--but is not 
clear--that they must submit a Unified State Plan. Between the clear 
language in sec. 102 and the failure of secs. 126 and 131 to reference 
secs. 102 and 103, WIOA title I is unclear if outlying areas are 
required to submit a Unified State Plan to receive funding under title 
I.
    Under title II of WIOA, which reauthorizes AEFLA, sec. 211(b)(1) 
states that eligible agencies shall be awarded a grant to carry out 
their adult education program if they have a Unified State Plan 
approved under sec. 102. Section 211(c)(1) includes similar language 
with regard to sec. 102 of WIOA when it describes the amounts to be 
allotted to eligible agencies. As noted above, WIOA sec. 203 defines an 
eligible agency as the agency in the State or outlying area (as those 
terms are defined in sec. 3 of WIOA) responsible for administering the 
adult education program in the State or outlying area. Thus, a plain 
reading of secs. 211(b)(1) and 211(c)(1) is that both States and 
outlying areas must have an approved Unified State Plan to be eligible 
to receive title II funds. WIOA sec. 221(1) reinforces this reading by 
requiring each eligible agency to develop, implement, and monitor the 
relevant portions of the Unified State Plan.
    However, WIOA sec. 224 only requires each State that wants funds 
under title II for any fiscal year to submit a Unified State Plan in 
accordance with sec. 102. In other words, sec. 224 does not mention 
eligible agencies or outlying areas, as is done in other provisions 
throughout title II. Of additional note is that separate from the 
requirements of WIOA, the Department of Education has permitted 
outlying areas administering AEFLA-funded programs to include AEFLA in 
an application for Consolidated Grants to Insular Areas (Consolidated 
Grant), in accordance with 48 U.S.C. 1469a. Consolidated Grant 
applications are submitted in lieu of any other State plan that is 
required under the programs included in the consolidation. Finally, 
sec. 101(a)(1) of the Rehabilitation Act of 1973, as amended by title 
IV of WIOA, requires a State--the definition of which includes outlying 
areas as described above--to submit a Unified State Plan in accordance 
with sec. 102 of WIOA in order to be eligible to receive Vocational 
Rehabilitation Services funds. This provision, unlike the similar 
provisions in WIOA titles I and II discussed above, is clear that the 
submission of a Unified State Plan is a prerequisite to receiving 
funding.
    Given these differences and potential inconsistencies, there are 
two possible options with regard to outlying areas. The first option is 
to require the outlying areas to submit a Unified or Combined State 
Plan as a prerequisite to receiving funding for the core programs. 
Under this option, the outlying areas would receive their funding 
through the relevant statutory and regulatory processes for all core 
programs as would be applicable to any State. While this option is 
consistent with WIOA's goal of creating a more integrated, streamlined 
system and treats all grantees similarly, the Departments understand 
that the Unified or Combined State Plan requirements could pose 
additional burden on the outlying areas that may not exist for other 
States in terms of size, capacity, and resources. If the Departments 
were to adopt this option, the Department of Education would have, as 
an additional consideration, the implications of the Consolidated Grant 
application process as an option for the outlying areas to apply for 
AEFLA funds.
    The second option would be not to require the outlying areas to 
submit a complete Unified or Combined State Plan as a prerequisite to 
receiving funding for the core programs. Under this option, the 
Departments would continue to award funds to the outlying areas under 
WIOA as they have in the past. For example, under this option the 
Department of Labor would continue to require the outlying areas to 
submit a plan as part of the competitive grant competition required by 
WIOA sec. 127(b)(1)(B). On the other hand, the Department of Education 
would require the outlying areas to submit a Unified or Combined State 
Plan, in accordance with secs. 102 and 103 of WIOA, for both the AEFLA 
and Vocational Rehabilitation Services programs. Under this option, 
outlying areas administering AEFLA would also still have the option to 
submit a Consolidated Grant to Insular Areas in lieu of the Unified or 
Combined State Plan under WIOA. While this option may be consistent 
with current practice for each program and most in line with the plain 
meaning of each of the relevant programmatic requirements under WIOA, 
it may not as effectively promote the collaborative, integrated 
purposes of WIOA among the core programs. In addition, this option 
imposes differing requirements for the core programs administered by 
the outlying areas, thereby causing potential confusion during the 
implementation process. Moreover, this option could result in the 
Vocational Rehabilitation Services program being the only component on 
a Unified or Combined State Plan, which would render the Unified or 
Combined State Plan requirements meaningless.
    The Departments specifically request comments on the options 
proposed above, as well as any additional options, and which option the 
Departments should adopt.
    In the section-by-section discussions of each proposed Unified and 
Combined State Plan provision below, the heading references the 
proposed DOL CFR part and section number. However, the Department of 
Education proposes in this joint NPRM identical provisions at 34 CFR 
part 361, subpart D (under its State Vocational Rehabilitation Services 
Program regulations) and at 34 CFR part 463, subpart H (under a new CFR 
part for AEFLA regulations). For purposes of brevity, the section-by-
section discussions for each Department's provisions appear only once--
in conjunction with the DOL section number--and constitute the 
Departments' collective explanation and rationale for each proposed 
provision.
Sec.  676.100 What are the purposes of the Unified and Combined State 
Plans?
    Proposed Sec.  676.100 describes the principal purposes of the 
Unified and Combined State Plans, which communicate the State's vision 
for the State workforce system and serve as a vehicle for aligning and 
integrating the State workforce system across Federal programs.
    Proposed Sec.  676.100(a) explains that the Unified or Combined 
State Plan serves as the vehicle for the State to outline its vision of 
the workforce development system and how the State will achieve WIOA's 
goals.
    Proposed Sec.  676.100(b) explains that the Unified or Combined 
State Plan serves as a 4-year plan for how the State will align and 
integrate the workforce development system.
    Proposed Sec.  676.100(b)(1)-(4) explain how the strategies 
articulated in the Plan support the State's vision and overarching 
goals. The goals of the 4-year Unified and Combined State Plans are to 
align and integrate Federal education, employment, and training 
programs; guide investments to ensure that training and services are 
meeting the needs of employers and job seekers; apply consistent job-
driven training strategies across all relevant Federal programs; and 
engage economic, education, and workforce partners in improving the 
workforce development system.

[[Page 20579]]

Sec.  676.105 What are the general requirements for the Unified State 
Plan?
    Proposed Sec.  676.105 describes the general requirements for the 
Unified State Plan that apply to all six core programs. These 
requirements set the foundation for WIOA implementation by fostering 
strategic alignment, improving service integration, and ensuring that 
the workforce system is industry-relevant, responds to the economic 
needs of the State, and matches employers with skilled workers. The 
Departments envision a plan that describes how the State will develop 
and implement a unified, integrated program rather than a plan that 
separately discusses the State's approach to operating each program 
individually.
    Proposed Sec.  676.105(a) explains that Unified State Plans must be 
submitted in accordance with Sec.  676.130 and that the Secretaries of 
Labor and Education will issue joint planning guidance, as discussed 
above, with instructions to States on how to submit Unified State 
Plans.
    Proposed Sec.  676.105(b) implements WIOA's statutory requirements 
in sec. 102(a), and requires that the State submit the Unified State 
Plan to the Secretary of Labor to receive funding for the workforce 
development system's six core programs.
    Proposed Sec.  676.105(c) requires, in accordance with sec. 102(a) 
of WIOA, that the State outline its 4-year strategy for WIOA's core 
programs and meet the requirements of WIOA sec. 102(b). This section 
further explains that the Secretaries of Labor and Education will 
jointly issue planning guidance, which will include additional 
requirements with which the State's plan must comply.
    Proposed Sec.  676.105(d), which implements sec. 102(b) of WIOA, 
describes the content required to be included in the Unified State 
Plan. The proposed regulation includes major structural elements rather 
than repeating all the statutory State planning requirements. States 
still must comply with each of the statutory requirements, regardless 
of whether they are repeated in regulation.
    Proposed Sec. Sec.  676.105(d)(1)-(3) implement the key WIOA 
statutory requirements found in sec. 102(b)(1), (b)(1)(E), and (b)(2), 
respectively. The plan contains two major content areas--strategic 
elements and operational planning elements. Strategic planning elements 
include State analyses of economic and workforce factors, an assessment 
of workforce development activities, formulation of the State's vision 
and goals for preparing an educated and skilled workforce that meets 
the needs of employers, and a strategy to achieve the vision and goals. 
Operational planning elements include State strategy implementation, 
State operating systems and policies, program-specific requirements, 
assurances, and other requirements imposed by the Secretaries of Labor 
or Education. Additional explanations and clarifications of assurances 
and plan requirements will be contained in the subsequently issued 
joint planning guidance. The plan requirements also emphasize the use 
of economic and labor market information to ensure that the Governor's 
vision and State strategies are based on a thorough understanding of 
the economic opportunities and workforce needs of the State, to align 
the best interests of job seekers and employers with the economic 
future of the State.
    Finally, proposed Sec.  676.105(d)(3)(v), as allowed by WIOA sec. 
102(b)(2)(C)(viii), requires the State Plan to include any additional 
operational planning elements as the Secretaries determine are 
necessary. These additional elements will be included in the joint 
planning guidance.
Sec.  676.110 What are the program-specific requirements in the Unified 
State Plan for the adult, dislocated worker and youth workforce 
investment activities in Workforce Innovation and Opportunity Act title 
I?
Sec.  676.115 What are the program-specific requirements in the Unified 
State Plan for the Adult Education and Family Literacy Act program in 
Workforce Innovation and Opportunity Act title II?
Sec.  676.120 What are the program-specific requirements in the Unified 
State Plan for the Wagner-Peyser Act Employment Services programs as 
amended by title III of the Workforce Innovation and Opportunity Act?
Sec.  676.125 What are the program-specific requirements in the Unified 
State Plan for the State Vocational Rehabilitation Program in title IV 
of WIOA?
    States are required to develop a unified or combined plan as 
described in Sec.  676.105. While States must address general common 
planning requirements, States must also ensure that their planning 
process and plan content adhere to the legal requirements for each of 
the six core programs that remains unique to each program, as required 
by sec. 102(b)(2)(D) of WIOA.
    Proposed Sec.  676.110, implementing WIOA sec. 102(b)(2)(d)(i), 
describes the additional requirements to which the adult, dislocated 
worker, and youth programs are subject.
    Proposed Sec.  676.115 explains the additional requirements to 
which the AEFLA program is subject.
    Proposed paragraph (a) contains three specific program 
requirements. First, subparagraph (1) restates the statutory 
requirement that the eligible agency must align its adult education 
content standards with its State-adopted challenging academic content 
standards under the Elementary and Secondary Education Act of 1965, as 
amended, and further establishes that the eligible agency must have 
completed that alignment by July 1, 2016. Establishing the July 1, 
2016, date will ensure that all States are positioned to work toward 
full implementation of rigorous standards in the first year of the 
Unified State Plan and promote consistency across States. Second, 
subparagraph (2) addresses the general requirement that States, in the 
Unified State Plan, describe the methods and factors the State will use 
to distribute funds under the core programs. The regulation clarifies 
and reinforces requirements in title II that the eligible agency must 
compete title II funds, award multi-year grants, and provide direct and 
equitable access to funds using the same grant or contract announcement 
and application procedure. Adding the provisions found in sec. 231 of 
WIOA to this subparagraph is intended to clarify the requirements 
related to the distribution of AEFLA funds that must be incorporated 
into the Unified State Plan. Third, subparagraph (3) addresses the 
requirement that the State describe how it will integrate workforce and 
education data on core programs, unemployment programs and education 
through post-secondary education. The regulation requires that for 
title II, a State must include in the Unified State Plan how it will 
ensure interoperability of data systems in the reporting of core 
indicators and performance reports required to be submitted by the 
State. This regulation is intended to support the work of eligible 
agencies participating in State Longitudinal Data Systems initiatives 
and Workforce Data Quality initiatives and otherwise support the 
concepts of interoperability that will allow efficient reporting of 
performance under WIOA.
    Proposed Sec.  676.120, consistent with sec. 102(b)(2)(D)(iv), 
requires States to include any information the Secretary of Labor 
determines is necessary to administer the Employment Services Program. 
This additional information will be provided in the jointly issued 
planning guidance.

[[Page 20580]]

    Proposed Sec.  676.125 explains the additional requirements to 
which the State Vocational Rehabilitation program is subject. 
Specifically, States must submit a Vocational Rehabilitation Services 
portion, which complies with all State plan requirements set forth in 
sec. 101(a) of the Rehabilitation Act of 1973, as amended by WIOA, as 
part of the Unified State Plan. The Commissioner of the Rehabilitation 
Services Administration of ED is responsible for approving the 
Vocational Rehabilitation Services portion of the Unified State Plan.
    In addition to the specific elements required by WIOA, the Unified 
State Plans must include any additional program specific aspects as 
required by sec. 102(b)(2)(C)(viii).
Sec.  676.130 What is the submission and approval process of the 
Unified State Plan?
    In order to facilitate the State strategic planning process, and 
concurrent review by the relevant Federal program offices, the Unified 
State Plan must be submitted to the Secretary of Labor, according to 
the procedures established in this section, and as clarified and 
explained through joint planning guidance. Proposed Sec.  676.130(d), 
discussed below, outlines the procedures the Secretary of Labor will 
follow upon receipt of a Unified State Plan. Proposed Sec.  676.130 
also describes the requirements for transparency, public comment, and 
submission, as well as the terms for approval.
    Proposed Sec.  676.130(a) requires that the Unified State Plan be 
submitted in accordance with the procedures set out in the joint 
planning guidance, as previously discussed, issued by the Secretaries 
of Labor and Education and the procedures outlined in sec. 102(c) of 
WIOA.
    Proposed Sec. Sec.  676.130(b)(1) and (2) reiterate the requirement 
at sec. 102(c)(1) of WIOA regarding the deadlines for submitting the 
initial and subsequent Unified State Plans to the Secretary of Labor. 
The Secretary will develop a process for submission of Unified State 
Plans to ensure that ED receives the entire Unified State Plan 
submission concurrently. Based on this timeline, States are required to 
submit their first Unified State Plan on March 3, 2016. The Departments 
anticipate that the second Unified State Plans will need to be 
submitted 4 years after the first plan, in roughly the spring of 2020. 
The official submission dates for the Plans will be announced in the 
joint planning guidance.
    Proposed paragraph (b)(3) clarifies that, consistent with current 
practice for many of the core programs, a PY runs from July 1 through 
June 30 of any year. This clarification is particularly important, in 
this context, for the Vocational Rehabilitation program since that 
program operates on a Federal fiscal year and will continue to do so, 
in accordance with title I of the Rehabilitation Act of 1973, despite 
the fact that the Vocational Rehabilitation Services portion of the 
Unified State Plan will align, for submission purposes, with the other 
partners on a PY basis.
    Proposed Sec.  676.130(c) requires that the State ensure that the 
Unified State Plan is developed and drafted as part of a transparent 
process.
    Proposed Sec.  676.130(c)(1) implements WIOA's Sunshine Provision 
at sec. 101(g), which the Departments have interpreted to require that 
the State provide an opportunity for comment by the general public and 
by representatives of Local Boards, CEOs, businesses, representatives 
of labor organizations, CBOs, adult education providers, institutions 
of higher education, and other stakeholders with an interest in the 
services provided by the six core programs, including individuals with 
disabilities. This opportunity for comment provides interested 
stakeholders with a means to participate actively and effectively in 
the development of the plan in a transparent manner.
    Proposed Sec.  676.130(c)(2) reiterates WIOA's Sunshine Provision's 
requirement at WIOA sec. 101(g) that the State Board make information 
regarding Unified State Planning publicly available to the public 
through regularly occurring open meetings. In addition, this section 
requires that the Unified State Plan describe the State's process and 
public comment period.
    Proposed Sec.  676.130(d) implements WIOA sec. 102(c)(2)(A) which 
requires the Secretary of Labor to provide the entire Unified State 
Plan to the Secretary of Education for review pursuant to the 
submission process described in Sec.  676.130(b). Because content 
pertaining to each of the six core programs will be integrated 
throughout the Unified State Plan, it will be more efficient and 
effective to provide both Secretaries the opportunity to review the 
entirety of a State's plan rather than trying to break out the portions 
of the plan pertaining to the specific programs. This joint review 
process supports the purposes of the Unified State Plan in fostering 
program integration and alignment.
    Proposed Sec. Sec.  676.130(e)-(g), implementing WIOA sec. 
102(c)(2)(B), pertain to the approval of the Unified State Plan.
    Proposed Sec.  676.130(e) implements WIOA's statutory requirement 
that the Unified State Plan is subject to the approval of the Secretary 
of Labor and the Secretary of Education. WIOA requires both Secretaries 
to approve the Unified State Plan to ensure cross-program alignment, 
integration, and collaboration between the programs administered by the 
two Departments.
    Proposed Sec.  676.130(f) implements WIOA's statutory requirement 
that the Commissioner of the Rehabilitation Services Administration 
approve the vocational rehabilitation services portion of the Unified 
State Plan before the Secretaries of Labor and Education approve the 
Unified State Plan.
    Proposed Sec.  676.130(g) implements WIOA's statutory requirement 
that the Unified State Plan must be reviewed and approved by the 
Secretaries of Labor and Education within 90 days of receipt. The 
Secretary of Labor will develop a process for submission of Unified 
State Plans to ensure that the Secretary of Education receives the 
entire Unified State Plan submission concurrently. The section further 
states that in order to disapprove a Unified State Plan either the 
Secretary of Labor or the Secretary of Education must find, in writing, 
that the Plan is inconsistent with a core program requirement, is 
inconsistent with Unified State Plan requirements under WIOA sec. 102, 
is incomplete, or that the plan does not provide sufficient information 
to make the findings described in proposed Sec. Sec.  676.130(g)(1)-
(2).
    Proposed Sec.  676.130(h) implements WIOA sec. 102(c)(2)(B), which 
provides that if one of the Secretaries does not affirmatively make the 
determination described in Sec. Sec.  676.130(g)(1)-(3) within 90 days 
of receipt, the Unified State Plan will be considered approved.
Sec.  676.135 What are the requirements for modification of the Unified 
State Plan?
    Given the multi-year life of the Unified State Plan, States must 
revisit regularly State Plan strategies and recalibrate these 
strategies to respond to the changing economic conditions and workforce 
needs of the State. At a minimum, a State is required to submit 
modifications to its Unified State Plan at the end of the first 2-year 
period of any 4-year plan and also under specific circumstances, 
examples of which have been included in this section. States may also 
choose to submit a State Plan modification at any time during the life 
of the plan. Proposed Sec.  676.135 further describes the requirements 
for

[[Page 20581]]

submission and approval of Unified State Plan modifications, which are 
subject to the same public review and comment requirements and approval 
process as the full Unified State Plan submissions.
    Proposed Sec.  676.135(a) reiterates WIOA's statutory authority in 
sec. 102(c)(3)(B), which allows the Governor to submit a modification 
of the Unified State Plan at any time during the 4-year period of the 
Unified State Plan.
    Proposed Sec.  676.135(b)(1) implements the statutory requirement 
in WIOA sec. 102(c)(3)(A), requiring the Governor to submit a Unified 
State Plan modification at the end of the first 2-year period of any 4-
year State Plan.
    In addition to the statutory mandate to modify the Plan, proposed 
Sec. Sec.  676.135(b)(2)-(3) require that the Governor modify the 
Unified State Plan when changes in Federal or State law or policy 
substantially affect the strategies, goals, and priorities upon which 
the Unified State Plan is based or when there are substantial changes 
in the State's workforce investment system. In order for the plan to 
both effectively govern the State's implementation and operation of the 
core programs and effectively serve the State's workforce and 
employers, the plan must be consistent with relevant laws and policies.
    Proposed Sec.  676.135(c) requires that modifications to the 
Unified State Plan be subject to the same public review and comment 
requirements for submitting a Unified State Plan described at proposed 
Sec.  676.130(c). This requirement ensures transparency in the process 
of developing the Unified State Plan modification. The Unified State 
Plan modification must describe the State's process and timeline for 
ensuring public comment.
    Proposed Sec.  676.135(d), implementing WIOA sec. 102(c)(3)(B), 
requires Unified State Plan modifications to be subject to the same 
approval process as the original Unified State Plan submission. 
Modifications must be approved by both the Secretary of Labor and the 
Secretary of Education within 90 days of receipt, in accordance with 
the standards described at Sec.  676.130, which also includes the 
approval process for the Vocational Rehabilitation Services portion of 
the State plan.
Sec.  676.140 What are the general requirements for submitting a 
Combined State Plan?
    States have the option to submit a Combined State Plan that goes 
beyond the core programs of a Unified State Plan to include at least 
one optional, additional Federal workforce, educational, or social 
service program from the programs identified in sec. 103(a)(2) of WIOA. 
Generally, the requirements for a Combined State Plan include the 
requirements for the Unified State Plan as well as the program-specific 
requirements for any optional programs that are included in the 
Combined State Plan. To expand the benefits of cross-program strategic 
planning, increase alignment among State programs, and improve service 
integration, States are strongly encouraged to submit Combined State 
Plans.
    Proposed Sec.  676.140, which implements sec. 103(a) and (b) of 
WIOA, authorizes the submission of a Combined State Plan, lists the 
optional programs that a State may include, and describes the 
requirements of the combined plan.
    Proposed Sec.  676.140(a) allows a State to submit a Combined State 
Plan in lieu of a Unified State Plan. Proposed Sec.  676.140(b), 
implementing WIOA sec. 103(b)(2), clarifies that, if a State submits a 
Combined State Plan that is approved, the State is not required to 
submit any other plan in order to receive the funds to operate the 
programs covered by the combined plan. The Combined State Plan takes 
the place of the individual State Plans for the optional programs that 
are covered by the plan and replaces the Unified State Plan. In this 
way, the Combined State Plan is meant to reduce the burden for States 
and promote integrated planning across State programs. One proposed 
exception to this rule, for the optional program, employment and 
training activities carried out under the Community Services Block 
Grant (CSBG) Act (42 U.S.C. 9901 et seq.), is described below under 
proposed Sec.  676.140(h).
    The 4-year cycle, with a 2-year modification, for the Combined 
State Plan is inconsistent with the planning cycles for the plans 
governing the optional programs. The Departments seek comment on how to 
address this issue and reduce the burden of managing multiple cycles. 
Specifically, the Departments request comment on how to treat the plan 
for an optional program whose planning cycle is longer than 2 years, 
whose planning cycle is less than 2 years, and whose planning process 
includes intra-cycle modifications of the plan. Similarly, the 
Departments request comments on how best to treat the plan for an 
optional program that is reauthorized or otherwise significantly 
amended during the 4-year or 2-year cycle of a Combined State Plan, 
including a change to the optional program's planning cycle.
    Proposed Sec.  676.140(c) requires that the Combined State Plan be 
submitted to the appropriate Secretary for approval in accordance with 
the procedures described in proposed Sec.  676.143(a).
    Proposed Sec.  676.140(d) reiterates the requirement that the 
Combined State Plan include all of the core programs, and at least one 
of the optional programs described in WIOA sec. 103(a)(2).
    Proposed Sec. Sec.  676.140(d)(1)-(11) identify the programs that a 
State may include in the Combined State Plan. These are Federal 
programs that offer educational, training, employment, or supportive 
services to populations that may overlap with those core programs 
serve. By expanding the State's cross-program planning beyond the core 
programs to include one or more of the optional programs the State will 
further improve strategic alignment and service integration for job 
seekers and employers.
    Proposed Sec. Sec.  676.140(e)(1)-(4) generally describe what must 
be included in the Combined State Plan. It is important to note that 
the portions of the Combined State Plan covering the core programs must 
include all of the required contents of the Unified State Plan, while 
the portions of the Combined State Plan covering optional programs must 
include the information for a plan or application as required by the 
laws authorizing and governing the optional programs, as well as common 
planning requirements (both strategic and operational) described in 
sec. 102(b) of WIOA, and as clarified and explained in the joint 
planning guidance for all included optional programs. This provision 
implements sec. 103(b)(1) of WIOA.
    Proposed Sec.  676.140(f) clarifies that although the optional 
programs listed in sec. 103(a)(2) of WIOA are included in the Combined 
State Plan, those programs are subject to the requirements of the 
applicable Federal law, regulations, and program-specific requirements 
governing those programs. A program's inclusion in the Combined State 
Plan does not negate a State's duty to comply with all of the relevant 
laws and regulations, procedures, and any other requirements imposed by 
the agency or organization administering or governing that program.
    Proposed Sec.  676.140(g), consistent with sec. 103(d)(2) of WIOA, 
explains that the term ``appropriate secretary'' when used in relation 
to the optional programs refers to the head of the Federal agency 
overseeing the program.
    Proposed Sec.  676.140(h) indicates that States that elect to 
include employment and training activities carried out under

[[Page 20582]]

the CSBG Act (42 U.S.C. 9901 et seq.) under a Combined State Plan would 
submit all other required elements of a complete CSBG State Plan 
directly to the Federal agency that administers the program, according 
to the requirements of Federal law and regulations. Because employment 
and training activities are only a subset of the broad range of anti-
poverty activities and other requirements addressed in the overall CSBG 
plan, States would not be required to include these program-specific 
elements of a complete CSBG State Plan in the WIOA Combined State Plan.
Sec.  676.143 What is the submission and approval process of the 
Combined State Plan?
    In order to facilitate the State's strategic planning process, and 
concurrent review by the relevant Federal program offices, the Combined 
State Plan must be submitted in accordance with jointly-issued planning 
guidelines issued by the Secretaries of Labor and Education and any 
program-specific requirements of each optional program that a State 
includes.
    Proposed Sec.  676.143 implements WIOA's statutory requirements for 
submitting a Combined State Plan. These are similar to the requirements 
for submitting a Unified State Plan, with added considerations for 
review and approval by the Federal agencies that oversee the optional 
Combined State Plan programs.
    Proposed Sec.  676.143(a) requires the Combined State Plan to be 
submitted in accordance with the requirements in Sec.  676.143 and 
joint planning guidelines issued by the Secretaries of DOL and ED.
    Proposed Sec.  676.143(b) requires the State to submit, to all 
Secretaries whose programs are included in the Combined State Plan, in 
accordance with the procedures described in the joint planning guidance 
described in Sec.  676.143(a), any plan documents, application, form, 
or similar documents that are required by the optional Combined State 
Plan programs or activities in order to receive Federal funding for 
that program. Though the Combined State Plan takes the place of the 
individual State Plans for the optional programs or activities included 
in the Combined State Plan, the State must still comply with the 
submission requirements for approval of Federal funding under the 
optional programs.
    Proposed Sec.  676.143(c) requires that the Combined State Plan be 
approved or disapproved in accordance with the requirements of sec. 
103(c) of WIOA. This section requires that only the Secretary tasked 
with administering the relevant optional program review and approve 
that portion of the Combined State Plan. Accordingly, proposed Sec.  
676.143(c)(1) implements sec. 103(c)(3)(A) of WIOA, describing the 
approval process by the Secretaries of Labor and Education for those 
parts of the Combined State Plan that cover the core programs, while 
proposed Sec.  676.143(c)(2) implements sec. 103(c)(3)(B) of WIOA, 
describing the approval process by the appropriate secretary for the 
optional programs included in the Combined State Plan.
    Proposed Sec.  676.143(d) implements WIOA's standards for the 
Secretaries of Labor, Education, or other appropriate secretary to 
determine if a Combined State Plan should be approved or disapproved, 
or otherwise deemed complete. These standards are similar to the 
standards for disapproving a Unified State Plan, with considerations 
for the requirements of the optional Combined State Plan programs and 
activities. Proposed Sec. Sec.  676.143(d)(1)-(3) state that the plan 
may not be approved if the relevant Secretary determines, in writing, 
within the relevant review period that: the plan is inconsistent with 
the requirements of the core programs or one or more of the optional 
programs included; does not meet the criteria for the core programs or 
one or more of the optional programs included; or is considered 
incomplete or insufficient to make an approval determination.
    Under this section, the appropriate Secretary reviewing his or her 
portion of the Combined State Plan is not required to take any action 
or make any determination to approve/disapprove a plan beyond what is 
required or permitted under the law governing that program. For 
example, if the appropriate Secretary is only authorized to determine 
if a plan is complete, as part of the Combined State Plan approval 
process that Secretary would not also be required to make the 
additional determinations described in Sec.  676.143(d) in order to 
approve or disapprove that portion of the plan.
    Proposed Sec.  676.143(e) implements the requirement in WIOA sec. 
103(c)(3) that, unless the relevant Secretary makes the determination 
described in Sec.  676.143(d), the relevant portion of the plan will be 
deemed approved.
    Proposed Sec.  676.143(f) requires a State, with respect to the 
core programs, and a program under the Carl D. Perkins Career and 
Technical Education Act of 2006, to reach an agreement with the 
appropriate Secretaries regarding State performance measures or State 
performance accountability measures, as the case may be, including 
levels of performance. The plan may not be approved if an agreement as 
to these measures is not reached and included in the plan. Performance 
requirements for the Carl D. Perkins Career and Technical Education Act 
of 2006 continue to apply.
Sec.  676.145 What are the requirements for modifications of the 
Combined State Plan?
    Section 103 of WIOA provides for the modification process for parts 
of the Combined State Plan. Proposed Sec.  676.145 applies to the 
Combined State Plans the same requirements for modifications as Unified 
State Plans, with added requirements for the additional Federal 
programs included in the Combined State Plan. For the additional 
program and activities that are not part of the Unified State Plan, the 
State may elect to modify the Combined State Plan according to WIOA 
sec. 102(c)(3).
    Proposed Sec.  676.145(a) requires modification of the Combined 
State Plan for the core programs at the end of the first 2-year period 
of any 4-year Combined State Plan. This proposed regulation subjects 
the core programs in the Combined State Plan to the modification 
requirements described at Sec.  676.135 for Unified State Plans, 
ensuring that all State plans governing the core programs are treated 
equally. Additionally, this proposed regulation requires the State 
Workforce Development Board to review the Combined State Plan, and the 
Governor to submit a modification to the Combined State Plans to ensure 
that the Plan remains responsive to changes in labor market and 
economic conditions and to other factors that impact the strategies 
described in the Combined State Plan.
    Proposed Sec.  676.145(b), similar to the Unified State Plan 
provision, allows States to modify a Combined State Plan, at any time 
during the 4-year period of the Plan and requires modifications as 
described in Sec.  676.145(a).
    Proposed Sec.  676.145(c)(1) allows the State, at its discretion, 
to apply the modification requirements in Sec.  676.135 to the optional 
programs and activities included in the Combined State Plan.
    Proposed Sec.  676.145(c)(2) requires the State to submit, in 
accordance with the submission requirements described in Sec.  676.143, 
any modification, amendment, or revision required by Federal law for 
the optional programs included in the Combined State Plan. However, the 
State is required to submit the modification, amendment, or revision 
for approval only to the

[[Page 20583]]

Secretary overseeing the program if the modification, amendment, or 
revision affects the administration of that particular program and has 
no impact on the Combined State Plan as a whole or the integration and 
administration of the core and optional programs at the State level. In 
this case, the State may submit its modification, amendment, or 
revision in accordance with the procedures and requirements applicable 
to the particular program.
    In addition, if the program-specific requirements change by law for 
an optional Combined State Plan program, the State may choose to 
either: (1) Modify the Combined State Plan or (2) remove the program 
from the Combined State Plan and submit a separate plan to the Federal 
agency that oversees that program, in accordance with the new Federal 
law authorizing the optional program and other applicable legal 
requirements for such program. Since Combined State Plan programs are 
optionally included by the State in a Plan, the State may also choose 
to exclude them at a later date. A State also may amend its Combined 
State Plan to add an optional program or activity described in Sec.  
676.140(d), provided that it meets the requirements of WIOA and the 
optional program or activity.
    Proposed Sec.  676.145(d) requires the modifications of Combined 
State Plans to be subject to public review and comment as described in 
proposed Sec.  676.130(c) or in program-specific requirements of each 
optional program included by the State. The Combined State Plan 
modification process must comply with the transparency requirements for 
the six core programs in the Combined State Plan. The Departments seek 
comment on how to streamline the public review and comment process for 
Combined State Plan modifications; whether it is advisable to limit the 
comment process to significant or substantial modifications to the 
common planning elements; and, if so, how the Departments might define 
significant or substantial changes.
    Proposed Sec.  676.145(e) requires that modifications of the 
portions of the Combined State Plan that pertain to the core programs 
must be approved by the Secretaries of Labor and Education according to 
the approval standards described in Sec.  676.143.
    Proposed Sec.  676.145(f) requires that modifications of the 
Combined State Plan for the programs or activities described in Sec.  
676.140(d) be approved by the appropriate Secretary if the 
modification, amendment, or revision affects the administration of only 
that particular optional program and has no impact on the Combined 
State Plan as a whole or the integration and administration of the core 
and optional programs at the State level.

B. Performance Accountability Under Title I of the Workforce Innovation 
and Opportunity Act (20 CFR Part 677; 34 CFR Part 361, Subpart E; 34 
CFR Part 463, Subpart I)

1. Introduction
    Section 116 of the Workforce Innovation and Opportunity Act (WIOA) 
establishes performance accountability indicators and performance 
reporting requirements to assess the effectiveness of States and local 
areas in achieving positive outcomes for individuals served by the core 
programs. The core programs are defined in sec. 116(b)(3)(A)(ii) of 
WIOA to include the adult, dislocated worker, and youth programs under 
title I of WIOA, the AEFLA programs under title II; the Employment 
Services authorized by the Wagner-Peyser program under the Wagner-
Peyser Act as amended by title III (``Employment Services''); and the 
Vocational Rehabilitation program under the Rehabilitation Act of 1973, 
as amended by title IV.
    With a few exceptions, including the local accountability system 
under sec. 116(c) of WIOA, the performance accountability requirements 
apply across all of the core programs. It is instructive to note that 
sec. 116 is located in the statute under subtitle A, which is System 
Alignment. This is an historic opportunity to align definitions, 
streamline performance indicators, and integrate reporting for each of 
the core programs to the extent practicable, while implementing 
program-specific requirements. Through these proposed joint 
regulations, the Departments are laying the foundation for the 
establishment of a performance accountability system that serves all 
core programs and their targeted populations in a manner that is 
customer-focused and that supports an integrated service design and 
delivery model. In addition, WIOA requires additional programs, 
including Job Corps, Native American programs, the Migrant and Seasonal 
Farmworker programs, and the YouthBuild program, to use the same 
performance accountability indicators as the core programs, as provided 
in 29 CFR part 686 and 29 CFR part 684. This will better align both the 
core programs and other education and training programs across the 
workforce system. Further, DOL plans to include other workforce 
programs under its purview in this streamlining effort, including the 
Jobs for Veterans State Grants (JVSG) program as authorized by the Jobs 
for Veterans Act, other formula and applicable competitive grant 
programs administered by DOL.
    As with the planning requirements discussed previously, the 
differing definitions of ``State'' raise potential inconsistencies as 
to the applicability of the performance accountability system 
requirements of sec. 116 of WIOA for purposes of the outlying areas and 
their administration of the core programs. Section 116, which 
consistently references States, establishes a common performance system 
to measure the effectiveness of the States and local areas in achieving 
positive outcomes for participants in the core programs. However, sec. 
116 does not specifically reference the outlying areas. Sections 126 
and 131 of WIOA require that outlying areas comply with all of the 
requirements of title I as a prerequisite to their receipt of title I 
funds, although neither section specifically references the 
requirements of sec. 116. The silence in sec. 116 is especially 
important with regard to the core programs funded under title I of 
WIOA, and administered by the Department of Labor, since sec. 3 defines 
the terms ``State'' and ``outlying area'' separately. Reading title I, 
and sec. 116 specifically, in isolation, suggests that the performance 
system does not apply to the outlying areas.
    Unlike the title I programs, the Adult Education and Vocational 
Rehabilitation programs under titles II and IV, respectively, clearly 
require the outlying areas to comply with the performance 
accountability system requirements of sec. 116 of WIOA. Section 212 
applies the performance provisions in sec. 116 to all of the programs 
and activities authorized in title II, which includes the adult 
education programs and activities administered by the eligible agencies 
in the outlying areas. Additionally, sec. 106 of the Rehabilitation 
Act, as amended by title IV of WIOA, requires that States--which 
includes the outlying areas--comply with the performance accountability 
system requirements of sec. 116 of WIOA.
    Given the use of the term ``State'' in sec. 116 and the differing 
definitions for that term for the various core programs, ambiguity 
exists within WIOA as to the applicability of the performance 
accountability system requirements with regard to the core programs 
administered by the Department of Labor under title I of WIOA. 
Nevertheless, WIOA is clear that the core programs funded under titles 
II and IV are subject to these requirements. For this reason, there are 
two options to

[[Page 20584]]

resolve this potential inconsistency, thereby ensuring that the 
performance of the core programs in the outlying areas can be measured 
to ensure programmatic effectiveness.
    The first option would be to subject the title I WIOA core programs 
administered by the outlying areas to the sec. 116 performance system, 
as WIOA requires of the core programs funded under titles II and IV. 
The second option would be not to apply the performance accountability 
system requirements of sec. 116 of the title I WIOA programs 
administered by the outlying areas, since title I is less clear in the 
applicability of these requirements to the outlying areas, while 
requiring the outlying areas administering the Adult Education and 
Vocational Rehabilitation Services programs, funded under titles II and 
IV respectively, to comply with the sec. 116 requirements since these 
titles clearly require such compliance. This option, while perhaps most 
in line with the plain meaning of the relevant statutory provisions, is 
contrary to the purpose of WIOA generally and the performance 
accountability system established in sec. 116 specifically. Moreover, 
this option would treat the various core programs differently, thereby 
causing potential confusion during implementation and could result in 
disparate treatment with regard to sanctions.
    The Departments specifically request comments on the options 
proposed above, as well as any additional options, and which option the 
Departments should adopt.
    In the section-by-section discussions of each proposed performance 
accountability provision below, the heading references the proposed DOL 
CFR part and section number. However, the Department of Education 
proposes in this joint NPRM identical provisions at 34 CFR part 361, 
subpart E (under its State Vocational Rehabilitation Services Program 
regulations) and at 34 CFR part 463, subpart I (under a new CFR part 
for AEFLA regulations). For purposes of brevity, the section-by-section 
discussions for each Department's provisions appear only once--in 
conjunction with the DOL section number--and constitute the 
Departments' collective explanation and rationale for each proposed 
provision.
Sec.  677.150 What definitions apply to Workforce Innovation and 
Opportunity Act performance measurements and reporting requirements?
    Proposed Sec.  677.150 defines key performance-related terms which 
States must use in their reporting on performance calculations. The 
Departments propose these definitions to facilitate consistent 
reporting across the States. Under WIA, States created differing 
definitions of key terms for performance reporting, which resulted in 
inconsistent reporting and prevented the Departments from fully 
evaluating the effectiveness of its workforce and educational programs.
    The definitions the Departments are proposing in these regulations 
are sufficiently broad to apply across core programs and other programs 
authorized by this statute, to create an integrated performance 
accountability system, and to support clarity and alignment of 
performance metrics and comparability among the programs and States.
    Proposed Sec.  677.150 defines participant, reportable individual, 
and exit.
    Proposed Sec.  677.150(a) proposes a definition of ``participant'' 
across the core programs because participants are specifically 
identified in the statute as included in performance calculations. The 
definition of participant establishes a common point of measurement at 
which an individual is meaningfully engaged in a core program. This 
measurement point takes into consideration the unique purposes and 
characteristics of each program and the ways in which an individual may 
access, and ultimately engage in, services in each of the core 
programs. The proposed definition does not attempt to define the 
activities leading up to participation in the same way across all of 
the core programs, but instead seeks to establish a common point in 
service design and delivery that an individual reaches regardless of 
the program in which he or she is enrolled. In each program, an 
individual must meet a specific programmatic threshold at which he or 
she begins receiving services regardless of the program. The proposed 
definition takes into account the unique processes of each program to 
meet such thresholds and, thus, participant is defined in a manner that 
works across the core programs. The proposal defines participant as a 
reportable individual who has received staff-assisted services after 
satisfying all applicable programmatic requirements for the provision 
of services, such as the eligibility determination. This proposed 
definition establishes a common approach to establishing a minimum 
participation threshold that is appropriate to the services provided by 
each program. This approach also ensures consistent definition of 
participant within each program. This definition excludes self-service 
individuals because they have minimal interaction with the program and 
minimal resources are spent on their behalf. Such individuals are 
reportable, as defined below, because they have contact with the system 
but are not participants and, thus, are not included in performance 
calculations.
    Specifically for Wagner-Peyser Employment Services, only those 
reportable individuals who received staff-assisted services would be 
included in performance calculations. For WIOA adults, reportable 
individuals who receive staff assisted services would be considered 
participants and, thus, be included in performance calculations. For 
WIOA dislocated workers, reportable individuals who are determined 
eligible and receive a staff-assisted service would be considered 
participants and, thus, be included in performance calculations. For 
WIOA youth, reportable individuals who are determined eligible, receive 
an assessment, and receive a program element (a staff-assisted service) 
would be considered participants and, thus, be included in performance 
calculations. For the AEFLA program, reportable individuals who have 
been determined eligible and who have completed at least 12 contact 
hours in an adult education and literacy activity under AEFLA would be 
considered participants and, thus, be included in performance 
calculations. For the Vocational Rehabilitation program, reportable 
individuals who have been determined eligible for services and who have 
an approved and signed Individualized Plan for Employment (IPE) that 
outlines the services that the individual will receive would be 
considered participants and, thus, be included in performance 
calculations.
    Proposed Sec.  677.150(b) defines ``reportable individual'' as an 
individual who meets specific core program criteria for reporting such 
as the provision of identifying information or a level of service 
receipt that is below the staff-assisted level, which will be further 
explained in guidance issued by DOL and ED. This approach would allow 
for counting self-service system utilization or those who received only 
informational services/activities as well as other services that may 
occur prior to an individual meeting all of the established benchmarks 
for participation.
    These definitions are critical for determining who is subject to 
performance calculations. All individuals receiving staff-assisted 
services through WIOA workforce system core programs would be reported 
under a single count of program

[[Page 20585]]

participants and would be subject to performance calculations. It is 
important to note that this differs from ETA's current approach for the 
Employment Services' under WIA reporting whereby self-service 
individuals are included in performance calculations. In contrast, 
under these proposed regulations all self-service and information-only 
individuals would be subjected to reportable counts and other 
associated information, but not performance calculations for the 
primary indicators of performance. This proposed approach also would 
address the current inconsistency in reporting based on various co-
enrollment strategies.
    The Departments are seeking feedback regarding this proposed 
approach, specifically for the WIOA title I and III programs, on the 
appropriate point of receipt of staff-assisted services, which has not 
been a commonly defined point under WIA. A stronger delineation of that 
measurement point, which would be the same for the Wagner-Peyser 
Employment Services, WIOA adults, and WIOA dislocated workers, would 
enhance comparability across States.
    Proposed Sec.  677.150(c) defines the term ``exit'' for the 
purposes of a uniform performance accountability system for the core 
programs under WIOA, as well as applicable non-core programs as 
established through regulation or guidance. Several of the primary 
indicators of performance for performance accountability require 
measuring participants' progress after they have exited from the 
program. One consistent definition of exit would facilitate this 
calculation and will allow the Departments to make meaningful 
comparisons across the States. For the core programs, excluding 
Vocational Rehabilitation, the Departments propose defining ``exit'' as 
the last date of service. The last date of service means the individual 
has not received any services for 90 days and there are no future 
services planned. For the purpose of this definition, ``service'' does 
not include self-service, information-only activities, or follow-up 
services. Therefore, in order to determine whether or not an individual 
has exited, States will retroactively determine if 90 days have passed 
with no further service and no further services scheduled.
    The proposed definition of ``exit'' for the Vocational 
Rehabilitation program is similar in that it marks the point at which 
the individual no longer is engaged with the program and there is no 
ongoing relationship between the individual and the program. However, 
the proposed definition takes into account specific programmatic 
requirements. Under the Vocational Rehabilitation program, an 
individual would be determined to have exited the program on the date 
the individual's case is closed in accordance with Vocational 
Rehabilitation program requirements. Even with this programmatic 
distinction, the calculations would be essentially the same as with the 
other core programs because in all instances the ``exit'' count would 
capture all individuals who are no longer active participants in any of 
the core programs. In addition, the Departments exclude from the 
definition of ``exit,'' for purposes of the Vocational Rehabilitation 
program, those individuals who have achieved a supported employment 
outcome at a subminimum wage. This proposed provision is necessary to 
implement WIOA's heightened emphasis on competitive integrated 
employment.
    The Departments considered various approaches to defining ``exit'' 
across the programs. The proposed definition introduces common language 
that is broad enough to apply to all of the core programs, but also 
accommodates statutory requirements specific to the Vocational 
Rehabilitation program as implemented in 34 CFR 361.43 and 361.56.
    The Departments seek comments on whether an individual's continued 
use of self-service offerings should extend the individual's exit date, 
or if a participant should be considered as having exited after the 
final staff-assisted service. The self-service component is limited to 
WIOA title I programs and the Wagner-Peyser Employment Services.
    WIOA sec. 116(d)(2)(I) requires States to report on the number of 
participants who are enrolled in more than one WIOA core program. 
Therefore, the Departments are also considering the value of a cross-
program definition of exit, sometimes called a common exit, that is 
based upon the last staff-assisted service from all core programs 
rather than a program exit. The current proposed definition of ``exit'' 
is program specific so if an individual was receiving services from 
more than one program, that individual could have multiple ``exits.'' 
The current proposed definition would allow programs to capture all 
exit-based participant outcomes in a reporting period regardless of 
whether the participant continued to receive services from other core 
programs. The Departments have considered a common exit-based 
definition that requires an individual to have completed all programs 
in order to officially exit from the system. Such a definition would 
emphasize the importance of an individual receiving and completing all 
partner program services necessary to ensure a successful attachment to 
the labor market. It is, however, largely dependent on the ability of 
States to exchange data effectively and efficiently across State 
agencies in order to determine outcomes for each of the programs. The 
Departments are seeking comments on the costs and benefits of taking a 
program-exit approach or a common exit approach in defining ``exit.''
2. Subpart A--State Indicators of Performance for Core Programs
Sec.  677.155 What are the primary indicators of performance under the 
Workforce Innovation and Opportunity Act?
    Proposed Sec.  677.155 identifies the primary indicators of 
performance that States must include in their Unified or Combined State 
Plans. The primary indicators are applied in numerous places across all 
of the WIOA proposed regulations. Though the indicators may appear 
under other components of the regulations the indicators are aligned 
and the same and do not vary across the regulations. The Departments 
have considered a variety of approaches to define the primary 
indicators of performance, which will be applied to each of the core 
programs outlined in sec. 116(b)(3)(A)(ii) of WIOA. Specifically, these 
indicators will apply to the core programs administered by ED's Office 
of Career, Technical, and Adult Education, ED's Rehabilitation Services 
Administration, and DOL's ETA. WIOA presents new opportunities for 
system alignment through performance accountability. The ED and DOL 
envision a performance system whereby all programs' primary performance 
metrics share a common language that supports comparability and 
facilitates enhanced consumer choice and better programmatic decision-
making.
    Proposed Sec.  677.155(a)(1) identifies the six primary indicators 
that will be applied to the core programs identified in sec. 
116(b)(3)(A)(ii) of WIOA. The DOL is also planning to leverage these 
indicators to streamline reporting for other DOL programs, such as the 
JVSG program, and other discretionary grant programs. To that end, the 
Departments invite comments specific to this issue.
    Proposed Sec.  677.155(a)(1)(i) implements the first statutory 
performance indicator in sec. 116(b)(2)(A)(i)(I) of WIOA and requires 
States to report on the percentage of participants in unsubsidized

[[Page 20586]]

employment in the second quarter after exit from the program. This 
statutory language requires States to measure the employment rate of 
participants in the second quarter after exit from the program. In 
contrast, WIA's first indicator of performance required States to 
report on an ``entered employment rate.'' The WIA indicator measured 
individuals who were unemployed at the time of entry into the program 
and after receiving services, obtained employment, thus allowing the 
Departments to evaluate whether the WIA services were effective in 
helping unemployed individuals obtain employment. The proposed WIOA 
indicator is different from WIA's ``entered employment rate'' indicator 
in two ways: (1) The time period for measurement in WIOA is the second 
quarter after exit instead of the first quarter; and (2) the statutory 
language under WIOA does not specify that the indicator is to measure 
entry into employment. The Departments plan to calculate both an 
``employment rate'' for all participants in the program regardless of 
employment status at program entry and an ``entered employment rate'' 
for participants who were unemployed at the time of program entry. The 
Departments seek public comment on whether and how to collect 
information on the quality of employment and how WIOA's programs help 
employed and underemployed individuals find new or better jobs.
    Proposed Sec.  677.155(a)(1)(ii) implements WIOA's second statutory 
primary indicator of performance and is similar to the first, except 
that the time period for measurement is the fourth quarter after exit. 
This statutory language requires States to measure the employment rate 
of participants in the fourth quarter after exit from the program 
without regard to whether those participants were employed in the 
second quarter after exit from the program. Under WIA, this indicator 
is a retention measure that analyzes whether individuals who were 
employed in the first quarter after exiting from WIA services were 
still employed in the second and third quarters. As a retention measure 
such as the approach under WIA, this indicator would have counted 
participants who were employed in the second quarter after exit and 
measured of this group, who were still employed in the fourth quarter 
after exit from the program. The Departments seek comment on the 
advantages and disadvantages of collecting or reporting the employment 
retention rate in addition to the employer rate.
    Proposed Sec.  677.155(a)(1)(iii) implements WIOA's third statutory 
indicator found at sec. 116(b)(2)(A)(i)(III) and measures participants' 
median earnings in the second quarter after exit. This indicator 
measures median earnings at the same time frame as the first indicator 
measures the employment rate of participants. The use of a median is a 
shift from the use of an average under WIA and is based on the language 
provided in WIOA.
    Proposed Sec.  677.155(a)(1)(iv) implements WIOA's fourth statutory 
indicator and measures post-secondary credential attainment and high 
school completion of program participants during participation in the 
program or within 1 year after exit. The proposed regulation defines 
this measure with the same language as the statute and includes the 
statutory language limiting participants who obtain a secondary school 
diploma or its equivalent to be included in the percentage counted as 
meeting the criterion only if the participant is employed or is 
enrolled in an education or training program leading to a recognized 
post-secondary credential within 1 year after exit from the program. 
The Departments specifically seek comment on clarifications that will 
be necessary to implement this indicator.
    Proposed Sec.  677.155(a)(1)(v) measures the percentage of 
participants who, during a PY, are in education or training programs 
that lead to a recognized post-secondary credential or employment, and 
who are achieving measurable skill gains, which the Departments are 
defining as documented academic, technical, occupational or other forms 
of progress, toward the credential or employment.
    The Departments are considering using this indicator to measure 
interim progress of participants who may be enrolled in education or 
training services for a specified reporting period. For example, if a 
participant is enrolled in a 4-year registered apprenticeship program, 
the indicator would track the skills the participant gains throughout 
the reporting period, not just at the end of the 4-year training 
program. For low-skilled adults, this proposed indicator provides an 
opportunity to track progress in reading, writing, mathematics, and 
English proficiency while they are participating in an adult education 
program prior to completing the high school credential and entering 
post-secondary education or training or employment. The measurable 
skill gains indicator will encourage local adult education programs to 
serve all low-skilled adults as Congress intended. Another example 
pertains to a participant who is training for multiple fields in the 
YouthBuild program. Such an individual may be pursuing certifications 
that require several years of experience, specific study hours, and 
demonstration of skills and knowledge prior to the final certification 
exam. The measurable skill gains indicator would capture documented 
progress on interim milestones leading up to the final certification. 
The measurable skill gains indicator is intended to capture important 
progressions through pathways that offer different services based on 
program purposes and participant needs and can help fulfill the 
Departments' vision of creating a workforce system that serves a 
diverse set of individuals with a range of services tailored to 
individual needs and goals.
    In using this indicator as a measure of interim progress of 
participants, the Departments are considering how States can document 
progression during participation in an education or training program in 
a standardized way. Documented progress could include such measures as:
    (1) The achievement of at least one educational functioning level 
of a participant in an education program that provides instruction 
below the post-secondary level;
    (2) attainment of a high school diploma or its equivalent;
    (3) a transcript or report card for either secondary or post-
secondary education for 1 academic year (or 24 credit hours) that shows 
a participant is achieving the State unit's policies for academic 
standards;
    (4) a satisfactory or better progress report, towards established 
milestones from an employer who is providing training (e.g., completion 
of on-the-job training (OJT), completion of 1 year of an apprenticeship 
program);
    (5) the successful completion of an exam that is required for a 
particular occupation, progress in attaining technical or occupational 
skills as evidenced by trade-related benchmarks such as knowledge-based 
exams; and
    (6) measurable observable performance based on industry standards.
    The Departments seek comments on the proposed indicator and request 
comments on the ways States can measure and document participants' 
measurable skill gains in a standardized way, including whether time 
intervals are required and what time intervals might be. The 
Departments also seek comments on whether the performance targets for 
this indicator should be set at the indicator (i.e., measurable skill

[[Page 20587]]

gains) or documented progress measure (e.g., attainment of high school 
diploma) level.
    Proposed Sec.  677.155(a)(1)(vi) implements the sixth statutory 
primary indicator related to effectiveness in serving employers. Under 
WIOA, the Departments are required to consult with stakeholders and 
receive public comment on proposed approaches to defining the 
indicator. As part of this requirement, the Departments have already 
sought public input on performance indicators generally and on the 
business indicators specifically through several avenues, including a 
town-hall meeting that addressed all of the primary indicators, a town-
hall meeting convened with employers, numerous town-halls and webinars 
on WIOA across the country, and consultations with State Administrators 
for the AEFLA and Vocational Rehabilitation (VR) stakeholders. Because 
the Departments have not previously used this indicator, it is 
important to hear from States and stakeholders on what they consider 
core functions of their services to employers in order to best 
determine how to understand and measure the effectiveness of the 
services provided. Additionally, it is critical to hear from employers 
on the attributes of services that they find effective. In drafting the 
potential proposals described below, the Departments consulted with a 
wide range of representatives to develop the indicators of 
effectiveness in serving employers as required by WIOA sec. 
116(b)(2)(A)(i)(VI). See WIOA sec. 116(b)(A)(2)(iv) and 116(b)(4)(B).
    Based on the consultations, the Departments have established 
several potential approaches to measuring the effectiveness of serving 
employers, including potential measures that could be used. One of the 
Departments' principal concerns in crafting a final definition of this 
indicator is minimizing burden that measuring this indicator will 
impose on employers in order to avoid discouraging employer engagement 
with the workforce and education systems. The Departments value the 
interaction of employers with the workforce and education systems and 
do not want to impose any barriers to that interaction. With this in 
mind, the Departments' proposed approaches aim to minimize employer 
burden while still attempting to measure the effectiveness of how the 
Departments' programs serve employers.
    One approach to measure this indicator is to measure employee 
retention rates tied to the employment they obtained after receiving 
WIOA services. Under this approach, States would be required to use 
wage records to identify whether or not a participant matched the same 
Federal employer identification number (FEIN) in the second and fourth 
quarters. This approach has the lowest burden on employers, as it 
requires no action from the employer. Under this approach, WIOA's 
services are effectively serving an employer if that employer hires a 
WIOA participant and the participant is still employed by that employer 
in the fourth quarter (up to a year) after program exit. The 
Departments would be interested in specific comments around the 
feasibility of this, and if it measures the systems' effectiveness in 
serving employers.
    Another potential way to define this indicator would measure the 
repeat/retention rates for employers' use of the core programs. The 
Departments seek comments around this approach, including how States 
could capture this data, the feasibility of capturing and reporting 
this data, and if this indicator would measure the efficacy of the 
services provided to employers.
    The Departments are also considering using the number or percent of 
employers that are using the core program services out of all employers 
represented in an area or State served by the system (i.e., employers 
served) as a measure of the effectiveness of serving employers. 
Employer usage may reflect the effectiveness of the system's ability to 
reach out to employers, convey the services the core programs provide, 
and meet employers' needs. The Departments seek comment on the 
feasibility of capturing this data accurately, the validity of such an 
approach in measuring effectiveness of program services, and the 
usefulness of this approach in managing employer services.
    The Departments are proposing to look at this as a shared indicator 
across programs, as many employers are served by multiple programs. 
Another approach could be to apply this measure to individual core 
programs. The Departments seek comment on the relative merits of each 
approach. The Departments also seek comment about whether a single 
metric for this indicator would sufficiently capture effectiveness in 
serving employers or if this indicator should encompass a combination 
of metrics, including how these metrics could most effectively be 
combined.
    Understanding that an array of programs provide services to 
employers, the Departments seek public comment on additional ways to 
measure the core programs' effectiveness in serving employers.
    Proposed Sec.  677.155(b) applies the six indicators outlined in 
proposed Sec.  677.155(a)(1) to the adult and dislocated worker 
programs under title I of WIOA, the AEFLA program under title II of 
WIOA, and the Vocational Rehabilitation program as amended by title IV 
of WIOA.
    Proposed Sec.  677.155(c) applies the primary indicators of 
performance in proposed Sec. Sec.  677.155(a)(1)(i)-(iii) and (vi) that 
States must include in their Unified or Combined State Plans for the 
Employment Services as amended by WIOA title III. Those indicators of 
performance which apply to the Employment Services are: (1) The 
percentage of program participants who are in unsubsidized employment 
during the second quarter after exit from the program; (2) the 
percentage of program participants who are in unsubsidized employment 
during the fourth quarter after exit from the program; (3) the median 
earnings of program participants who are in unsubsidized employment 
during the second quarter after exit; and (4) the effectiveness in 
serving employers. The Departments also seeks comments on how to best 
measure the Wagner-Peyser Employment Services' effectiveness in serving 
employers.
    Proposed Sec.  677.155(d)(1)-(6) identifies the primary indicators 
of performance that States must to address in their Unified or Combined 
State Plans for the youth program under WIOA title I. The youth 
indicators apply universally to the youth workforce investment program 
and, therefore, apply to in-school and out-of-school youth as defined 
in WIOA sec. 129(a)(1)(B) and (C).
    Proposed Sec.  677.155(d)(1) implements the first statutory 
indicator for youth, which measures the percentage of program 
participants who are in education or training activities, or in 
unsubsidized employment, during the second quarter after exit from the 
program. Under WIA, States report on a placement rate, which measures a 
youth's placement in either education or employment, after exiting from 
the program. The WIOA indicator differs from WIA's placement rate in 
three ways. First, the time period for measurement in WIOA is the 
second quarter after exit instead of the first quarter after exit. 
Second, the placement rate under WIA only allowed post-secondary 
education to be reported; whereas, under WIOA, any education, including 
secondary and post-secondary, is reported. Third, the placement measure 
under WIA excluded those youth who were enrolled in post-secondary 
education, employed, or in the military at the time

[[Page 20588]]

of participation; WIOA's indicators do not make these exclusions. WIA's 
measure provided insight into how many youth came to a program not 
enrolled in post-secondary education, employed, or in the military, and 
then after receiving services, obtained employment or were placed into 
post-secondary education or training program. Under WIOA, this 
indicator does not provide for this exclusion and the Departments' 
proposed indicator measures placement in the second quarter after exit 
of all participants.
    Proposed Sec.  677.155(d)(2) implements the second statutory 
indicator that applies to the WIOA youth program under title I. This 
indicator under sec. 116 of WIOA is similar to the first indicator in 
that it is the percentage of program participants who are in an 
education or training program or in unsubsidized employment in the 
fourth quarter after exit. The Departments propose that this indicator 
measure whether a participant is in education, training or unsubsidized 
employment in the fourth quarter.
    Proposed Sec.  677.155(d)(3) implements the third statutory 
indicator that applies to the youth program under WIOA title I. This 
indicator measures median earnings in the second quarter after 
participants exit from the program. States must report the median point 
for earnings for all program participants in unsubsidized employment in 
the second quarter after exit. This indicator measures earnings in the 
second quarter after exit, which is the same time frame in which the 
States will measure if program participants are in education or 
training activities or unsubsidized employment.
    Proposed Sec.  677.155(d)(4) implements the fourth statutory 
indicator and measures post-secondary credential attainment and high 
school completion of program participants who have exited from the 
youth program under WIOA title I. The language of the proposed 
regulation is the same as the indicator in Sec.  677.155(a)(1)(iv). The 
Departments have provided an in-depth explanation of this in the 
preamble for Sec.  677.155(a)(1)(iv) and therefore, refer readers to 
this section for more information on this definition.
    Proposed Sec.  677.155(d)(5) implements the fifth statutory 
indicator and pertains to measurable skill gains. The language of the 
proposed regulation is the same as the indicator in Sec.  
677.155(a)(1)(v). The Departments have provided an in-depth explanation 
of this in the preamble for Sec.  677.155(a)(1)(v) and refers readers 
to this section for more information on this definition.
    Proposed Sec.  677.155(d)(6) implements the sixth statutory 
indicator and is the same language for the indicator in Sec.  
677.155(a)(1)(vi). The Departments have provided an in-depth 
explanation of this in the preamble for Sec.  677.155(a)(1)(v) and 
refers readers to this section for more information on this definition.
Sec.  677.160 What information is required for State performance 
reports?
    Proposed Sec.  677.160 identifies the information States are 
statutorily required to report in the State performance report under 
WIOA sec. 116(d)(2). The Departments agree that integrated performance 
reports would facilitate assessment of WIOA performance across 
programs. The proposed regulation reorganizes in a more user-friendly 
format the WIOA statutory requirements for the State performance 
reports.
    Section 116(d)(1) of WIOA requires the Departments to provide a 
performance reporting template for each of the performance reports 
required in secs. 116(d)(2)-(4) of WIOA. The Departments will seek 
public comment on the reporting templates through the PRA process. In 
developing these report templates, the Departments will seek to 
maximize the value of the templates for workers, job seekers, 
employers, local elected officials, State officials, Federal policy-
makers, and other key stakeholders, and seek feedback on the formats 
that will be most useful for each audience through the PRA process. The 
Departments will seek to align performance reports to the extent 
possible while maximizing the value of each report for its primary 
audience, in order to have comparable reporting elements across all 
core programs in keeping with the shared statutory performance 
requirements. Aligning the reports and performance definitions will 
create a performance accountability system that is easier to understand 
and assess the effectiveness of States in achieving positive outcomes 
for individuals served by these programs.
    Proposed Sec.  677.160(a) implements the reporting provisions of 
WIOA sec. 116(d)(2) for the State performance reports.
    Proposed Sec.  677.160(a)(1) requires States to report the number 
of participants served and the number of participants who exited from 
each of the core programs identified in WIOA sec. 116(b)(3)(A)(ii).
    Proposed Sec.  677.160(a)(1)(i)-(ii) implements WIOA's statutory 
requirement that the States include a count of the number of 
participants and exiters served that are individuals with barriers to 
employment, disaggregated by those barriers as defined in WIOA sec. 
3(24) and that are co-enrolled in any of the programs in WIOA sec. 
116(b)(3)(A)(ii) in the State performance report. Additional reporting 
information required under WIOA sec. 116(d)(2) in regard to 
participants and exiters are age, sex, and race and ethnicity. The 
provisions of the statute are clear in what is required and the 
Departments have proposed rule text to coincide with the statutory 
language.
    Proposed Sec.  677.160(a)(2) implements WIOA's statutory 
requirement that States include the levels achieved for the primary 
indicators of performance listed in Sec.  677.155 in the performance 
report. This section also requires that the States' performance report 
include disaggregated levels for individuals with barriers to 
employment as defined in WIOA sec. 3(24), as well as age, sex, race, 
and ethnicity as required by sec. 116(d)(2) of WIOA.
    Proposed Sec.  677.160(a)(3)-(7) implements WIOA's statutory 
requirement that States report information on career and training 
services including: (1) Participant and exiter counts by career and 
training services, (2) the performance levels achieved for the primary 
indicators consistent with Sec.  677.155 for career and training 
services, (3) the percentage of participants who are placed into 
training-related employment, (4) the amount of funds spent on each type 
of career and training service, and (5) the average cost per 
participant for participants who received career and training services.
    The Departments propose that these requirements are applied based 
on the applicable services provided by a core program. For example, the 
Employment Services do not provide training services and as such would 
not be required to report on training related information--they would 
only report on the applicable career services that they provide. 
Similarly, the AEFLA program also only provides certain career 
services, through the one-stop delivery system, and as such, reporting 
would only be required with respect to applicable career services that 
the program provides. Requiring programs to report on services they do 
not provide would create an additional and unnecessary reporting 
burden. This interpretation is in line with sec. 504 of WIOA, which 
requires the Departments to simplify and reduce reporting burdens. 
(Further information on the career and training services is found at 20 
CFR 680.150 and 680.200.) Additionally, the Departments interpret these 
provisions as prospective

[[Page 20589]]

provisions that do not require retroactive collection of information.
    Proposed Sec.  677.160(a)(3) implements the requirement for core 
programs to report on the number of participants and exiters in a 
program who received career and training services. Other than the 
proposed limitation that this be reported by a program based on the 
applicable services it provides, the statutory language is clear in the 
requirement and propose to implement as stated.
    Proposed Sec.  677.160(a)(4) requires States to provide information 
on the performance levels achieved for the primary indicators 
consistent with Sec.  677.155 for career and training services for the 
most recent program year and the 3 preceding program years, as 
applicable to the program providing services. The Departments interpret 
this provision to apply to the core programs only with respect to the 
applicable services they provide and have more fully discussed this 
rationale above.
    Proposed Sec.  677.160(a)(5) requires States to include the percent 
of participants in a WIOA title I program who obtained unsubsidized 
employment related to the training received. This provision implements 
WIOA's statutory requirement that States report on training-related 
employment. WIOA sec. 116(d)(2)(G) requires States to report on the 
participants in programs ``authorized under this subtitle.'' Section 
116 is in subtitle A, which does not authorize any programs under WIOA. 
Therefore, the Departments interpret this provision of WIOA to mean 
that States must report on core programs authorized by title I.
    Proposed Sec. Sec.  677.160(a)(6) and (a)(7) require States to 
report on the amount of funds spent on each type of career and training 
service as well as the average cost per participant for participants 
receiving career and training services for the most recent program year 
and the 3 preceding program years. The Departments interpret this 
provision to apply to the core programs only with respect to the 
applicable services they provide as discussed above.
    Proposed Sec.  677.160(a)(8) implements WIOA's statutory 
requirement that States report on the percent of the State's annual 
allotment under WIOA sec. 132(b) that the State spent on administrative 
costs.
    Proposed Sec.  677.160(a)(9) implements the WIOA statutory 
allowance for the collection of information that facilitates 
comparisons of programs with programs in other States. The Departments 
are considering collecting a variety of supplemental information such 
as outcomes for Unemployment Insurance claimants, reportable 
individuals, and other subgroups served by the core programs, as well 
as additional outcomes, such as entered employment (the number of 
individuals who were unemployed when coming into a program and obtained 
employment following program exit) or employment retention (the number 
of people who were employed in a quarter that remained employed in 
subsequent quarters) and information about participants enrolled in 
education or training programs that do not lead to a recognized post-
secondary credential as potential performance information for inclusion 
in the State annual report narratives. The Departments are also 
considering the addition of a supplemental customer service measure, 
which would assess the quality of services provided to American Job 
Center customers. This measure would not be a primary indicator of 
performance, but would be used as a tool for tracking the quality of 
the customer experience. The Departments seek comment on how to 
structure such a measure (e.g., using the net promoter score) and 
whether the inclusion of such a measure would be valuable.
    Proposed Sec.  677.160(a)(10) implements WIOA's requirement that if 
at least one local area within a State is implementing a Pay-for-
Performance contract strategy, the States' title I programs must 
provide a State narrative report that contains the performance 
reporting requirements regarding pay-for-performance contracting 
strategies, including the performance of service providers entering 
into contracts for pay-for-performance strategies and evaluation of the 
design of the programs and the performance strategies. Additionally, 
this provision requires the evaluation of program design and activities 
that require narrative in order to meet the requirements of the 
provision. The Departments interpret this provision to only apply to 
title I programs and only to apply to those States in which Pay-for-
Performance contracting strategies are being implemented. Pay-for-
performance contracting provisions are only included in the title I 
programs. Requiring programs to report on services and contracting 
mechanisms they do not provide or employ would create an additional and 
unnecessary reporting burden. This interpretation is in line with sec. 
504 of WIOA, which requires the Departments to simplify and reduce 
reporting burdens.
    Proposed Sec.  677.160(b) requires States to comply with WIOA sec. 
116(d)(6)(C). This section of WIOA prohibits the disaggregation of data 
for a category in the State performance report if the number of 
participants in that category is insufficient to yield statistically 
reliable information or when the results would reveal personally 
identifiable information about a participant. As written, WIOA sec. 
116(d)(2) requires the performance report to be subject to WIOA sec. 
116(d)(5)(C). However, this section refers to Data Validation, and the 
Departments interpret this reference to require States to comply with 
sec. 116(d)(6)(C) which ensures the Departments receive statistically 
reliable information and protects participants' privacy. The 
Departments will issue guidance on these issues.
    Proposed Sec.  677.160(c) requires that the State performance 
report include a mechanism for electronic access to the State's local 
area and eligible training provider (ETP) performance reports. This 
provision does not require the State to submit the actual local area 
and ETP performance reports with their State report.
    Proposed Sec.  677.160(d) proposes that the Departments will 
require compliance with these requirements in sec. 116 of WIOA as 
explained through joint guidance. The Departments may request 
information on reportable individuals for the purpose of understanding 
the number of individuals who are accessing services, including self-
services and information-only services, and for other purposes, 
including costs.
Sec.  677.165 May a State require additional indicators of performance?
    Proposed Sec.  677.165 is updated to reflect WIOA citations. The 
provision of additional performance indicators proposed by the State 
remains unchanged.
Sec.  677.170 How are State adjusted levels of performance for primary 
indicators established?
    Proposed Sec.  677.170 outlines the process that will be followed 
and the factors that will be considered in determining adjusted levels 
of performance.
    Proposed Sec.  677.170(a)(1) implements the requirement in sec. 
116(b)(3)(A)(iii) that States provide expected levels of performance in 
the Unified or Combined State Plan for the first 2 years of the plan. 
Proposed Sec.  677.170(a)(2) requires the State to submit expected 
levels for the third and fourth year before the start of the third PY 
covered by the Unified or Combined State Plan. This requirement is 
needed to implement the statutory requirement in WIOA sec. 
116(b)(3)(A)(iv)(II) that the

[[Page 20590]]

State reach agreement with the Secretaries on the negotiated levels of 
performance before the start of the third PY.
    Proposed Sec.  677.170(b) requires that the Secretaries will reach 
agreement with the States on negotiated levels of performance based on 
the factors in sec. 116(b)(3)(A)(v) of WIOA, and proposed Sec.  
677.170(c) provides that the Secretaries will disseminate a statistical 
adjustment model that will be used to make the adjustments in the State 
adjusted levels of performance for actual economic condition and 
characteristics of participants including the factors required by WIOA 
sec. 116(b)(3)(A)(viii). The statistical adjustment model must be 
developed after consultation with specified stakeholder groups, 
including appropriate external experts. The Departments request comment 
on whether any additional factors beyond those in the statute should be 
considered in developing the model, and the best approach to updating 
the model as necessary.
    Proposed Sec.  677.170(d)(1) provides for the application of the 
model to the primary indicators for the core programs based on the 
availability of data to sufficiently populate the model. For example, 
baseline data will be required to populate the model. None of the core 
programs will have this data for the new indicators of performance, 
such as the measurable skill gains indicator, until after States have 
begun reporting data for the indicator.
    Proposed Sec. Sec.  677.170(d)(2)-(3) provide our interpretation 
that the model will be applied twice in the PY. Specifically, the model 
will generate an estimate of expected performance to serve as a 
framework for negotiating performance targets for the upcoming PY; the 
model will also be applied at the end of the PY to adjust expectations 
for performance levels based on actual circumstances. This 
interpretation is required by WIOA sec. 116(b)(3)(A)(vii), which states 
that the negotiated levels will be revised based on the model. This 
approach is similar to that utilized under WIA's predecessor, the Job 
Training Partnership Act (JTPA), which applied an objective statistical 
model in order to develop targets and then updated the model based on 
actual circumstances at the end of a PY. Under JTPA, models were 
established for each required indicator and sec. 116 of WIOA intends a 
similar process.
    Proposed Sec.  677.170(e) requires compliance with these 
requirements from sec. 116 of WIOA as explained in joint guidance 
issued by DOL and ED for subsequent programmatic guidance to be issued 
for programs concerning the model, and its application.
Sec.  677.175 What responsibility do States have to use quarterly wage 
record information for performance accountability?
    Proposed Sec.  677.175 implements the requirement in sec. 116(i)(2) 
of WIOA, that States use quarterly wage records, consistent with State 
law, to measure State and local progress on the performance 
accountability measures.
    The use of quarterly wage records is essential to achieve full 
accountability under the WIOA performance accountability system to 
identify high performing States and localities, and, if necessary, to 
provide technical assistance to help improve performance or sanction 
low performing States and localities. Matching participant social 
security numbers against quarterly wage record information is the most 
effective means by which timely and accurate data can be made available 
to the system.
    Proposed Sec.  677.175(a) requires States to use quarterly wage 
record information to measure States' and local areas' progress on the 
adjusted levels of performance for the primary indicators of 
performance. WIOA sec. 116(i)(2) requires the Secretary of Labor to 
make arrangements, consistent with State law, to ensure that the wage 
records of any State are available to other States to carry out the 
State plan or to complete the 116(d) annual report. Proposed Sec.  
677.175(a), therefore, expressly authorizes the use of participants' 
social security numbers to measure participants' progress through 
quarterly wage records.
    Section 136(f)(2) of WIA required the Secretary of Labor to make 
arrangements to ensure that wage records of each State are available to 
any other State. Under this requirement, the Secretary worked with the 
States to create the Wage Record Interchange System (WRIS) and WRIS2. 
WRIS and WRIS 2 are automated networks that allow participating States 
to query the wage records of other participating States for the purpose 
of assessing and reporting on State and local employment, training, and 
education program performance. WRIS 2 allows States to share 
information for the purposes of reporting on outcomes for employment, 
training, and education programs and currently has approximately 36 
States participating. WRIS was narrower and only allowed for reporting 
on outcomes for employment and training programs; there are currently 
50 States participating in WRIS. These data sharing agreements greatly 
increased accuracy in States' performance reporting and helped the 
Departments evaluate the effectiveness of educational and training 
programs. Given that WIOA expands the common performance measures and 
common reporting standards across all WIOA programs, including 
employment, education and training programs, the Departments intend to 
engage in a renegotiation of WRIS data sharing agreements with States, 
which will allow States to conduct interstate wage matches for all WIOA 
programs.
    Proposed Sec.  677.175(b) defines quarterly wage record information 
as the intra and interstate wages paid to an individual, the social 
security number of the individual, and the name, address, State, and 
the FEIN of the employer paying the wages to the individual. This 
definition clarifies that the Departments interpret WIOA's reference to 
quarterly wage records in sec. 116(i)(2) to mean all of the wages an 
individual earned in any State. In today's economy, WIOA participants 
may receive services in one State and have work, or have wages 
reported, in another State. Therefore, in defining ``quarterly wage 
records'' as the interstate and intrastate wages, the Departments hope 
to encourage States to conduct interstate wage queries to accurately 
report on an individual's wages after participating in a WIOA program.
3. Subpart B--Sanctions for State Performance and the Provision of 
Technical Assistance
Sec.  677.180 What State actions are subject to a financial sanction 
under Workforce Innovation and Opportunity Act sec. 116?
    Proposed Sec.  677.180 outlines performance and reporting 
requirements that are subject to sanctions under sec. 116(f) of WIOA.
    Proposed Sec.  677.180(a) provides that only the failure to submit 
the State annual performance reports required under sec. 116(d)(2) of 
WIOA is sanctionable. Section 116(f)(1)(B) of WIOA requires the 
Departments to assess a sanction if ``a State fails to submit a report 
under subsection (d) for any PY.'' There are three reports required 
under sec. 116(d): the State annual performance reports, the local area 
performance reports, and the ETP performance reports. However, of 
these, only the State annual performance reports must be submitted by 
the State to the Secretary of Labor and the Secretary of Education.
    Proposed Sec.  677.180(b) implements the requirement in sec. 
116(f)(1) of WIOA

[[Page 20591]]

that sanctions for performance failure be based on the primary 
indicators of performance at Sec.  677.155 of this part for the core 
programs: the adult, dislocated worker, and youth programs under WIOA 
title I, the AEFLA programs under title II, the program under the 
Employment Services authorized by the Wagner-Peyser Act, as amended by 
title III, and the Vocational Rehabilitation program under the 
Rehabilitation Act of 1973, as amended by title IV.
Sec.  677.185 When are sanctions applied for failure to report?
    Proposed Sec.  677.185 outlines the circumstances under which a 
State may be sanctioned for failure to report under sec. 116(f)(1)(B) 
of WIOA.
    Under proposed Sec.  677.185(a)(1), it would be a failure to report 
if a State submits its annual performance reports on any date later 
than the date for submission set in guidance. The Departments propose 
to deem any late submission a failure to report because the Departments 
are concerned that setting the date for reporting failure at some later 
time would effectively extend the deadline for submission of the 
reports. The date for submission will be set in guidance by the 
Departments. In addition, under Sec.  677.185(a)(2), the Departments 
propose that it would be a failure to report if the State submits a 
report on a timely basis, but the report is incomplete, including 
failure to include a mechanism to access the local area performance 
reports and ETP performance reports. This proposal is based on the 
Departments' concern that if only timeliness is required, States could 
not be sanctioned for submitting reports that do not meet statutory 
requirements for reporting elements. If a State fails to submit a State 
annual performance report, it will be subject to a 5 percent sanction 
of the Governor's Reserve allotment as discussed in Sec.  677.195 of 
this part.
    Proposed Sec.  677.185(b) outlines the exceptional circumstances 
that would exempt a State from sanction in the case of failure to 
report under WIOA sec. 116(f)(1)(B). The statute provides that a 
failure to report can be excused by either Secretary in the case of 
exceptional circumstances but does not define these circumstances. This 
proposal provides a non-exclusive list of exceptional circumstances 
beyond the State's control that would be likely to cause a significant 
disruption in the State's ability to submit timely, accurate, and 
complete performance reports. Reporting challenges that are routine or 
predictable would not qualify, because the statute requires the 
exception to be based on circumstances that are exceptional.
    Under proposed Sec.  677.185(c)(1), the Departments would require 
States to notify the Secretary of Education or Labor of exceptional 
circumstances as soon as possible but no later than 30 days prior to 
the established deadline for the State annual reports to request an 
extension to the reporting deadline. This minimum 30-day period for 
notification would provide the Secretaries with adequate opportunity to 
review the extension request and assess whether the circumstances 
underlying the request fit within the statutory exception.
    Proposed Sec.  677.185(c)(2) deals with circumstances where an 
exceptional circumstance arises less than 30 days before the reporting 
deadline. Under this proposal, the Secretaries will review the request 
under guidance that the Departments will issue to deal with procedures 
for extension requests with less than 30 days' notice.
Sec.  677.190 When are sanctions applied for failure to achieve 
adjusted levels of performance?
    Proposed Sec.  677.190 explains how States will be assessed for 
performance failure and when such failures will result in a financial 
sanction. Though the Departments have referenced other non-core 
programs in previous sections, performance success or failure will be 
based solely on the six core programs consistent with sec. 116(b)(2) 
and (f)(1) of WIOA.
    Proposed Sec.  677.190(a) explains, consistent with Sec.  677.170, 
that the statistical adjustment model will be applied at the end of a 
PY to adjust expected levels of performance based on actual economic 
conditions experienced and the characteristics of participants.
    Proposed Sec.  677.190(b) clarifies that a determination that a 
State has failed performance will be based on the performance levels 
achieved after the application of the statistical adjustment model, 
pursuant to WIOA sec. 116(f)(1) which states that sanctions must be 
assessed if a State fails to meet adjusted levels of performance. In 
addition, this proposed section restates statutory language that 
requires the Secretary of Labor or Education to provide technical 
assistance, as appropriate, to include assistance with the development 
of a performance improvement plan in any year when a State fails to 
meet the adjusted levels of performance.
    Proposed Sec.  677.190(c) outlines the three criteria that will be 
used to assess a State's performance at the end of a PY: An overall 
State program score, an overall State indicator score, and individual 
indicator scores. The overall State program score would be an average 
score based on the percent of the State adjusted goal achieved on each 
of the six primary indicators for a core program. The overall State 
indicator score would be based on an average score of the percent of 
the State adjusted goal achieved across core programs on each of the 
six primary indicators. The individual indicator scores would be based 
on the percent of the State adjusted goal achieved on any single 
primary indicator for each of the six core programs.
    Table 1 below illustrates the manner in which each State is 
proposed to be assessed using the overall State program score and the 
overall State indicator score. Under this proposal, a failing average 
program score for any core program, a failing average indicator score 
for any indicator across programs, or a failing score on any individual 
indicator for each of the core programs would be a performance failure 
under sec. 116(f)(1) of WIOA. The Departments propose this approach 
because it provides accountability for all programs and all measures. 
For example, a State that on average falls below its median earnings 
target threshold across all programs would be subject to sanctions even 
if its performance on other indicators is satisfactory. The Departments 
seek comment on whether to use a weighted average or a straight average 
for purposes of each overall indicator score.

[[Page 20592]]

[GRAPHIC] [TIFF OMITTED] TP16AP15.000

    As shown in Table 1, there are a total of 12 scores on which a 
State will be assessed for the proposed overall State indicator score 
and overall State program score criteria proposed. The first six 
averages on which a State is assessed are the average indicator scores 
across the core programs. The second six averages on which a State is 
assessed are the average program scores across each of the six 
indicators. The first six scores will be the average of the core 
programs' percent achieved against their adjusted goals on the first 
indicator (employment in the second quarter after exit). The second six 
scores are the average of the core programs' percent achieved against 
their adjusted goals on the second indicator (employment in the fourth 
quarter after exit). For the Employment Services, the Departments 
propose to exclude indicators four and five because WIOA exempts the 
Employment Services from these indicators. Therefore, the Departments 
propose that the program score for the Employment Services be comprised 
of the total average score of the percent achieved by the States' 
Employment Services against their targets for indicators one, two, 
three, and six only. In addition, the Departments propose to phase in 
the inclusion of the measurable skills gain and effectiveness in 
serving employers indicators.
    Proposed Sec.  677.190(d) establishes two thresholds for 
performance failure. The first threshold at proposed Sec.  
677.190(d)(1) is 90 percent for each of the overall State program 
scores and the overall State indicator scores. The Departments are 
considering potentially setting this threshold higher to emphasize the 
importance of performance success and would be interested in specific 
comments on the established levels for success/failure in assessing 
performance under WIOA for the core programs. The second threshold in 
proposed Sec.  677.190(d)(2) establishes a minimum threshold of 50 
percent for the individual indicator scores. The Departments consider 
this minimum threshold of performance critical for the purpose of 
underscoring the need to achieve and maintain successful performance 
with respect to each individual performance indicator, regardless of 
average performance across performance indicators and across core 
programs. The Departments seek comment on the implications of the 
proposed methodology, including the three criteria and associated 
thresholds for failure established under this proposed regulation 
(i.e., the overall State indicator score [90 percent of adjusted goal], 
the overall State program score [90 percent of adjusted goal], and the 
individual indicator scores [50 percent of adjusted goal]).
    The Departments also request comments generally on how to define 
``fails to meet the State adjusted levels of performance'' and 
specifically on the methods described above.
    The Departments seek comment on the specific timelines for 
reporting outcomes on the core indicators of performance as well as the 
timing for using the annual State report to determine success or 
failure against adjusted levels of performance. Under WIA's performance 
accountability provisions, titles I and II use the performance 
information reported in the State's annual reports. Under WIA, these 
data have a built-in time-lag. WIOA establishes an employment indicator 
that extends the time-lag even further. The fourth quarter employment 
indicator would not be available until six quarters after a participant 
has exited. Given the inherent lag, by statutory definition, in the 
indicators, the Departments seek comment on the specific operational 
timelines for determining which performance outcomes to use for 
assessing performance. Specifically, the Departments seek comment on 
which State report should be the first annual State report used to 
assess performance against the State's adjusted levels of

[[Page 20593]]

performance. In the event of performance failure in the first year, the 
Departments are seeking comment on when the performance improvement 
plan should be developed and, in the event there is performance failure 
in the second consecutive year, when the financial sanction should be 
applied. To the extent possible, the Departments would like to tie 
ultimate imposition of financial sanction with the performance 
improvement plan process, such that States have the chance to avoid 
financial sanction if they successfully execute the reforms included in 
their performance improvement plan. The Departments welcome comment on 
how best to accomplish this goal.
    In addition to timelines for calculating a State's performance 
against its adjusted levels of performance, the Departments seek 
comment on the timelines for implementing the full accountability 
system to include determining performance failure for sanctions. 
Because WIOA introduces new indicators on which no historical data 
exist, there is a need to establish baseline benchmarks from which to 
establish adjusted levels of performance under WIOA. For this reason, 
the Departments seek comment on the transition timing of the 
performance accountability system as WIOA is implemented.
    Proposed Sec.  677.190(e) outlines the statutory process under 
which performance failure by any State for 2 consecutive years will 
result in a performance sanction.
Sec.  677.195 What should States expect when a sanction is applied to 
the Governor's Reserve Allotment?
    Proposed Sec.  677.195 explains what will occur when a sanction is 
applied to the Governor's Reserve for failure to report or failure to 
meet adjusted levels of performance. It clarifies that the sanction 
will be 5 percent of the amount that could otherwise be reserved by the 
Governor. Section 116(f)(1)(B) of WIOA provides that ``the percentage 
of each amount that would . . . be reserved by the Governor under 
section 128(a) [Governor's Reserve fund] . . . shall be reduced by five 
percentage points.''
    This provision is ambiguous and could be interpreted to require a 
percentage point reduction in the overall State allotment that could 
otherwise be reserved by the Governor. For example, under a percentage 
point-based interpretation, if the total State allotment was one 
million dollars, and the Governor could reserve 15 percentage points of 
the State allotment for a total of $150,000 reserved, the reduced 
amount of the Governor's Reserve after a sanction of five percentage 
points would be 10 percent of the State allotment (i.e., $100,000).
    The better reading is that the maximum amount that could otherwise 
be reserved would be reduced by 5 percent. For example, under this 
scenario, if the State allotment was one million dollars, and without a 
sanction the Governor could reserve $150,000, the amount of the 
Governor's Reserve after sanctions would be 95 percent of the amount 
that could otherwise be reserved (i.e., $142,500), or in other words, 
the $150,000 reserve less the 5 percent sanction. This is a better 
reading because a reading that required a reduction of percentage 
points of the overall allotment, rather than the percentage reserved by 
the Governor, would be unnecessarily punitive and inconsistent with the 
overall intent of WIOA. The Departments are further concerned that such 
an extreme reduction would frustrate the State's ability to take 
actions to improve performance or submit timely, complete, and accurate 
performance reports in the future.
    Proposed Sec.  677.195(b) clarifies that if, in the same PY, a 
State fails under proposed Sec.  677.195(a)(1), failure to report in 
any given PY, and fails under proposed Sec.  677.190(a)(2), failure to 
meet adjusted levels of performance for 2 consecutive program years, 
then sanctions in the amount of 5 percent will be applied for each of 
these failures. The maximum sanction therefore that could be applied to 
a State in any given PY is 10 percent of the maximum available amount 
of the Governor's Reserve allotment--for failure to submit a 
performance report and for failure to meet adjusted levels of 
performance for 2 consecutive program years. The Departments are 
seeking comment on this interpretation of the language under WIOA sec. 
116(f), as well as the implications of this proposed regulation. The 
Departments also note that the application of sanctions against the 
Governor's Reserve does not preclude the Departments from pursuing 
other avenues of enforcement as permitted under applicable laws.
    Proposed Sec.  677.195(c) clarifies the statutory requirement in 
sec. 116(f)(1)(B) of WIOA that a sanction be applied until such a time 
as the Secretaries of Education and Labor determine that performance 
levels have been met and the State annual performance reports have been 
submitted. The immediately following PY is the first point at which the 
Departments could reasonably determine that a State that has previously 
failed performance has met adjusted levels of performance because the 
statistical adjustment model is only applied at the beginning and the 
end of the year and not at the time of the quarterly reports. The 
Departments interpret this statutory provision to mean that the 
reduction continues for the entire PY with no earn-back potential. This 
interpretation is consistent with the imposition of a sanction. If a 
State could earn its full reserve allotment even if it submitted its 
State annual performance report 6 months after the deadline, reporting 
deadlines would be undermined and there would be little incentive for 
timely reporting. In addition, appropriations law prevents us from 
redistributing funds in a later PY. Finally, the proposal clarifies 
that the State will continue to have a sanction at the reduced amount 
of the total allotment of the Governor's Reserve in successive PYs if 
they continue to fail to meet expected levels of performance, or fail 
to report.
    All performance reports required under sec. 116(d) of WIOA, are 
critically important for accountability purposes; however, as discussed 
above for proposed Sec.  677.180, because the State annual performance 
reports are the only of these reports submitted by the State to the 
Departments, they are the only reports that are subject to sanctions. 
All required reports must be provided on a timely basis irrespective of 
the applicability of sanctions.
    Proposed Sec.  677.195(d) identifies that a State may request a 
review of any sanction DOL imposes in accordance with the provisions 
outlined in 20 CFR 683.800.
    The Departments also request comments on the specific approach 
outlined above, as well as generally on (1) how to define ``fails to 
meet the State adjusted levels of performance,'' and (2) how to 
operationalize the Departments' approach to applying sanctions for both 
failure to submit a performance report and performance failure (i.e., a 
maximum sanction of 10 percent), including when sanctions should be 
applied. The Departments are considering whether failure to submit a 
performance report would automatically constitute failure to meet State 
adjusted levels of performance, resulting in the maximum sanction of 10 
percent (5 percent for failure to submit a performance report and 5 
percent for failure to meet State adjusted levels of performance). In 
order to encourage States to submit the performance report and avoid 
the maximum potential sanction, the Departments are considering a 
definition of performance failure that would provide a final deadline 
for the States to submit their performance data and avoid a sanction

[[Page 20594]]

for failure to meet the State's adjusted levels of performance.
Sec.  677.200 What other administrative actions will be applied to 
States' performance requirements?
    Proposed Sec.  677.200 outlines the circumstances under which a 
State will be subject to additional administrative actions when 
determined to be at risk due to low performance on an individual 
primary indicator.
    Proposed Sec.  677.200(a) identifies the circumstances under which 
administrative actions would be triggered outside of the sanctions 
process. While States' performance on the primary indicators will be 
aggregated into an overall program score and overall indicator score to 
assess performance failure, the individual indicators will be assessed, 
as explained in guidance, in order to establish whether a program's 
performance is at risk. While sanctions are based on performance and 
reporting failures, the Departments want to foster a workforce system 
that is focused on achieving success, not just avoiding failure. Early 
intervention in the event of performance problems is necessary for 
States to achieve successful outcomes. Accordingly, to assist the 
States in performing well for all one-stop customers, the Departments 
propose alternate administrative actions for performance issues that do 
not rise to the level of sanctionable failure.
    Under proposed Sec.  677.200(b) if a single primary indicator for a 
State's programs is determined to be at risk, as explained in guidance 
issued by DOL or ED, the State must develop and submit a performance 
risk plan to outline the primary reasons for low performance and the 
steps they are taking to improve performance and ameliorate the risk 
for that indicator or indicators. This will require States to take a 
proactive approach to addressing performance concerns before they rise 
to the level of failure. The Departments propose that the levels set 
for administrative actions will be explained in guidance so that the 
Departments can adjust the levels as needed as the Departments gain 
programmatic experience with the new WIOA performance measures. As 
these levels will not be the subject of financial sanctions but are 
instead within the Departments' general monitoring responsibilities, 
the inclusion of the levels in regulation is not required.
4. Subpart C--Local Performance Accountability for Workforce Innovation 
and Opportunity Act Title I Programs
Sec.  677.205 What performance indicators apply to local areas?
    Proposed Sec. Sec.  677.205(a) and (b) implement sec. 116(c) of 
WIOA and clarify that for the core programs under title I of WIOA each 
local workforce area will be subject to the same primary indicators as 
States, although Governors may elect to apply additional performance 
indicators to local areas. Proposed Sec.  677.205(c) outlines and 
explains that local area reports are required to be reported on the 
standard template that the Departments will provide under WIOA sec. 
116(d)(1); be made available to the public on an annual basis, 
including by electronic means; and must include, at a minimum, the 
local areas' performance levels achieved with respect to the primary 
indicators under Sec.  677.155 as well as additional information States 
are required to report under WIOA sec. 116(d)(3). This section largely 
summarizes statutory language in WIOA and establishes the proposed 
framework for guidelines and instructions that the Departments plan to 
issue later to implement and carry out the performance reporting 
requirements of WIOA sec. 116. In addition, proposed Sec.  677.205(c) 
requires the State to provide electronic links to the local area 
performance report as part of its annual State performance report. The 
Departments propose this requirement because while WIOA sec. 
116(d)(6)(B) requires the State to make the local report publicly 
available, sec. 116(d)(6)(D) requires the Secretaries to disseminate 
these reports to Congress. The proposal will enable the Departments to 
fulfill this statutory requirement.
    Proposed Sec. Sec.  677.205(d) and (e) outline the minimum required 
information to be provided in those reports consistent with sec. 
116(d)(3) of WIOA. Under proposed Sec.  677.205(d), the local area 
reports must contain information on actual performance levels achieved 
(consistent with Sec.  677.175, regarding the use and aggregation of 
interstate and intrastate wage records) on the primary indicators as 
outlined in Sec.  677.155. Under proposed Sec.  677.205(e), States must 
also make available performance information for their local areas for 
the adult, dislocated worker, and youth programs under WIOA title I 
consistent with Sec.  677.160(a). States are also required to make 
available information on the percentage of a local area's allotment 
under WIOA sec. 128(b) and 133(b) that the local areas spent on 
administrative costs as well as any other information that may be 
proposed in guidance from the Secretary of Labor to facilitate 
comparisons of programs, with other programs in local areas or planning 
regions as deemed appropriate.
    Proposed Sec.  677.205(f) reiterates that States are responsible 
for compliance with any associated guidance, including the use of the 
performance reporting template, issued by the Secretary of Labor for 
compliance with local area performance reporting requirements.
Sec.  677.210 How are local performance levels established?
    Proposed Sec.  677.210 describes the process to be utilized to 
establish local performance targets prior to the start of a PY and, 
subsequently, to establish performance levels based on actual 
circumstances at the conclusion of a PY. The proposed process is 
similar to the proposed language for establishing State performance 
levels, including the negotiations process, which is proposed to be 
developed and disseminated by the Governor and conducted with the Local 
Boards and CEOs.
    Proposed Sec.  677.210(a) implements the requirements of sec. 
116(b)(3)(A)(viii) of WIOA to apply a statistical adjustment model in 
the establishment of local area adjusted levels of performance. It 
requires the Departments to run the model at the beginning of a PY and 
at the end of the PY to revise adjusted levels of performance based on 
actual conditions experienced and the characteristics of participants.
    Proposed Sec.  677.210(b)-(c) requires that the Governor, Local 
Board, and CEO reach agreement on local targets and adjusted levels of 
performance based on a negotiations process prior to the start of a PY. 
The Governor is to establish a negotiations process and disseminate it 
to all of the Local Boards and CEOs.
    Proposed Sec.  677.210(d) states that Local Boards have the 
authority to establish performance targets for service providers in a 
local area. Setting performance targets will help local areas in 
evaluating the performance of service providers, managing programs at 
the local level, and determining whether to maintain or change 
providers. This also allows locals some flexibility in the way they 
structure their service delivery design while taking into account the 
performance requirements for a local area. The Departments suggest that 
the local area should consider its negotiated local performance levels, 
the services to be provided by each provider, and populations the 
service provider is

[[Page 20595]]

intended to serve in developing these targets. Targets may vary by 
provider and may be different from the local area's performance 
measures.
5. Subpart D--Incentives and Sanctions for Local Performance for 
Workforce Innovation and Opportunity Act Title I Programs
Sec.  677.215 Under what circumstances are local areas eligible for 
State Incentive Grants?
    Proposed Sec.  677.215 outlines the circumstances in which a local 
area is eligible for an incentive grant.
    Proposed Sec.  677.215(a) implements sec. 116(h) of WIOA and 
explains that the Governor is not required, but is allowed to use non-
Federal funds to create incentives for Local Boards to implement pay-
for-performance contract strategies for the delivery of training 
services described in sec. 134(c)(3) and sec. 129(c)(2) of WIOA in the 
local areas served by the Local Boards.
    Proposed Sec.  677.215(b) maintains that pay-for-performance 
contract strategies must be implemented in accordance with 20 CFR 
683.500 through 683.530 and Sec.  677.160.
Sec.  677.220 Under what circumstances may a corrective action or 
sanction be applied to local areas for poor performance?
    Proposed Sec.  677.220(a) explains the circumstances under which 
local areas must receive technical assistance under WIOA sec. 116(g) 
for failure to meet levels of performance. In accordance with WIOA, the 
proposed rule would require that local areas must receive technical 
assistance and may be subject to a performance improvement plan for 
failure to achieve adjusted levels of performance established with the 
State for primary performance indicators in the adult, dislocated 
worker, or youth programs authorized under title I of WIOA in any PY. 
The Governor, or his/her designee, or upon request of the Governor, the 
Secretary of Labor, must provide technical assistance, which may 
include assistance in the development of a performance improvement plan 
or a modified local or regional plan, to the local area in the first 
year of failure to meet levels on the required performance indicators. 
In requesting assistance from the Secretary of Labor, the Governor's 
request should include the factors that impede the provision of 
successful technical assistance at the State level, because the State 
is generally in the best position to address failure to meet the 
performance levels it negotiated with the local area. The Departments 
further clarify that a State must establish the threshold for failure 
for a local area to meet levels of performance prior to negotiating 
local area adjusted levels of performance. A local area cannot 
accurately negotiate adjusted levels of performance without having an 
understanding of what the State will consider failure.
    Proposed paragraph (b), in accordance with WIOA, outlines the 
required corrective actions for local areas that continue to fail to 
meet performance indicators for 3 consecutive years. A local area that 
failed to meet adjusted levels of performance on required performance 
indicators for a third consecutive year is subject to reorganization, 
which would include the certification of a new Board, the exclusion of 
underperforming service providers or partners, and other actions the 
Governor deems appropriate. The Departments request comments regarding 
what other actions should be considered in this circumstance.
Sec.  677.225 Under what circumstances may local areas appeal a 
reorganization plan?
    Proposed Sec.  677.225 implements sec. 116(g)(2)(B) of WIOA and 
outlines when a local area and CEO may appeal a reorganization plan 
executed by the Governor.
    Proposed Sec.  677.225(a) explains that the Local Board and CEO for 
a local area subject to a reorganization plan under WIOA sec. 
116(g)(2)(A) may appeal to the Governor to rescind or revise a 
reorganization plan no later than 30 days after receiving notice of the 
reorganization plan. The Governor must make a final decision 30 days 
after receipt of an appeal.
    Proposed Sec.  677.225(b) implements the statutory requirement that 
if the Local Board and CEO wish to appeal the final decision of the 
Governor, they must make an appeal to the Secretary of Labor no later 
than 30 days after receiving the final decision from the Governor. The 
Departments propose to require that any appeal to the Governor under 
proposed Sec.  677.225(a) or the Secretary of Labor under proposed 
Sec.  677.225(b) must be submitted jointly by the Local Board and the 
CEO. The Departments propose this interpretation because the statute 
uses the conjunctive ``and'' in stating that the Local Board and the 
CEO may appeal. In addition, this interpretation has the benefit of 
requiring review only in circumstances where the Local Board and CEO 
are in agreement that the reorganization plan should be appealed and 
will conserve government resources in cases where either the Local 
Board or CEO agrees with the Governor's decision. This approach also 
avoids duplication and inefficiency that would be engendered by 
providing an opportunity for the Local Board and the CEO to appeal 
separately.
    Proposed Sec. Sec.  677.225(c)-(d) implement statutory requirements 
that the Secretary must make a final decision regarding an appeal 
within 30 days of receipt of the appeal and that a reorganization 
decision made by the Governor is effective at the time it is issued and 
remains in effect unless and until such time that the Secretary of 
Labor rescinds or revises the reorganization plan on appeal.
6. Subpart E--Eligible Training Provider Performance for Workforce 
Innovation and Opportunity Act Title I Programs
Sec.  677.230 What information is required for the eligible training 
provider performance reports?
    Proposed Sec.  677.230 implements the requirements of sec. 
116(d)(4) of WIOA, which requires annual ETP performance reports. The 
ETP performance reports provide critical information, including the 
employment, earnings, and credentials obtained by individuals in the 
programs of study eligible to receive funding under the adult and 
dislocated worker formula programs under title I-B of WIOA. This 
information will be of significant benefit in assisting WIOA 
participants and members of the general public in identifying effective 
training programs and providers. The information will also benefit 
providers by widely disseminating information about their programs and 
potentially as a tool to enhance their programs.
    The Departments are seeking comment on how the Departments may best 
support ETPs in meeting the requirements of this section as well as how 
to make the ETP reports a useful tool for WIOA participants, ETPs, 
interested stakeholders, and the general public.
    This proposed regulation, in conjunction with proposed Sec.  
680.400 through 680.530, establishes the minimum requirements for 
performance information to be provided in the ETP performance reports.
    Proposed Sec.  677.230(a) requires that States make publicly 
available and publish in the standard template disseminated by the 
Departments under ETP performance reports under WIOA sec. 116(d)(4), 
including by electronic means, the ETP reports for those ETPs who 
provide services under sec. 122 of WIOA, which is further discussed in 
20 CFR 680.500.
    Consistent with proposed Sec.  680.470, and as provided below in 
proposed paragraph (b) of the section, States are

[[Page 20596]]

only required to provide performance information on registered 
apprenticeship programs if these programs voluntarily submit 
performance information. DOL is considering ways to support interested 
registered apprenticeship programs in the collection and dissemination 
of performance data. The Department seeks comment on ways to support 
registered apprenticeship programs that are interested in providing 
performance information, and what that information might look like.
    Proposed Sec.  677.230(a)(1) outlines the minimum participant 
performance information that is required to be made available under the 
statutory provisions in sec. 116(d)(4) of WIOA. ETP performance reports 
must include performance information on the total number of 
participants who receive training services under the adult and 
dislocated worker programs of WIOA title I for the most recent PY of 
performance as well as the three preceding PYs. The ETP reports must 
provide disaggregated counts of participants in the adult and 
dislocated worker programs with respect to barriers to employment, age, 
sex, and race and ethnicity.
    Additionally, the ETP performance reports must include counts of 
participants disaggregated by type of training entity for the adult and 
dislocated worker programs for the most recent PY and three preceding 
PYs. The Departments interpret this requirement to be applicable only 
in prospective years; this would not apply retroactively and would not 
require ETPs to provide information for these reports in years prior to 
being established as an ETP in the performance reports. Any data 
provided for initial eligibility determinations should be done 
consistent with established parameters under 20 CFR part 680, subpart 
E.
    Proposed Sec.  677.230(a)(2) outlines the minimum exit-based 
performance information that is required to be made available under the 
statutory provisions in sec. 116(d)(4) of WIOA. At a minimum, the ETP 
performance reports must contain the number of participants who exit 
from a program of study, and the total number of participants who 
exited, disaggregated by type of training entity for a PY and the three 
preceding PYs.
    Proposed Sec.  677.230(a)(3) identifies additional requirements 
that the ETP performance reports contain performance information on the 
average cost-per-participant for participants who received training 
services and disaggregated by type of training entity for the PY and 
three preceding PYs. The Departments interpret this requirement to be 
applicable only in prospective years; this would not apply 
retroactively, and does not require ETPs to provide information for 
these reports in years prior to being established as an ETP. The 
Departments seek comment on the best way to calculate cost-per-
participant. Any data provided for initial eligibility determinations 
should be done consistent with established parameters under 20 CFR part 
680, subpart E.
    Proposed Sec.  677.230(a)(4) provides that the ETP performance 
reports contain information on the total number of individuals exiting 
from a program of study (or its equivalent). This includes all students 
in a program of study and is not limited to those students who are WIOA 
participants. Including all students provides significantly better 
information on the effectiveness of a program of study.
    Proposed Sec.  677.230(a)(5) reiterates the statutory requirements 
for outcome information on all students in a program of study with 
regard to the primary indicators of performance (as identified in 
clauses (I)-(IV), sec. 116(b)(2)(A)(i) of WIOA, and Sec. Sec.  
677.155(a)(1)(i)-(iv)).
    Proposed Sec.  677.230(b) is consistent with 20 CFR 680.470 and 
provides that registered apprenticeship programs need not submit 
performance information. Under this proposal, if a registered 
apprenticeship program voluntarily submits this information, it must be 
part of the report as with any other training provider.
    Proposed Sec.  677.230(c) requires the State to provide electronic 
access to the eligible training provide performance report as part of 
its annual State performance report. The Departments propose this 
requirement because while WIOA sec. 116(d)(6)(B) requires the State to 
make the ETP performance report available, sec. 116(d)(6)(D) requires 
the Secretaries to summarize and disseminate these reports to Congress. 
The proposal will enable the Departments to fulfill this statutory 
requirement.
    Proposed Sec.  677.230(d) requires States to follow reporting 
guidance to be issued that will explain and clarify procedures 
governing this section.
    Proposed Sec.  677.230(e) establishes that a Governor may designate 
one or more State agencies or appropriate State entities, such as a 
State education agency or State educational authority, to assist in 
overseeing the ETP performance and facilitating the production and 
dissemination of ETP performance reports. These agencies may be the 
same agencies that are designated responsible for administering the ETP 
list as provided for in Sec.  680.210. The designated State agency or 
entity is responsible for data matching required to produce the ETP 
reports using quarterly wage data, creating and disseminating the 
reports, and coordinating the dissemination of the performance reports 
with the ETP list as provided in Sec.  680.210.
    Proposed Sec.  677.230(e)(1) establishes that the designated agency 
would be responsible for the facilitating the data matches necessary to 
develop and compile the ETP performance reports. This proposed 
regulation seeks to provide a foundation for data matching for the 
purposes of these reports to allow States more opportunities to 
establish the necessary connections and procedures that are in 
compliance with the existing regulations governing education data 
governed by the Family Educational Rights and Privacy Act (FERPA) and 
the UI wage data governed by State law and UI Confidentiality 
Regulations found in 20 CFR part 603.
    Proposed Sec.  677.230(e)(2) establishes that the designated State 
agency or State entity responsible for these reports would carry the 
responsibility for the creation and dissemination requirements found in 
this subsection. The Departments recognize that the ETP performance 
reports are a departure from the previous reporting mechanisms related 
to ETPs as they existed under WIA. The Departments are seeking comment 
on specific aspects of this new performance reporting requirement as it 
relates to reporting burden for training providers under this 
requirement. The Departments are interested in comments on ways the 
Departments may reduce this burden for training providers as well as 
how the Departments may leverage this performance reporting requirement 
to be of more use to the ETPs. The Departments would like specific 
comments on what would facilitate the reporting process to make it 
easier for ETPs to report on multiple programs of study, including 
programs that they would like to be on the list but do not have 
currently any WIOA funded participants enrolled.
    Proposed Sec.  677.230(e)(3) establishes the designated State 
agency or State entity as responsible for coordinating the 
dissemination of the ETP performance reports with the dissemination of 
the ETP list. WIOA sec. 122 establishes the ETP list as a key resource 
in the State one-stop system and requires it to be available to 
individuals seeking information on training programs as well as 
participants receiving career services funded under WIOA and other 
programs. DOL

[[Page 20597]]

considers the ETP reports to also be a key component of consumer 
choice.
    The Departments propose that the ETP performance report be 
disseminated in coordination with the dissemination of the ETP list and 
the information that is required to accompany that list under Sec.  
680.500. This coordination requirement is consistent with the statutory 
emphasis on consumer choice and performance accountability.
7. Subpart F--Performance Reporting Administrative Requirements
Sec.  677.235 What are the reporting requirements for individual 
records for core Workforce Innovation and Opportunity Act title I, III, 
and IV programs?
    Proposed Sec.  677.235 outlines the requirements for core WIOA 
title I, III and IV programs for the collection and submission of 
individual records.
    Proposed Sec.  677.235(a) requires that States submit individual 
records containing demographic information, information on services 
received, and information on resulting outcomes for individuals served 
by specific programs to be submitted by programs to their appropriate 
Secretary on a quarterly basis. At the time of WIOA's enactment, DOL 
already required the submission of standardized individual records for 
the adult, dislocated worker and youth programs, and programs 
authorized under the Wagner-Peyser Act. Similarly, ED required the 
submission of individual-level data from case service records for the 
Vocational Rehabilitation program.
    DOL began requiring States to submit quarterly individual records, 
in part, to ensure the information submitted in States' annual reports 
as required by WIA were accurate. These quarterly reports also helped 
DOL identify States that needed early intervention to provide 
assistance if they are not meeting their performance goals. The DOL 
interpreted several provisions of WIA as authorizing the collection of 
these reports. Specifically, WIA sec. 136 required DOL to measure 
States' progress, WIA sec. 172 required DOL to evaluate the activities 
of its programs, and WIA sec. 189 required DOL to submit an annual 
report to Congress on WIA title I programs. Additionally, WIA sec. 185 
required States to maintain records sufficient to prepare performance 
reports. Considered as a whole, these statutory provisions authorized 
DOL to require States submit these reports.
    ED has collected individual-level data regarding all individuals 
served by the Vocational Rehabilitation program, whose case service 
records were closed, in order to satisfy data collection requirements 
and to ensure States' compliance with programmatic requirements under 
WIA and the Rehabilitation Act of 1973. ED has historically collected 
this data, via the Case Service Report (RSA-911), for open cases as 
well as closed cases, annually, but proposes to start collecting this 
data on a quarterly basis to satisfy requirements imposed by WIOA.
    Section 13 of the Rehabilitation Act requires ED to collect and 
report information required by WIOA sec. 101(a)(10) to Congress and to 
the President in the Annual Report. Section 14 of the Rehabilitation 
Act requires ED to conduct evaluations of the VR program. The 
information from this data collection is used in these evaluations. 
Section 106 of the Rehabilitation Act requires each State to report to 
ED the extent to which each State is in compliance with standards and 
indicators. Section 107 of the Act requires an annual review and 
periodic onsite monitoring of States' performance, much of which is 
determined on the basis of this data collection activity. RSA-911 data 
are also needed to satisfy the requirements of sec. 131 of the 
Rehabilitation Act, which requires an exchange of data between RSA, the 
Social Security Administration (SSA), and DOL.
    Sections 116, 169, and 185 of WIOA retain similar requirements to 
the WIA provisions the Departments relied on to require these reports. 
Additionally, WIOA's increased focus on performance accountability and 
requirement that the Departments sanction failing States, give the 
Departments authority to require these reports.
    Proposed Sec.  677.235(b) requires the individual records be 
submitted in one record that is integrated across all core DOL 
programs. The proposal would require that the individual records 
submitted by States be standardized in terms of data elements and 
associated reporting specifications. Currently quarterly individual 
records are program-specific and not part of an integrated performance 
reporting system. For DOL programs, States are required to provide two 
separate individual records for an individual receiving services under 
WIA and Wagner-Peyser. This duplication increases the reporting burden 
on States and treats these programs separately rather than as parts of 
a holistic, integrated system designed to efficiently provide necessary 
employment and training services to an individual.
    Furthermore, sec. 504 of WIOA requires DOL and ED to reduce 
reporting burden and simplify reporting requirements. A single 
integrated individual record best meets these needs. Requiring a 
single, integrated record will eliminate duplicative reporting of an 
individual's demographic information across programs.
    At the time of enactment, the Workforce Investment Streamlined 
Performance Reporting (WISPR) system is the most integrated individual 
record layout utilized in workforce development programs administered 
by DOL. The WISPR includes programmatic and performance reporting 
across programs authorized under WIA (adult, dislocated worker, and 
youth), Wagner-Peyser, the Trade Act, and the Jobs for Veterans State 
Grant programs administered by DOL's Veterans' Employment and Training 
Service (VETS). This new regulation proposes an integrated, individual 
record that is similar to the WISPR approach for core programs 
administered by DOL, which supports system alignment, as well as 
reduced reporting burden as required under sec. 504 of WIOA. The 
Departments are working towards establishing reporting templates for 
the required performance reports and individual record formats that 
States will be required to use in order to meet these reporting 
requirements.
    Proposed Sec.  677.235(c) explains that associated reporting 
instructions are proposed to be provided through policy guidance.
Sec.  677.240 What are the requirements for data validation of State 
annual performance reports?
    Proposed Sec.  677.240 implements sec. 116(d)(5) of WIOA, which 
requires States to establish procedures, consistent with DOL and ED 
guidelines to provide that the information in the States' annual 
performance reports are valid and reliable. Therefore, the Departments 
propose to add Sec.  677.240, which requires States to submit valid and 
reliable annual State performance reports and associated individual 
record information consistent with requirements that the Secretaries of 
Labor and Education will explain through guidance. To ensure States are 
meeting this statutory requirement, the Departments propose that if a 
State fails to achieve the accuracy standards, the Secretary of Labor 
or Education may require the State to develop and implement corrective 
actions, which may require the State to provide training for its 
subrecipients. These proposed

[[Page 20598]]

requirements are separate from the corrective actions provided under 
Sec.  677.185 and Sec.  677.220. The Departments are committed to 
providing that States have the information needed to effectively 
validate data and propose that the Departments will provide training 
and technical assistance about these requirements.

C. Description of the One-Stop System Under Title I of the Workforce 
Innovation and Opportunity Act (20 CFR Part 678; 34 CFR Part 361, 
Subpart F; 34 CFR Part 463, Subpart J)

1. Introduction
    In the section-by-section discussions of each proposed one-stop 
provision below, the heading references the proposed DOL CFR part and 
section number. However, the Department of Education proposes in this 
joint NPRM identical provisions at 34 CFR part 361, subpart F (under 
its State Vocational Rehabilitation Services Program regulations) and 
at 34 CFR part 463, subpart J (under a new CFR part for AEFLA 
regulations). For purposes of brevity, the section-by-section 
discussions for each Department's provisions appear only once--in 
conjunction with the DOL section number--and constitute the 
Departments' collective explanation and rationale for each proposed 
provision.
2. Subpart A--General Description of the One-Stop Delivery System
    The WIOA reaffirms the role of the one-stop system, a cornerstone 
of the public workforce development system, and subpart A describes the 
one-stop delivery system. Although there are many similarities to the 
system established under the WIA, there are also significant changes 
under WIOA. This subpart, therefore, restates WIA requirements 
governing one-stop centers, to the extent they are still applicable 
under WIOA, and embodies a set of reforms that, when implemented 
effectively, are intended to make significant improvements to the 
public workforce delivery system. These proposed regulations would 
establish requirements of the one-stop career center system as defined 
under WIOA, requiring partners to collaborate to support a seamless 
customer-focused service delivery network. The proposed regulations 
would require that programs and providers collocate, coordinate, and 
integrate activities and information, so that the system as a whole is 
cohesive and accessible for individuals and businesses alike. The 
ultimate goal is to increase the long-term employment outcomes for 
individuals seeking services, especially those with significant 
barriers to employment, and to improve services to employers.
    Proposed subpart A describes the one-stop center system established 
under WIOA. It establishes the different types of one-stop career 
centers allowable in each local area, and addresses the use of 
technology to provide services through the one-stop delivery system. As 
discussed in Sec. Sec.  678.305 and 678.310, a local area's one-stop 
delivery system may be made up of a combination of a comprehensive one-
stop center and a network of affiliated sites. When designing the one-
stop delivery system, States and Local Boards must ensure that 
information on the availability of career services is available at all 
one-stop physical locations and access points, including electronic 
access points, regardless of where individuals initially enter the 
local one-stop system.
Sec.  678.300 What is the one-stop delivery system?
    Proposed Sec.  678.300(a) describes the requirements of the one-
stop delivery system and the purpose. The one-stop delivery system 
brings together a series of partner programs and entities responsible 
for workforce development, educational, and other human resource 
programs to collaborate in the creation of a seamless customer-focused 
service delivery network that enhances access to the programs' 
services. Partners, programs, and providers will collocate, coordinate, 
and integrate activities so that individuals seeking assistance will 
have access to information and services that lead to positive 
employment outcomes for individuals seeking services.
    Proposed Sec.  678.300(b) provides that there are responsibilities 
at the local, State and Federal levels relative to the establishment 
and maintenance of the one-stop delivery system.
    Proposed Sec.  678.300(c) retains the same requirement found under 
WIA at 20 CFR 662.100(c) that there be at least one physical one-stop 
career center in each local area.
    Proposed Sec.  678.300(d) allows for the establishment of 
additional affiliate locations including specialized centers serving 
targeted participant populations, such as youth or dislocated workers, 
or industry sector specific centers.
    Proposed Sec.  678.300(e) states that required one-stop partners 
must provide electronic access to programs, activities, and services by 
electronic means, in addition to providing access to the services at a 
comprehensive one-stop center or making the program services available 
at an affiliated site if the partner is participating at the affiliated 
site. Services provided through electronic means would need to 
supplement and not supplant those provided through the physical one-
stop delivery system. The phrase ``electronic means'' includes Web 
sites, social media, internet chat features, and telephone.
    Proposed Sec.  678.300(f) requires that the description of the one-
stop delivery system be included in the Memorandum of Understanding 
(MOU) required at proposed 20 CFR 678.500.
Sec.  678.305 What is a comprehensive one-stop center and what must be 
provided there?
    Proposed Sec.  678.305 requires that there be a comprehensive one-
stop career center in each local area. Although the requirement to have 
at least one physical center in each local area is unchanged from the 
requirement under WIA, and the requirement is more fully described 
under these proposed regulations.
    Proposed Sec.  678.305(a) establishes that the comprehensive one-
stop center is a physical location where individuals must have access 
to a specific set of services that must be made available to 
individuals seeking services. The required services are listed in 
proposed Sec.  678.305(b) and the proposed rule defines ``access'' in 
Sec.  678.305(d). Customers can access a specific program without that 
program's staff being physically present at a one-stop center. However, 
in order to ensure that comprehensive one-stop centers are not all 
virtual services, the Departments propose that WIOA title I staff be 
physically present in the one-stop. There may be creative ways to 
provide all virtual services to customers, but such an all-virtual site 
would not be considered a comprehensive one-stop center. This proposed 
physical presence requirement does not have to be met by a full-time 
staff person, and can be met by the physical presence of different 
staff trading off throughout regular business hours (e.g., job-sharing 
or shift work).
    Proposed Sec.  678.305(c) provides that individuals must have 
access to the required services under Sec.  678.305(b) on regular 
business days, at a minimum, at the comprehensive center. This is a 
more specific requirement than exists under WIA. If, for example, the 
comprehensive one-stop center is open Monday through Friday, customers 
must have access to the services listed at Sec.  678.305(b) Monday 
through Friday. The Departments strongly encourage Local Boards to find 
creative ways to expand the hours that services are available to 
customers, to ensure that

[[Page 20599]]

services are universally accessible to people with various working 
hours, different access to transportation, and different family care 
arrangements. For example, Local Boards should consider ways to make 
services available to job seekers who might have childcare 
responsibilities or work during the normal business day. State Boards 
must consider service hours when evaluating effectiveness of one-stop 
centers, as part of the one-stop certification process described 
further in Sec.  678.800(b).
    Proposed Sec.  678.305(d) defines the access to services that must 
be available to individuals seeking assistance at the comprehensive 
one-stop. This access can be provided in one of three variations of 
physically present staff or through technology: (1) Program staff 
physically present at the location; (2) staff physically present at the 
one-stop from any partner program appropriately trained to provide 
information to customers about the programs, services, and activities 
available through partner programs, such as the types of services that 
program provides and whether the services might meet the individual's 
needs; or (3) providing direct linkage through technology to someone 
who can either provide the program services, or provide information 
such as how to apply for the program, or how to begin receiving 
services. Under the proposed rule, if there is access to technological 
direct linkages (as defined in Sec.  678.305(d)(1)) at a comprehensive 
one-stop center for a specific program, no partner program staff must 
be physically present.
    Proposed Sec. Sec.  678.305(d)(1) and (2) provide that services 
provided through technology must be meaningful, available in a timely 
manner and not simply a referral to additional services at a later date 
or time.
    Proposed Sec.  678.305(e) requires that all comprehensive one-stop 
career centers be physically and programmatically accessible to 
individuals with disabilities.
Sec.  678.310 What is an affiliated site and what must be provided 
there?
    In addition to the proposed requirement for a physical center in 
each local area where required one-stop partners must provide access to 
their programs, services and activities, proposed Sec.  678.310 
provides that the one-stop delivery system may also provide programs, 
services, and activities through affiliated sites or through a network 
of eligible one-stop partners that provide at least one or more of the 
programs, services, and activities at a physical location or through an 
electronically or technologically linked access point, such as a 
library.
    Proposed Sec.  678.310(a) defines an affiliated site as a location 
that makes available one or more of the required or optional programs, 
services, and activities to individuals. The proposed rule is not 
intended to establish a new physical presence requirement for one-stop 
partner programs in affiliated sites. Physical presence at affiliated 
sites can be negotiated at the local level by partner programs and the 
Local Board, and may be under 50 percent for any individual partner 
program, except in those cases described in proposed Sec.  678.315(b).
    Proposed Sec.  678.310(b) sets forth the prohibition against 
standalone Wagner-Peyser employment service centers, described more 
fully in proposed Sec.  678.315. Section 121(e)(3) of WIOA, which 
requires colocation of Wagner-Peyser employment services, is effective 
on July 1, 2015. However, proposed Sec.  678.310(c) recognizes that 
States will need a reasonable amount of time to fully integrate the 
delivery of employment services into the one-stop system. Real property 
issues, decisions on site locations, discussions with municipal or 
county governments, and development of agreements with partners to 
participate at both comprehensive and affiliated sites may require some 
time. Nevertheless, a State in such circumstances must be prepared to 
provide DOL with a plan that details the steps the State will take to 
achieve colocation of Wagner-Peyser employment services as described in 
proposed Sec.  678.315, and a timetable showing how the State will 
achieve colocation of Wagner-Peyser services within a reasonable time. 
The Departments are aware that States may also be considering how best 
to integrate other partner programs and may be considering the 
colocation of other programs as well. In its plan for achieving Wagner-
Peyser employment services colocation, the State may wish to include 
how it will collocate other programs too, but this is not required. DOL 
may request the plan for achieving Wagner-Peyser employment services 
colocation during monitoring and other oversight activities. DOL's ETA 
will provide guidance on the approach it will use to obtain the plan 
and timeline from States.
    Proposed Sec.  678.310(d) requires that all affiliate one-stop 
centers be physically and programmatically accessible to individuals 
with disabilities, as described in proposed Sec.  678.800.
Sec.  678.315 Can a stand-alone Wagner-Peyser employment service office 
be designated as an affiliated one-stop site?
    Proposed Sec.  678.315 sets forth the prohibition against 
standalone Wagner-Peyser employment services offices, to implement 
WIOA's amendment to the Wagner-Peyser Act that requires Wagner-Peyser 
employment services to be collocated with one-stop centers. Wagner-
Peyser employment services cannot, by themselves, constitute an 
affiliated one-stop center. In those cases where Wagner-Peyser 
employment services are located in an affiliated site, there must be at 
least one other partner in that affiliated site whose staff is 
physically present more than 50 percent of the time the center is open. 
Certain partner programs cannot be considered the ``other partner'' 
when determining whether Wagner-Peyser employment services are stand-
alone; these are: local veterans' employment representatives, disabled 
veterans' outreach program specialists, or unemployment compensation 
(UC) staff. Local veterans' employment representatives, disabled 
veterans' outreach program specialists, also referred to collectively 
as JVSG programs, are typically provided alongside Wagner-Peyser 
employment services programs. When a veteran does not receive services 
through the disabled veterans' outreach program, that veteran is served 
by the Wagner-Peyser employment service. To provide individuals with 
the full range of employment, training, and education services 
available, it is important to connect both the JVSG programs and the 
Wagner-Peyser employment service with the rest of the one-stop system. 
The Departments expect that the entity that administers the Wagner-
Peyser employment service, in consultation with Local Boards and one-
stop partners, will need to make the changes needed to comply with the 
proposed rule. The proposed rule is not intended to establish a new 
physical presence requirement for individual one-stop partner programs 
in affiliated sites. The proposed rule is meant to trigger adjustments 
on where Wagner-Peyser employment services are delivered. The 
Departments are aware that some one-stop partner programs are unable to 
have a physical presence in every affiliated site. Partner programs and 
the Local Board can negotiate physical presence at affiliated sites, 
and this presence may be below 50 percent for any one partner program. 
The Departments seek feedback, particularly from workforce programs 
outside WIOA title I and III, on whether the proposed requirement that 
other partners be

[[Page 20600]]

present more than 50 percent of the time creates an impediment to 
participating in the one-stop system, and whether any other changes 
would facilitate colocation.
Sec.  678.320 Are there any requirements for networks of eligible one-
stop partners or specialized centers?
    Proposed Sec.  678.320 explains the requirements for the networks 
of one-stop partners and specialized centers named in the statute. 
These entities were not listed in WIA but were included as part of the 
one-stop system in the WIA regulations. An example of a specialized 
center is one targeted for youth, one geared at a specific industry 
sector, or one established specifically to respond to a large localized 
layoff. These specialized centers do not need to provide access to 
every required partner, but must have a way to make referrals to one-
stop partners in comprehensive and affiliate centers. The specialized 
centers should also follow-up to make sure that services were provided 
after referral. A Local Board can design the specialized center to meet 
local needs. A specialized center must not be a standalone Wagner-
Peyser employment service office. The requirements of proposed Sec.  
678.315(b) apply to specialized centers just as they apply to 
affiliated sites.
3. Subpart B--One-Stop Partners and the Responsibilities of Partners
    The public workforce system envisioned by WIOA seeks to provide all 
participants with access to high-quality one-stop centers that connect 
them with the full range of services available in their communities, 
whether they are looking to find jobs, build basic educational or 
occupational skills, earn a post-secondary certificate or degree, get 
guidance on how to chart careers, or are employers seeking skilled 
workers. A true seamless, one-stop experience requires strong 
partnerships across programs that are able to streamline service 
delivery and align program requirements. In this subpart of the 
proposed rule, the Departments describe requirements relating to such 
one-stop partnerships. Specifically, this subpart identifies the 
programs that are required partners, the other entities that may serve 
as partners, the roles and responsibilities of required partners, and 
the types of services provided.
Sec.  678.400 Who are the required one-stop partners?
    Proposed Sec. Sec.  678.400(a)-(b) lists the required partners 
under WIOA. Beyond the partners previously required under WIA, WIOA 
adds the Temporary Assistance for Needy Families (TANF) program and the 
Ex-Offender program administered by DOL under sec. 212 of the Second 
Chance Act of 2007 to the list of required partners.
Sec.  678.405 Is Temporary Assistance for Needy Families a required 
one-stop partner?
    Proposed Sec.  678.405(a) clarifies that TANF is a required 
partner. Proposed Sec.  678.405(b) provides further clarification that 
the Governor may determine that TANF will not be a required partner in 
a local area(s) but must notify the Secretaries of Labor and Health and 
Human Services in writing of this determination. This implements sec. 
121(b)(1)(C) of WIOA. Proposed Sec.  678.405(c) clarifies that TANF may 
always partner or collaborate with the one-stop, even if the Governor 
has determined it is not a required partner in that State or local 
area.
Sec.  678.410 What other entities may serve as one-stop partners?
    Partnerships across programs are critical to supporting the one-
stop vision for service delivery. Proposed Sec.  678.410(a) reinforces 
the sec. 121(b)(2)(B)(vii) of WIOA, which states that other Federal, 
State, local, or private sector entities that carry out workforce 
development programs may serve as additional one-stop partners if the 
Local Board and CEOs approve. Proposed Sec.  678.410(b) provides a list 
of possible additional partners. In addition to the optional partners 
listed, Local Boards may partner with a wide range of organizations, 
including but not limited to CBOs, non-profit community action 
agencies, disability service providers, nonprofit workforce providers, 
and nonprofit English-as-a-second-language (ESL) providers.
    In contrast to the former WIA requirement, the proposed rule does 
not contain an allowance for the State to require that optional 
partners be included as a partner in all of the local one-stop delivery 
systems in the State. This omission reflects the WIOA requirement that 
the Local Board determine partners in the one-stop and that the State 
cannot mandate partners other than those specifically required in WIOA. 
This change places greater discretion at the local level in identifying 
the appropriate mix of services provided and the Departments expect 
that such decisions will be based on local or regional labor market 
information and population demographics.
Sec.  678.415 What entity serves as the one-stop partner for a 
particular program in the local area?
    The proposed regulation at Sec.  678.415 provides a general 
definition of the ``entity'' that carries out the programs identified 
in Sec. Sec.  678.400 and 678.410 and serves as the one-stop partner. 
The regulation defines the entity as the grant recipient or other 
entity or organization responsible for administering the program's 
funds in the local area. The term ``entity'' does not include service 
providers that contract with or are sub recipients of the local entity. 
The proposed regulation notes that for programs that do not have local 
administrative entities, the responsible State agency may be the one-
stop partner. In addition, the proposed regulation specifies the 
appropriate entity to serve as partner for the Adult Education and 
Vocational Rehabilitation (AEFLA) program, WIOA national programs, and 
the Carl D. Perkins Career and Technical Education (Perkins) program is 
the State eligible agency. Further, a State eligible agency for the 
AEFLA or Perkins programs may delegate its responsibilities to act as a 
local one-stop partner to one or more State agencies (for the Perkins 
program only), local entities, or consortia of local entities, as 
specified in the proposed regulation. In making such a delegation, a 
State eligible agency would have to meet all Federal and State 
requirements applicable to such delegations.
Sec.  678.420 What are the roles and responsibilities of the required 
one-stop partners?
    Proposed Sec.  678.420 describes and elaborates upon the statutory 
responsibilities of the one-stop partners. These responsibilities and 
corresponding WIOA provisions are identified and summarized in 
paragraphs (a) through (e). Jointly funding services is a necessary 
foundation for an integrated service delivery system. All partner 
contributions to the costs of operating and providing services within 
the one-stop center system must be proportionate to the benefits 
received and adhere to the partner program's Federal authorizing 
statute, and to Federal cost principles requiring that costs are 
reasonable, necessary and allocable. The proposed requirement in Sec.  
678.420(e), to provide representation on State and Local Workforce 
Development Boards, is new in WIOA and only required of core programs; 
WIA only required one-stop partner representation on Local Boards, and

[[Page 20601]]

required it for all one-stop partner programs.
Sec.  678.425 What are the applicable career services that must be 
provided through the one-stop delivery system by required one-stop 
partners?
Sec.  678.430 What are career services?
    WIOA requires one-stop partners to deliver career services 
applicable to their specific program. This proposed regulation 
clarifies that an applicable career service is a service identified in 
Sec.  678.430 and is an authorized program activity. The TANF statute 
does not include a definition for career services. Accordingly, the 
TANF State grantees need to identify any employment services and 
related supports being provided by the TANF program (within the 
particular local area) that are comparable with the career services as 
described in proposed Sec.  678.430. At a minimum, the TANF program 
partner must provide intake services at the one-stop for TANF 
assistance and non-assistance benefits via application processing and 
initial eligibility determinations. These latter services comport with 
proposed Sec.  678.420. The Departments seek specific comments about 
our proposal regarding the identification and inclusion of TANF 
employment, related support services and TANF intake functions as 
``career services,'' that are required to be provided locally in one-
stop centers. Other program specific information about the 
applicability of various career services is provided where needed in 
subsequent sections of this proposed rule. Proposed Sec.  678.425 
repeats the WIOA prohibition on one-stop partners requiring a 
particular sequence of services. Seamless service delivery, which is 
one of the underlying principles of the one-stop system, requires that 
appropriate services be made available to individuals based on their 
needs, and that multiple services can be provided simultaneously.
    Career services are identified in sec. 134(c)(2) of WIOA. In 
addition to replacing core and intensive services as they were 
described in WIA, a number of new activities are included in the 
definition of ``career services.'' This section organizes WIOA careers 
services into three categories: (1) Career services that must be made 
available to all participants; (2) career services that must be made 
available if deemed appropriate and needed for an individual to obtain 
or retain employment; and (3) follow-up activities. The proposed 
regulation respectively designates these categories as: basic career 
services; individualized career services; and follow-up services. The 
activities included under these categories are identified in Sec. Sec.  
678.430(a), 678.430(b), and 678.430(c), respectively.
    The proposed regulation reiterates the list of services included in 
the statute, and elaborates on some of the career services. Section 
134(c)(2)(A)(x) of WIOA requires as a career service the provision of 
both information and assistance to customers regarding filing an UI 
claim. The proposed regulation at Sec.  678.430(a)(10) further provides 
that such assistance must be meaningful and provided by staff who are 
well trained in UC claims. This proposed paragraph reflects the 
Departments' interpretation that the one-stop system established by 
WIOA is intended to provide participants with a seamless, one-stop 
experience that includes a professional level of service provided in a 
timely manner. Specifically, the Departments have concluded that 
individuals directly seeking career services from the one-stop system 
should receive more robust or ``meaningful'' service beyond what they 
could obtain on their own using self-service tools, such as public Web 
sites and phone numbers; instead, the Departments intend for them to 
receive meaningful staff assisted services if needed. In the context of 
providing assistance with UI claims, the proposed rule defines 
``meaningful assistance'' as having staff well-trained in UC claims 
filing and the rights and responsibility of claimants available in the 
one-stop centers to provide customers with assistance in filing a claim 
if they request it or are identified as needing the service due to 
barriers such as limited English proficiency or disabilities. This 
staff can be UI staff placed in the one-stop or Wagner-Peyser or other 
one-stop partner staff who have been properly cross-trained to provide 
this service. Alternatively, meaningful assistance can also be provided 
by phone or by means of other technology, including computer access, as 
long as the assistance is provided by specifically identified staff and 
within a reasonable time. This means that if the customer is referred 
to a phone for UI claims assistance, it must be a phone line dedicated 
to serving one-stop customers. It cannot be simply placing the customer 
into the general State UI agency contact center's phone queue. If the 
assistance is provided remotely using technology, it must be a 
technology that enables trained staff to provide the assistance. 
Examples of technology that enables remote assistance include live Web 
chat applications, video conference applications, or other similar 
technology. In addition to UI program funding, adult and dislocated 
worker funds may be used for these services as allowed in WIOA sec. 
134(c)(2)(A)(x); Wagner-Peyser funds may be used for the provision of 
these services as allowed sec. 7(a)(3)(F) of the Wagner-Peyser Act; or 
some combination of these three funding sources. It is important to 
acknowledge that the vast majority of UI claims filing will continue to 
be done remotely through self-service options. This proposed regulation 
does not require that States actively promote in-person claims filing 
through the one-stop centers. It does mean that assistance must be made 
available to customers who come to the one-stop for assistance in 
filing a UI claim and to customers that have been identified as having 
barriers to filing a UI claim without assistance.
Sec.  678.435 What are the business services provided through the one-
stop delivery system, and how are they provided?
    The one-stop system is intended to serve both job seekers and 
businesses. Similar to job seekers, businesses should have access to a 
truly one-stop experience in which high quality and professional 
services are provided across partner programs in a seamless manner. 
Labor markets are typically regional, but programs often design service 
delivery strategies around State and local geographic boundaries. 
Effective business services must be developed in a manner that supports 
engagement of employers of all sizes in the context of both regional 
and local economies, but should avoid burdening employers, for example 
with multiple uncoordinated points of contact. Proposed Sec.  
678.435(a) lists required business services. Proposed Sec.  678.435(b) 
States that local areas have flexibility to provide services that meet 
the needs of area businesses and must carry out these activities in 
accordance with relevant statutory provisions.
    Section 134(d)(1)(A)(ix)(I) of WIOA provides additional flexibility 
to allow business-focused activities to be carried out by business 
intermediaries working in conjunction with the Local Board. Such 
activities can also be carried out through the use of economic 
development, philanthropic, and other public and private resources in a 
manner determined by the Local Board and in cooperation with the State. 
Proposed Sec.  678.435(b) reiterates this flexibility.
    Proposed Sec.  678.435(c) provides a non-exhaustive list of 
allowable business activities. In addition to traditional

[[Page 20602]]

employer services, such as customized screening and referral of 
candidates, this list includes activities specifically identified in 
sec. 134(d)(1)(A) of WIOA that demonstrate WIOA's emphasis on 
innovative and regional strategies, such as regional labor market 
information, sector strategies, and development of career pathways. 
This list reflects activities specifically identified in WIOA and 
activities the Department had previously identified in administrative 
guidance under WIA. Proposed Sec.  678.435(d) states that business 
services and strategies must be reflected in the local plan.
Sec.  678.440 When may a fee be charged for the business services in 20 
CFR 678.435?
    Section 134(d)(1)(A)(ii) of WIOA allows customized employer-related 
services to be provided on a fee-for-service basis. Proposed Sec.  
678.440 clarifies that there is no requirement that a fee-for-service 
be charged to employers. However, the Local Workforce Development 
Boards should examine available resources and assets to determine an 
appropriate cost structure. They may also provide such services for no 
fee.
    WIOA seeks to create a seamless service delivery system by linking 
and aligning one-stop partners. However, as described in Sec.  
678.425(a), eligibility and other requirements of one-stop partner 
programs continue to apply. Proposed Sec.  678.425(b) clarifies that 
resources of each partner may only be used to provide authorized 
services to eligible individuals. It also clarifies that seamless 
service delivery can still be provided through joint funding of shared 
services based on the relative benefit received by each program. For 
example, one-stop staff conducting intake for all programs could be a 
shared cost. Joint funding must be in compliance with Federal cost 
principles.
4. Subpart C--Memorandum of Understanding for the One-Stop Delivery 
System
    This subpart describes the requirements for the MOU between the 
Local Board, CEO, and the one-stop partners relating to the operation 
of the one-stop delivery system in the local area. The Local Board acts 
as the convener of MOU negotiations and shaper of how local one-stop 
services are delivered.
Sec.  678.500 What is the Memorandum of Understanding for the one-stop 
delivery system and what must be included in the Memorandum of 
Understanding?
    Proposed Sec.  678.500 describes what must be included in the MOU 
executed between the Local Board, with the agreement of the CEO, and 
the one-stop partners relating to the operation of the one-stop 
delivery system in the local area. Proposed Sec.  678.500(a) 
establishes that two or more local areas in a region may develop a 
single joint MOU when the areas submit a regional plan. The Departments 
encourage regional planning, and allowing joint MOUs to support 
regional planning, particularly where local areas have the same one-
stop operator, are providing business services at a regional level, or 
have planned other joint activities typically discussed in an MOU.
    The MOU must include the provisions described in paragraphs (b) 
through (e) of the section, consistent with WIOA sec. 121(c)(2). As 
stated in proposed Sec.  678.500(b), the MOU must include the final 
plan, or an interim plan if needed, on how the costs of the services 
and the operating costs of the one-stop system will be funded. Shared 
operating costs may include shared costs of the Local Board, as stated 
in proposed Sec.  678.760. The MOU must also contain all of the 
information about infrastructure costs listed in proposed Sec.  
678.755. When fully executed, the MOU must contain the signatures of 
the Local Board, one-stop partners, the CEO(s), and the period in which 
the agreement is effective, and the MOU must be periodically updated to 
reflect any changes in the signatories or one-stop infrastructure 
funding. Signatures to the MOU indicate that the MOU has been executed. 
A lack of signatures for the MOU means that the Local Board has not 
established an MOU.
Sec.  678.505 Is there a single Memorandum of Understanding for the 
local area, or must there be separate Memoranda of Understanding 
between the Local Board and each partner?
    Proposed Sec.  678.505 establishes that a Local Board and one-stop 
partners may develop a single ``umbrella'' MOU that applies to all 
partners, or develop separate agreements between the Local Board and 
each partner or groups of partners. Under either approach, the MOU 
requirements described in Sec.  678.500 apply. The Departments 
encourage States and local areas to use ``umbrella'' MOUs to facilitate 
transparent, flexible agreements that are not burdensome, so that 
partners may focus upon service delivery.
Sec.  678.510 How should the Memorandum of Understanding be negotiated?
    Proposed Sec.  678.510 describes the collaborative and good-faith 
approach Local Boards and partners are expected to use to negotiate 
MOUs. ``Good faith'' may include fully and repeatedly engaging 
partners, transparently sharing information, and maintaining a shared 
focus on the needs of the customer. Proposed Sec.  678.510(a) allows 
Local Boards, CEOs, and partners to request assistance from a State 
agency responsible for the program, the Governor, State Board, or other 
appropriate parties when negotiating the MOU. Proposed Sec.  678.510(b) 
describes options for including the infrastructure cost plans in the 
MOU; the MOU may include an interim infrastructure funding plan in the 
MOU, as described in proposed Sec.  678.715(c). This may be 
particularly needed if the local area uses the State infrastructure 
cost funding mechanism, as described in proposed Sec.  678.730, to 
enable the local area to move forward with implementing one-stop 
service delivery in areas where there is agreement. The MOU must be 
amended once a final infrastructure cost plan is determined. Proposed 
Sec.  678.510(c) describes how to address MOU impasses. Consistent with 
WIA regulations, any local area in which a Local Board has failed to 
execute an MOU with all of the required partners is not eligible for 
State incentive grants and these sanctions are in addition to, not in 
lieu of, any other remedies that may be applicable to the Local Board 
or to each partner for failure to comply with any statutory 
requirements.
5. Subpart D--One-Stop Operators
    This proposed subpart addresses the role and selection of one-stop 
operators. Unlike the other subparts in this proposed rule, this 
subpart is administered primarily by DOL. The DOL and ED agreed that 
the subpart should remain in this part of the Joint Rule, so that all 
of the subparts having to do with one-stop requirements are together. 
However, unlike the rest of this proposed part, this portion of the 
preamble refers mainly to DOL.
    Under WIA, one-stop operators could be designated or certified 
through a competitive process, or they could be ``grandfathered'' in 
from JTPA. Section 121(d)(2)(A) of WIOA only allows for selection of a 
one-stop operator through a competitive process. This proposed 
regulation uses the term ``selection'' of one-stop operator through a 
competitive process, rather than ``designation'' or ``certification'' 
to avoid confusion. The

[[Page 20603]]

competitive process established by this proposed subpart requires 
States to follow the same policies and procedures they use for 
procurement from non-Federal funds. All other non-Federal entities, 
including subrecipients of a State (such as local areas), are required 
to use a competitive process based on the principles of competitive 
procurement in the Uniform Administrative Guidance set out at 2 CFR 
200.318-200.326.
    Unlike under WIA, there is no ``designation'' or ``certification'' 
of an entity as a one-stop operator, including a Local Board. Section 
107(g)(2) of WIOA states that a Local Board may be designated or 
certified as a one-stop operator only with the agreement of the CEO in 
the local area and the Governor. The DOL interprets this provision to 
create an additional check for situations where a Local Board is 
selected to be one-stop operator through the competitive process as 
required under WIOA sec. 121(d)(2)(A) and as described in this proposed 
subpart at Sec.  678.605(d). In these situations, it is appropriate to 
require that the Governor and chief local official to approve the 
selection.
    The DOL received many comments during consultations regarding the 
impact of competition on local services. This proposed subpart seeks to 
clarify and address those concerns. For example, some States shared 
concerns that the outcome of such a competition may result in the 
layoff of State merit staff. Proposed Sec.  678.635 clarifies that 
merit staff may continue to work in the one-stop so long as a system 
for management of merit staff in accordance with State policies and 
procedures is established. This is consistent with how some local non-
governmental one-stop operators manage merit staff currently under WIA. 
Local government staff may also work in the one-stop regardless of who 
the operator is, if they are responsible for delivering a one-stop 
partner program's services.
    Additionally, Stakeholders have voiced concerns about the cost and 
burden associated with running a competition, as well as situations 
where there are a limited number of, or only one, possible provider(s). 
While procurement can take time, Local Boards are encouraged to perform 
extensive market research and prepare a thorough cost and price 
analysis to best identify the type of procurement most appropriate to 
minimize cost and burden of the competitive process. A Local Board has 
the flexibility to identify and implement the options set forth in 
proposed Sec.  678.605(d). This may include a limited competition where 
a smaller number of providers, identified in market research, Requests 
of Information (ROI), and/or the cost price analysis, are identified 
and invited to apply. Sole source awards are allowable in only very 
limited circumstances. For example, concern about the time associated 
with competition or failure to plan sufficient time for a competition 
does not constitute an ``unusual and compelling urgency'' as defined in 
Sec.  678.605(d). Thus, Local Boards retain flexibility to reduce 
burden while remaining consistent with the provisions of WIOA. WIOA 
describes a more robust role for Local Boards and partners to jointly 
develop local plans and one-stop MOUs, and the DOL and ED strongly 
recommend that Local Boards align these activities with the one-stop 
operator function and competitive process. Similarly, the competitive 
process can and should provide for a transition time that minimizes or 
eliminates disruption in services to participants. This can be achieved 
in a variety of ways, including provisions in the competition to ensure 
some staff continuity, transition time between operators, and requiring 
robust standard operating procedures to be developed by one-stop 
operators.
    Finally, numerous States and local agencies have inquired as to 
their eligibility to be a one-stop operator. There is nothing in the 
statute or in these proposed regulations that would prevent a State 
workforce agency or local agency from competing for and being selected 
as a one-stop operator. Because Local Board structures vary across 
State and local areas, in order to ensure there is no real or apparent 
conflict of interest, Local Boards (or State Boards in the case of 
single State areas) will need to have robust conflict of interest 
policies, as well as firewalls in place to ensure that development and 
conduct of the Board competition is kept separate and apart from the 
State or local agency, particularly if that entity is the current one-
stop operator. Additionally, the firewalls and conflict of interest 
policy must ensure that, if selected as operator, there are internal 
controls to ensure that the agency, as operator, has oversight and 
management from a source other than itself. Use of internal controls 
and firewalls to avoid conflicts of interest are also addressed in 
proposed Sec.  679.430.
    In sum, this proposed regulation represents the most flexibility 
that could be offered to Local Boards within the confines of the 
statutory requirement that one-stop operators be selected through a 
competitive process.
Sec.  678.600 Who may operate one-stop centers?
    Proposed Sec. Sec.  678.600(a)-(d) describe who may operate a one-
stop center. As stated in paragraph (a), WIOA allows a one-stop 
operator to be a single eligible entity or a consortium of one-stop 
partners. Consortia, like single entities, must be selected through a 
competitive process. Proposed paragraph (c) lists the types of entities 
what may be selected to be the one-stop operator. These repeat the 
eligible entities from sec. 121(d)(2)(B) of the statute, and also 
clarify that a Local Board, with the approval of the chief local 
elected official and the Governor, may serve as a one-stop operator, as 
stated in proposed paragraph (c)(6), and that another interested 
organization which is capable of carrying out the duties of one-stop 
operator may serve as the operator, as stated in proposed paragraph 
(c)(7). Proposed Sec.  678.600(d) repeats the requirement in sec. 
121(d)(3) of WIOA that elementary schools and secondary schools are not 
eligible to be one-stop operators; however, nontraditional public 
secondary schools such as night schools, adult schools, or area career 
and technical education schools are eligible to be operators.
Sec.  678.605 How is the one-stop operator selected?
    Proposed Sec.  678.605 requires the one-stop operator to be 
selected through a competitive process conducted not less than every 4 
years. As discussed above, the Departments interpret sec. 121(d)(2)(A) 
of WIOA to require a competition for selection of a one-stop operator. 
Competition provides the best method of providing that Local Boards 
examine operator effectiveness. Additionally, regular competition 
allows Local Boards to make adjustments based on findings of the one-
stop certification process described in proposed subpart F of this 
part, particularly to the role of the operator and other specifics that 
may shift as one-stop partners and the Local Board update their MOUs. 
The DOL received feedback that the burden of a competition every year 
would be large, and the Departments preliminarily concur. In looking at 
options, the Departments were concerned that a period of 3 years might 
also be too short because if a Local Board were to conduct a full 
competition with a Request for Proposals (RFP), it could take as long 
as 18 months and would result in a Board preparing for the next RFP 
before the current operator had an opportunity to demonstrate 
performance. Durations of 5 years or

[[Page 20604]]

more presents a risk of having an ineffective operator in place for an 
extended period. Therefore, proposed Sec.  678.605 settled on a time 
period of 4 years to ensure that there is a solid period of performance 
in which to evaluate effectiveness of the operator, including the 
results of the one-stop certification. This proposed section also 
provides flexibility to both States and to local areas to require or 
implement competitions more frequently than every 4 years. The 
Departments seeks comments regarding the length of time required 
between competitions for operators.
    Proposed Sec. Sec.  678.605(a), (b), and (c) require the one-stop 
operator competition to be done through a competitive process. In most 
cases, the entity conducting the competition to procure a one-stop 
operator will be the Local Board, pursuant to its responsibility under 
sec. 107(d)(10)(A) of WIOA to select the one-stop operators. However, 
in some cases, such as when the one-stop is in a single State local 
area, a State entity might conduct the competition. If a State conducts 
the competition, the State must follow applicable State procurement 
laws. Other entities, including subrecipients of a State (such as local 
areas) must conduct the competition following the principles of 
competitive procurement in the Uniform Administrative Guidance at 
chapter II of 2 CFR.
    This should simplify implementation for Local Boards. The 
requirements of the competitive process identified in WIOA should be 
consistent with the principles of competitive procurement in the 
Uniform Administrative Guidance set out at 2 CFR parts 200 and 2900. 
However, while the competitive process described in this proposed 
subpart is consistent with the principles of competitive procurement in 
the Uniform Administrative Guidance, not every particular requirement 
or process of that Guidance is applicable. This proposed subpart seeks 
to establish a particular competitive process that fulfills the 
requirements of sec. 121(d)(2)(A) of WIOA for a competitive process, 
while remaining consistent with the principles set forth in the Uniform 
Administrative Guidance. The Departments want to make clear that the 
specific requirements of the Uniform Guidance are only applicable where 
the subpart specifically refers to it. This approach provides 
sufficient flexibility to enable a range of operators, including 
current one-stop operators, State agencies, or consortia of required 
partners to compete for and be selected as one-stop operator. The 
Departments seek comments regarding the nature and extent of the 
competitive process outlined in the proposed regulations.
    Proposed Sec.  678.605(d) states that non-Federal entities, 
including subrecipients of a State (such as local areas) must first 
determine the nature of the competitive process to be used. The 
different processes that may be used are procurement by sealed bids or 
procurement by competitive proposals. Procurement by sole-source is 
permitted only under limited conditions. Because of the potential for 
abuse of the sole source selection method, DOL intends to set a high 
bar for justifying that there is only one possible operator. Local 
Boards cannot use their past experience with an entity being the one-
stop operator or one response to Requests for Information (RFI) alone 
as justification. Robust market research, combined with other methods, 
including but not limited to an RFI and a detailed cost and price 
analysis, will help a Local Board meet the burden of demonstrating they 
meet the requirement of proposed Sec.  678.605(d)(3)(i) for utilizing 
sole source selection. Additionally, the Local Board must comply with 
its own procurement policies regarding sole source procurements.
    There are two scenarios listed in proposed paragraph (d)(3)(i) that 
justify the use of sole-source procurement, and as discussed the 
Departments envision limited use of these options. These two scenarios 
are consistent with the circumstances that justify sole source 
selection under the Uniform Administrative Guidance at 2 CFR 
200.320(f), with the important exception of 2 CFR 200.320(f)(3). 
Governors may not approve a written request for sole source selection 
of a Local Board unless it complies with Sec.  678.605(d)(3).
    Proposed Sec.  678.605(e) requires maintenance records, which are 
crucial to demonstrate compliance with the requirements of this 
subpart.
Sec.  678.610 How is sole source selection of one-stop operators 
accomplished?
    Proposed Sec.  678.610 explains how sole-source selection of one-
stop operators is accomplished. It includes requirements about 
maintaining written documentation and developing appropriate conflict 
of interest policies. It states that a Local Board can be selected as 
one-stop operator through sole-source procurement only with the 
agreement of the CEO in the local area and the Governor. The Governor 
must approve the conflict of interest policies the Local Board has in 
place when also serving as one-stop operator. This is consistent with 
DOL's interpretation of sec. 107(g)(2) of WIOA--the section adds an 
additional check in the situations where a Local Board is selected to 
be operator.
Sec.  678.615 Can an entity serving as one-stop operator compete to be 
a one-stop operator under the procurement requirements of this subpart?
    Proposed Sec.  678.615(a) states that Local Boards may compete to 
be selected as a one-stop operator only if appropriate firewalls and 
conflict of interest policies and procedures are in place. The 
Departments seek comments on whether and how a sufficient firewall 
could be established in such a competition, whether alternate entities 
could conduct the competition, and who those entities might be.
    Proposed Sec.  678.615(b) allows State or local agencies to compete 
for, and be selected as, one-stop operators. However, the proposed 
paragraph recognizes that there would need to be strong firewalls, 
internal controls, and conflict of interest policies and procedures in 
place. There is precedent for State agencies applying and being 
selected as one-stop operators under WIA. For example, in one multi-
county local area, the Local Board issued an RFP on a per county basis. 
In one county, a community action program was selected as the operator. 
In another county, the State workforce agency was selected as the 
operator. In this scenario, State workforce agency staff provides both 
WIA and Employment Services in the county where the agency was selected 
as one-stop operator. In a second example under WIA, from a single area 
State: the State Board (which also serves as the Local Board) issued an 
RFP for the entire State for adult and dislocated workers and a 
separate RFP for youth services. A non-profit entity was selected as 
the operator for adult and dislocated worker services. That non-profit 
then subcontracted with other non-profits to serve the different 
geographic regions of the State. The staff of the State workforce 
agency continues to provide the labor exchange services in the one-stop 
career centers. A State agency was selected as the youth provider. 
Additional sub-awards were made by that State agency to ensure that all 
ten youth program elements were available.
    However, in the above two scenarios and any scenario where the 
State agency is competing to be the one-stop operator, there is a high 
risk for conflict of interest, particularly in the case of single State 
areas. Therefore, proposed Sec.  678.615(b) and (c) require robust 
conflict of interest policies as well as internal firewalls within the 
State agency to address the real and perceived conflicts of interest 
that could arise for

[[Page 20605]]

a State or local agency applying to a competition run by a Local Board.
    The DOL notes that this proposed section is relevant to the first 
competitions that are conducted after these regulations are promulgated 
for one-stop operators. With appropriate firewalls and conflict of 
interest policies and procedures to provide a fair and open competitive 
process, entities serving as one-stop operators at the time these 
regulations are promulgated, including Local Boards and other current 
one-stop operators, may compete and be selected as operator under the 
competition requirements in this proposed subpart. However, like the 
entities specifically mentioned in this proposed section, appropriate 
firewalls must be in place to provide that the current operator is not 
involved in conducting the competitive process, as that would be an 
inherent conflict of interest.
Sec.  678.620 What is the one-stop operator's role?
    Proposed Sec.  678.620(a) describes the role of the one-stop 
operator without prescribing a specific and uniform role across the 
system. The proposed minimum role that an operator must perform is 
coordination across one-stop partners and service providers. 
Additionally, the proposed paragraph (b) prohibits one-stop operators 
from assuming functions that are inherently the responsibility of the 
Local Board under proposed Sec.  679.370. The DOL seeks comments as to 
whether all of the functions listed in proposed paragraph (b) are 
accurately described as inherent to the responsibility of a Local 
Board. As the one-stop system evolved under WIA, some of the Local 
Board responsibilities may have changed or been devolved to the 
operator or fiscal agent as well.
Sec.  678.625 Can a one-stop operator also be a service provider?
    Proposed Sec.  678.625 allows a one-stop operator to also be a 
service provider. However, the section clarifies that there must be 
firewalls in place to ensure that the operator is not conducting 
oversight of itself as service provider. There also must be proper 
internal controls and firewalls in place to ensure that the entity, in 
its role as operator, does not conflict with its role of service 
provider. This is consistent with the firewall and internal control 
provisions in proposed Sec.  679.430.
Sec.  678.630 Can State merit staff still work in a one-stop where the 
operator is not a governmental entity?
    Proposed Sec.  678.630 addresses the concern about whether State 
merit staff can continue to work in a one-stop where the operator is an 
entity other than the State. State merit staff support numerous 
programs at the one-stop career center, including Wagner-Peyser, 
Vocational Rehabilitation, UI, and the JVSG program. Some States have 
shared concerns that competition may result in the layoff of State 
merit staff. Proposed Sec.  678.630 clarifies that State merit staff 
may continue to work in the one-stop so long as a system for management 
of merit staff in accordance with State policies and procedures is 
established. This is consistent with how some local non-governmental 
one-stop operators manage merit staff currently under WIA. Local 
government staff may also work in the one-stop regardless of who the 
operator is, if they are responsible for delivering a one-stop partner 
program's services. Nothing prohibits this from occurring, and there 
are numerous examples under WIA where this is currently occurring, 
including the above scenario of a single area State where the State 
Board (which also serves as the Local Board) issued an RFP for the 
entire State for adult and dislocated workers and a separate RFP for 
youth services. A non-profit entity was selected as the operator for 
adult and dislocated worker services. That non-profit then 
subcontracted with other non-profits to serve the different geographic 
regions of the State. The staff of the State workforce agency continues 
to provide the labor exchange services in the one-stops due to the 
merit staffing requirements. In another multi-county local area, the 
Local Board issued an RFP for a single operator throughout the entire 
local area. A large-scale non-profit was selected as the operator. 
Under the arrangement, State merit staff still provided labor exchange 
services because of the merit staffing requirement but under the 
operational direction of the one-stop operator.
    Similar to State merit staff, nothing would prevent local 
government staff from being employees in the one-stop center, although 
the Department recognizes that local government employees are not 
equivalent to the State merit staff, because State merit staff are 
governed by the requirements attached to specific programs that must be 
in the one-stop regardless of operator.
Sec.  678.635 What is the effective date of the provisions of this 
subpart?
    To ensure an orderly transition, as authorized under sec. 503 of 
WIOA, proposed Sec.  678.635(a) states that one-stop operators selected 
through the competitive process described in this subpart need to be in 
place no later than July 1, 2017. This lengthy transition period serves 
several goals: (1) It allows sufficient time for State and local areas 
to prepare to transition to a competitive process, including conducting 
market research, RFIs, cost and price analysis, and competitions; (2) 
it reduces or eliminates the likelihood of disruption in services to 
participants as Local Boards have time to plan for and incorporate into 
the competition a plan for transition to a new provider; and (3) it 
allows State and local areas to have the WIOA Final Rule to use to 
guide the implementation of a competitive process. It is important for 
Local Boards to begin planning for competition immediately, and 
therefore proposed Sec.  678.635(b) states that Local Boards must 
engage in and be able to demonstrate they are planning for a 
competition for one-stop operator in PY 2015 (July 1, 2015-June 30, 
2016).
6. Subpart E--One-Stop Operating Costs
    One-stop partner funding of infrastructure costs is intended to:
    (1) Maintain the one-stop delivery system to meet the needs of the 
local areas;
    (2) Reduce duplication by improving program effectiveness through 
the sharing of services, resources and technologies among partners;
    (3) Reduce overhead by streamlining and sharing financial, 
procurement, and facilities costs;
    (4) Encourage efficient use of information technology to include 
where possible the use of machine readable forms and shared management 
systems; and
    (5) Ensure that costs are appropriately shared by one-stop partners 
by basing contributions on proportionate share of use, and requiring 
that all funds are spent solely for allowable purposes in a manner 
consistent with the applicable authorizing statute and all other 
applicable legal requirements, including the Federal cost principles; 
and
    (6) Ensure that services provided by the one-stop partners to 
reduce duplication or to increase financial efficiency at the one-stop 
centers are allowable under the partner's program.
Sec.  678.700 What are one-stop infrastructure costs?
    Proposed Sec.  678.700 provides the definition for infrastructure 
costs based

[[Page 20606]]

on sec. 121(h)(4) of WIOA. In addition to those items, the section adds 
common one-stop delivery system identifier costs. These costs are those 
associated with signage and other expenses related to the one-stop 
common identifier as required by sec. 121(e)(4) of WIOA. The 
Departments seek comments as to other common identifier costs, or other 
types of costs, to include in the definition of infrastructure costs.
    Jointly funding services is a necessary foundation for an 
integrated service delivery system. Proposed Sec.  678.700(c) 
reiterates that all partner contributions to the costs of operating and 
providing services within the one-stop center system must adhere to the 
partner program's Federal authorizing statute, and to all other 
applicable legal requirements, including the Federal cost principles 
that require costs that are allowable, reasonable, necessary and 
allocable. There are a variety of methods to allocate costs, for 
instance: Based on proportion of a partner program's customers of all 
customers coming to the one-stop, proportion of partner program's staff 
among all staff at the one-stop, or based on a partner program's use of 
a particular expense item such as certain equipment. The DOL's previous 
Financial Management Technical Assistance Guide published for WIA 
remains useful for cost allocation explanations. See http://www.doleta.gov/grants/pdf/TAG_PartI.pdf and http://www.doleta.gov/grants/pdf/TAG_PartII_July2011.pdf. The DOL and ED jointly will update 
this guide and provide technical assistance on cost allocation.
Sec.  678.705 What guidance must the Governor issue regarding one-stop 
infrastructure funding?
    Proposed Sec.  678.705 addresses the requirement in sec. 
121(h)(1)(B) of WIOA for the Governor to issue guidelines to State 
programs and guidance to local areas regarding infrastructure funding. 
The Departments have interpreted the statute also to require that the 
local areas follow these guidelines, and to allow the State grantee to 
monitor local areas for compliance with the Governor's guidance. The 
proposed section includes certain requirements for the Governor's 
guidance, including establishing roles, defining equitable and 
efficient methods for negotiating around infrastructure costs, and 
establishing timelines for local areas. These requirements are 
essential to ensuring a consistent general approach to the Governors' 
guidance across States, and appropriate timeframes which then allow for 
one-stop certification, competition of one-stop operator, and inclusion 
of funding agreement terms into the local State plan. The proposed rule 
allows for different methods of reaching consensus, and different ways 
for the Governor to interact with a local area during the consensus-
building process. The Departments seek comments about the types of 
information or requirements local areas would like to see included in 
guidance issued by the Governor.
Sec.  678.710 How are infrastructure costs funded?
    Proposed Sec.  678.710 indicates that sec. 121(h)(1) of WIOA 
establishes two methods for funding the infrastructure costs of one-
stop centers: A local one-stop funding mechanism and a State one-stop 
funding mechanism. Both methods utilize the funds provided to one-stop 
partners by their authorizing legislations. There is no separate 
funding source for one-stop infrastructure costs.
Sec.  678.715 How are one-stop infrastructure costs funded in the local 
funding mechanism?
    Proposed Sec.  678.715 addresses the local funding mechanism. Local 
Boards, in consultation with CEOs, should engage one-stop partners 
early in discussions about one-stop center locations and other 
services, so that decisions about physical locations and services are 
cooperatively made, and can be financially supported by the partners 
within the workforce system. Under the local mechanism, local partners 
can contribute amounts in excess of the limitations contained under the 
State funded infrastructure mechanism at sec. 121(h)(2)(D)(ii) of WIOA, 
if the parties agree that is the proportionate share of their use for 
reasonable one-stop infrastructure costs and it is consistent with the 
Federal authorizing statute and other applicable legal requirements, 
including Federal cost principles Under this proposed paragraph, 
agreement is achieved when all of the one-stop partners sign the MOU 
with the Local Board, which includes a final agreement regarding 
funding of infrastructure that includes the elements listed in proposed 
Sec.  678.755, or an interim funding agreement that includes as many of 
these elements as possible.
Sec.  678.720 What funds are used to pay for infrastructure costs in 
the local one-stop infrastructure funding mechanism?
    Proposed Sec.  678.720 explains the funding that one-stop partners 
can use to pay for infrastructure cost contributions. Partner programs 
can determine the funds they will use, but these funds must still meet 
the requirements of the program's relevant statutes and regulations. 
Further, all one-stop partners must work together to administer the 
partner programs and the one-stop and other activities of the core 
programs under WIOA as efficiently and effectively as possible. This 
will ensure that, as recipients and stewards of Federal funds for all 
of these programs, the partners and their subrecipients administer 
these programs and activities to meet all applicable legal requirements 
and goals. Different Federal statutes and regulations define 
administrative costs slightly differently. Some programs' statutes and 
regulations define all of the infrastructure costs listed in Sec.  
678.700 as administrative costs, some programs' statutes and 
regulations define some of the infrastructure costs as administrative 
costs, and some as program costs. Under this proposed paragraph, one-
stop partner programs must adhere to the administrative and program 
cost limitations of their program's statutes and regulations.
    Proposed Sec.  678.720(a) would give State agencies responsible for 
title II of WIOA or the Carl D. Perkins Career and Technical Education 
Act of 2006 (Perkins Act) great flexibility in determining how to pay 
for infrastructure costs under the local one-stop funding mechanism. It 
would permit a State eligible agency under title II of WIOA to use 
Federal funds that were available for State administration of title II 
of WIOA. Similarly, proposed Sec.  678.720 would permit a State 
eligible agency under the Perkins Act to use Federal funds that were 
available for State administration of post-secondary level programs or 
activities. Additionally, proposed Sec.  678.720 would permit a State 
eligible agency under title II of WIOA or the Perkins Act to use non-
Federal funds that these State agencies contribute to meet these 
programs' matching or maintenance of effort requirements in lieu of the 
State's administrative funds from its Federal grants. Further, if a 
State eligible agency were to delegate to a local entity or a 
consortium of local entities the authority to serve as the local one-
stop partner pursuant to proposed Sec.  678.415(b) and (e), the entity 
or consortium could contribute local administrative funds for title II 
of WIOA or the Perkins Act, respectively, to the infrastructure costs 
in lieu of a contribution from the State's administrative funds from 
its Federal grants. The goal of providing the State agencies with this 
flexibility is to enable them to meet their responsibilities for

[[Page 20607]]

paying one-stop infrastructure costs in a manner that best allows them 
to meet their responsibilities as one-stop partners and grantees under 
title II of WIOA or the Perkins Act. The Departments seek public 
comment on whether the proposed regulation would achieve this goal.
Sec.  678.725 What happens if consensus on infrastructure funding is 
not reached at the local level between the Local Board, chief elected 
officials, and one-stop partners?
    Proposed Sec.  678.725 states that failure to sign the MOU 
containing the final infrastructure funding agreement or interim 
agreement by the beginning of each PY would trigger the State one-stop 
infrastructure funding mechanism. The proposed section states that 
Local Boards must notify the State if they cannot reach consensus. This 
notification policy must be included in the Governor's guidance, as 
required by proposed Sec.  678.705(b)(3). The State monitors the local 
areas to address violations of State guidance. The Governor's guidance 
might establish an earlier date for notification to the State of 
milestones or decision points in the negotiation process.
Sec.  678.730 What is the State one-stop infrastructure funding 
mechanism?
    Proposed Sec.  678.730 discusses the State infrastructure funding 
mechanism. In establishing a State-funded alternative to the local one-
stop infrastructure funding mechanism, the statute ensures 
infrastructure costs will still be funded if one-stop partners cannot 
agree on their contribution amounts to fund the infrastructure of the 
one-stop center. An important goal under both the local and State 
funding mechanisms is to ensure that each one-stop partner contributes 
its proportionate share to the funding of one-stop infrastructure 
costs, consistent with the Federal cost principles. This is in 
alignment with the requirements in the new Uniform Requirements, cost 
principles and audit requirements issued on December 26, 2014 (2 CFR 
part 200). In the State infrastructure funding mechanism, the Governor 
determines how much each partner will contribute, as described in 
proposed Sec. Sec.  678.735 and 678.740. The State Board determines how 
the contributed funds will be allocated out to local areas, as 
described in proposed Sec.  678.745.
Sec.  678.735 How are partner contributions determined in the State 
one-stop funding mechanism?
    In the State-funded option proposed in Sec. Sec.  678.735(a)-(b), 
the Governor, after consultation with State and Local Boards and CEOs, 
will determine the amount each partner must contribute to assist in 
paying the infrastructure costs of one-stop centers. The Governor must 
calculate amounts based on the proportionate use of the one-stop 
centers by each partner and other factors stated in proposed Sec.  
678.735(a). Proposed Sec.  678.735(b) clarifies that because Native 
American Program grantees under part 684 of this proposed rule have a 
government-to-government relationship, the Governor does not determine 
the contribution amounts for infrastructure grants from these grantees. 
The Native American Programs, as required one-stop partners, must 
contribute to infrastructure funding, and must negotiate with the Local 
Board on that contribution amount. The Local Board and Native American 
Program grantee can ask for assistance from the State in negotiating 
the MOU and infrastructure cost funding, and can also consult with DOL 
to resolve any impasse.
    Proposed Sec.  678.735(c) includes the limitation for one-stop 
partners' contributions, based on a percentage of their funding 
allocation, from sec. 121(h)(2)(D)(ii) of WIOA. These limitations do 
not apply to the local one-stop funding mechanism. However, the use of 
a program partner's funds must meet the requirements of the program's 
authorizing statute, all other applicable legal requirements, and the 
requirements in this subpart. Proposed Sec.  678.735(c)(1) states that 
the cap on WIOA formula and Wagner-Peyser required contributions will 
not exceed 3 percent of the amount of funds provided to carry out that 
program for a PY. Although WIOA sec. 121(h)(2)(D)(ii)(I) refers to a 
fiscal year, WIOA and Wagner-Peyser funds are provided on a PY basis 
(which is from July 1 through June 30 of the following year). 
Therefore, calculating on a fiscal year basis would cause numerous 
administrative difficulties, because the WIOA and Wagner-Peyser formula 
programs receive their appropriations at two different times during the 
fiscal year. This interpretation is consistent with the statute because 
under WIOA sec. 121(h)(1)(A)(ii) the determination of whether the State 
infrastructure funding mechanism will apply occurs on July 1, at the 
beginning of each PY.
    Proposed Sec.  678.735(c)(2) includes a clarification that the 1.5 
percent cap on contribution applies to the relevant education program 
and employment and training program of a required one-stop partner. For 
instance, States receive a large block grant for delivering TANF 
services. The 1.5 percent cap on contributions applies to the 
employment and training activities under that grant, not the entire 
TANF grant. Proposed Sec.  678.735(c)(3) states that the entities 
administering the Vocational Rehabilitation program must not be 
required to contribute more than a specific cap each year. In States 
where there are two Vocational Rehabilitation agencies (a general 
agency and a blind agency), the combined contribution from these 
programs cannot exceed the cap in the proposed rule, which is based on 
the total allotment to the State.
    Because there is a chance that the funding amount limitations would 
prevent the allocation from being fully funded, proposed Sec.  
678.735(d) allows the Governor to direct the local partners to reenter 
negotiations to resolve the shortage in a manner that is consistent 
with each partner's program's authorizing laws and regulations and all 
other applicable legal requirements, including the Federal cost 
principles, or to identify alternate infrastructure funding. When local 
partners reenter negotiations in this situation, the new negotiations 
should be conducted according to the same procedure as negotiations are 
conducted under the local funding mechanism, as discussed in proposed 
Sec.  678.715. The limitations for one-stop partners' contributions 
discussed in proposed Sec.  678.735(c) do not apply to the local 
funding mechanism. If an agreement is still not reached, the Governor 
will reduce the allocation for total one-stop infrastructure funding 
for that local area to match the amount of available partner 
contributions under the cap. In implementing a one-stop infrastructure 
allocation by the Governor, although sec. 121(h)(3)(B) of WIOA refers 
to the Governor allocating out to local areas the funds provided under 
sec. 121(h)(1) of WIOA, which is the local funding allocation 
mechanism, that section as enacted would also require the Governor to 
allocate those funds to only the local areas that are not using the 
local funding mechanism. This incongruity seems a clear scrivener's 
error--sec. 121(h)(3)(B) was meant to instruct the Governor to apply 
the allocation formula developed by the State Boards only to the local 
areas that are not subject to an agreement under the local funding 
mechanism. Proposed Sec. Sec.  678.730 through 678.745 reflect this 
interpretation.
Sec.  678.740 What funds are used to pay for infrastructure costs in 
the State one-stop infrastructure funding mechanism?
    Proposed Sec.  678.740 describes the funds that one-stop partners 
can use to pay for infrastructure costs. For some

[[Page 20608]]

partner programs, some infrastructure costs are classified as program 
costs under the partners' authorizing statute or implementing 
regulations, while other infrastructure costs are classified as 
administrative costs. In other partner programs, all infrastructure 
costs are classified as administrative costs. One-stop partner programs 
must follow their own program's rules in classifying costs as program 
or administrative costs, and must adhere to their program's 
administrative cost limit.
    Like proposed Sec.  678.720(a), proposed Sec. Sec.  678.740(c) and 
(d) would give State eligible agencies responsible for title II of WIOA 
and the Perkins Act great flexibility in determining how to pay for 
infrastructure costs under the State one-stop funding mechanism. It 
would enable these State agencies to use Federal funds that were 
available for State administration of title II of WIOA or for the 
administration of post-secondary level programs and activities under 
the Perkins Act, as well as non-Federal funds that the partners 
contribute to meet these programs' matching or maintenance of effort 
requirements. Further, as with Sec.  678.720(a), if a State eligible 
agency were to delegate to a local entity or a consortium of local 
entities authority to serve as the local one-stop partner pursuant to 
proposed Sec. Sec.  678.415(b) and (e), the entity or consortium could 
contribute local administrative funds for title II of WIOA or the 
Perkins Act, respectively, to the infrastructure costs in lieu of a 
contribution from the State's administrative funds from its Federal 
grants to be contributed to the one-stop infrastructure costs.
    The goal of providing the State agencies with this flexibility is 
to enable them to meet their responsibilities for paying one-stop 
infrastructure costs in a manner that best allows them to meet their 
responsibilities as one-stop partners and grantees under title II of 
WIOA or the Perkins Act. The Departments seek public comment on whether 
the proposed regulation would achieve this goal.
Sec.  678.745 How is the allocation formula used by the Governor 
determined in the State one-stop funding mechanism?
    Proposed Sec.  678.745 states that the State Board must establish 
an allocation formula, taking into account several requirements from 
WIOA 121(h)(3)(B), and the Governor will use the allocation formula to 
distribute funds to local areas that are opting to use the State 
infrastructure cost funding mechanism, so long as the distribution is 
consistent with the Federal cost principles for each affected partner 
program.
Sec.  678.750 When and how can a one-stop partner appeal a one-stop 
infrastructure amount designated by the State under the State 
infrastructure funding mechanism?
    Proposed Sec.  678.750 requires an appeals process, as outlined in 
WIOA sec. 121(h)(2)(E), to be established by the Governor and proposes 
similar principles regarding timely resolution as those seen under 
other appeals processes, such as the WIA regulations at 20 CFR 661.280. 
The Departments seek comments regarding the proposed State 
infrastructure funding mechanism, and in how local areas with existing 
successful infrastructure cost agreements have funded these costs and 
what factors contributed to local areas' success.
Sec.  678.755 What are the required elements regarding infrastructure 
funding that must be included in the one-stop Memorandum of 
Understanding?
    Proposed Sec.  678.755 explains what information the local areas 
must include about operating costs in the one-stop MOU, described in 
proposed Sec.  678.500. Under the State one-stop infrastructure funding 
mechanism, the partner contributions will be required to be included in 
the MOU. Once the State infrastructure funding mechanism is triggered, 
and the Governor determines each partner's required funding 
contribution, the partners must include these in, and sign, the MOU.
Sec.  678.760 How do one-stop partners jointly fund other shared costs 
under the Memorandum of Understanding?
    In addition to infrastructure, WIOA sec. 121(i)(1) requires that 
one-stop partners must contribute jointly to fund the cost of career 
services, and allows one-stop partners to jointly fund other shared 
services, such as intake, assessment, skill appraisals, identification 
of appropriate services, referrals, accommodations and other services, 
including business services. Shared operating costs may also include 
shared costs of the Local Board's functions. Under proposed Sec.  
678.760, these costs must be determined as part of the MOU described in 
proposed Sec.  678.500 and be comprised of cash and noncash resources. 
Non-cash, or in-kind, contributions may be such resources as space, 
equipment, staff to deliver shared services, and other examples. The 
Departments expect one-stop partners to engage early with each other 
and the Local Board to identify services that benefit multiple 
populations and programs and could be jointly funded through the MOU. 
Such agreements improve the efficiency and effectiveness of the one-
stop system, and benefit the system's customers. WIOA neither requires 
programs to examine if other funds are available before using program 
funds to pay for a service, nor does it establish requirements that any 
program can only be a ``payer of last resort.'' One-stop partners may 
jointly fund services in a manner of their choosing that meets the 
requirements of this part, meets the Federal cost principles, and meets 
the requirements of the programs' authorizing statutes and regulations.
    The DOL published Financial Management Technical Assistance Guides 
for use under WIA that are still useful in determining reasonable cost 
allocation methodologies, and how to jointly fund shared activities and 
services. See http://www.doleta.gov/grants/pdf/TAG_PartI.pdf and http://www.doleta.gov/grants/pdf/TAG_PartII_July2011.pdf. The DOL will 
provide further technical assistance on this topic.
7. Subpart F--One-Stop Certification
    Proposed part 678, subpart F implements the requirements in sec. 
121(g) of WIOA that the Local Board certify the one-stop center every 3 
years. The certification process is important to setting a minimum 
level of quality and consistency of services in one-stop centers across 
a State. The certification criteria allow States to set standard 
expectations for customer-focused seamless services from a network of 
employment, training, and related services that help individuals 
overcome barriers to becoming and staying employed. The Departments 
seek comments on how local areas can best measure the customer 
satisfaction of individuals who utilize American Job Centers as an 
aspect of effectiveness.
Sec.  678.800 How are one-stop centers and one-stop delivery systems 
certified for effectiveness, physical and programmatic accessibility, 
and continuous improvement?
    Proposed Sec.  678.800(a) requires that State Boards establish 
criteria and procedures for certification, and allows Local Boards to 
use additional certification factors in order to respond to labor 
market, economic, and demographic conditions and trends in the local 
area. The criteria must assess the effectiveness, physical and 
programmatic accessibility, and continuous improvement of one-stop

[[Page 20609]]

centers and the one-stop delivery systems.
    Proposed Sec.  678.800(b) sets requirements for evaluations of 
effectiveness, including those mandated by sec. 121(g)(2)(B)(ii) and 
(iii) of WIOA. States may establish further effectiveness factors, and 
set specific standards for program coordination or integration. Program 
coordination standards might include customer-focused standards such 
as: front desk and intake staff are trained to complete an initial 
assessment of a participant's needs and inform participants of the 
services available to them; intake forms and basic assessment tools and 
processes are harmonized across programs to minimize customers filling 
out multiple forms; and staff work in functional rather than program 
teams. Program coordination standards might also include operational 
standards such as: integrated resource teams such as those piloted in 
the Disability Employment Initiative or other methods are used to 
jointly fund services to meet the specific needs of individuals; 
resource rooms include high-quality up-to-date information about the 
services and supportive services available to individuals; Web sites 
and materials for the one-stop provide information about the services 
and supports of all partner programs; and business services teams 
include representatives or otherwise integrate with key partner 
programs and represent the center as a whole. This paragraph also 
emphasizes the importance of maximizing access to services to all 
customers, particularly outside regular business hours. Access to 
services can be through a physical one-stop location, but can also be 
through online or phone access as discussed in the Sec.  678.300(e) 
definition of ``direct linkage,'' as long as services are equally 
available to all customers, including those with disabilities. The 
Departments seek input on other important factors in making one-stop 
centers operate more efficiently and effectively, both for 
consideration as one-stop certification criteria and for general 
program implementation and management.
    Proposed paragraph Sec.  678.800(c) describes evaluations of 
continuous improvement, including those mandated by sec. 
121(g)(2)(B)(i) of WIOA. Continuous improvement requires local areas 
and one-stop centers to collect, analyze and use several types of data, 
from customer satisfaction and feedback to program and performance 
data. Professional development is a key feature of any continuous 
improvement loop, in order to ensure that staff are aware of the 
implications of recent evidence-based research, and can implement the 
latest policies and procedures established at the local, State and 
Federal levels.
    Proposed Sec.  678.800(d) describes how Local Boards apply the 
certification criteria, including that Local Boards must assess the 
one-stop centers at least once every 3 years. This section also 
requires that any additional local criteria be reviewed and updated as 
part of the biennial review and modification process for updating local 
plans. This provision also explains that this certification must be 
completed for one-stop centers to be eligible to receive infrastructure 
funds in the State infrastructure funding mechanism, as required by 
sec. 121(g)(4) of WIOA.
    Proposed Sec.  678.800(e) emphasizes that all one-stops must be 
physically and programmatically accessible. The requirements related to 
accessibility are set forth in the regulations implementing WIOA sec. 
188, at 29 CFR part 37.
    In addition to complying with the applicable architectural and 
programmatic accessibility requirements of the proposed regulations, 
one-stop centers and Boards may wish to consider the use of ``universal 
design,'' which designs inclusive space and materials to be available 
to individuals regardless of their range of abilities, mobility, age, 
language, learning style, intelligence, or educational level. Improved 
availability, a welcoming atmosphere, inclusive settings, and high 
quality customer service benefit all customers. Extensive technical 
assistance is available at www.ada.gov, and www.lep.gov. The 
Departments recommend that State Boards and Local Boards engage early 
with relevant Equal Opportunity officers in establishing the criteria 
for determining compliance with accessibility standards and other 
requirements related to providing equal opportunity, particularly for 
persons with disabilities.
8. Subpart G--Common Identifier
    The proposed regulation in subpart G promotes increased public 
identification of the one-stop delivery system through use of a common 
identifier across the nation, consistent with sec. 121(e)(4) of WIOA.
Sec.  678.900 What is the common identifier to be used by each one-stop 
delivery system?
    Proposed Sec.  678.900(a) designates the name ``American Job 
Center'' as the common identifier for the one-stop delivery system. 
This designation was made by the Secretaries after consulting with the 
heads of other appropriate departments and agencies, representatives of 
State Boards and Local Boards, and other stakeholders in the one-stop 
delivery system. As part of this consultation process, DOL engaged in a 
series of town hall meetings with State workforce agencies, and State 
and Local Workforce Boards, conducted in September and October 2014, in 
various cities across the country. In addition, two webinars were 
conducted on November 14 and December 9 with various stakeholders, 
including State agencies, State and Local Workforce Boards, and one-
stop partners, and were open to the public. The topic of the webinar 
was dedicated solely to the topic of the common identifier for the one-
stop delivery system. The DOL has also consulted with other departments 
and agencies, specifically ED and the Department of Health and Human 
Services (HHS). The Departments also specifically request that the 
public or any interested stakeholder provide feedback and input as 
comments on the proposed ``American Job Center'' common identifier 
designation.
    ``American Job Center'' is the common identifier that is currently 
being used by several one-stop delivery systems; furthermore, it has 
been promoted by the DOL and used by other Federal agencies since the 
issuance of Training and Employment Guidance Letter (TEGL) No. 36-11 on 
June 14, 2012. Continued use of the identifier ``American Job Center'' 
will avoid the confusion of implementing a new common identifier; and 
several State and Local Boards have already begun incorporating the 
identifier in their products, materials, Web sites, and facilities. The 
Departments continue to seek feedback on the name and associated logo 
as part of the proposed rulemaking process.
    Proposed Sec.  678.900(b) requires the use of ``American Job 
Center'' or the tagline ``a proud partner of the American Job Center 
network'' on all one-stop delivery system products, programs, 
activities, services, facilities, and related property and materials to 
help inform system users that the products, programs, activities, 
services, facilities, and related property and materials are provided 
by and through the publically funded one-stop delivery system. The 
Departments will issue templates and designs of a logo, phrase, or 
other material for the one-stop delivery system to use to associate 
this common identifier with the system. Local Boards should immediately 
start the process of incorporating the identifier on products, 
programs, activities, services, and related and materials. 
Incorporating the identifier on facilities and related

[[Page 20610]]

property may take time. Local Boards may start the process of 
incorporating the identifier on facilities and property anytime, but 
must start this process at the time these regulations are published as 
a final rule, and fully implement the requirements listed in the final 
rule within PY 2016.
    Proposed paragraph Sec.  678.900(c) allows the use of additional 
identifiers, per sec. 121(e)(4) of WIOA.

V. Rulemaking Analyses and Notices

A. Executive Orders 12866 and 13563: Regulatory Planning and Review

    Executive Order (E.O.) 12866 directs agencies, in deciding whether 
and how to regulate, to assess all costs and benefits of available 
regulatory alternatives, including the alternative of not regulating. 
E.O. 13563 is supplemental to and reaffirms E.O. 12866. It emphasizes 
the importance of quantifying present and future benefits and costs; 
directs that regulations be adopted with public participation; and, 
where relevant and feasible, directs that regulatory approaches be 
considered that reduce burdens, harmonize rules across agencies, and 
maintain flexibility and freedom of choice for the public. Costs and 
benefits are to include both quantifiable measures and qualitative 
assessments of possible impacts that are difficult to quantify. If 
regulation is necessary, agencies should select regulatory approaches 
that maximize net benefits. OMB determines whether a regulatory action 
is significant and, therefore, subject to review.
    Section 3(f) of E.O. 12866 defines a ``significant regulatory 
action'' as any action that is likely to result in a rule that may:
    (1) 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;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising from legal mandates, 
the President's priorities, or the principles set forth in E.O. 12866.
    Summary of the analysis. The Departments provide the following 
summary of the regulatory impact analysis:
    (1) The proposed joint rule is a ``significant regulatory action'' 
under section 3(f)(4) of E.O. 12866 and accordingly, OMB has reviewed 
the proposed rule.
    (2) The proposed joint rule would have no cost impact on small 
entities.
    (3) The proposed joint rule would not impose an unfunded mandate on 
Federal, State, local, or tribal governments as defined by the Unfunded 
Mandates Reform Act of 1995.
    In total, the Departments estimate that this joint NPRM would have 
an average annual cost of $147,128,434 and a total 10-year cost of 
$1,154,622,032 (with 7-percent discounting). The largest contributor to 
the cost is the requirement related to evaluation of State programs, 
followed by the development of strategies to align technology and data 
systems across one-stop partner programs.
    The Departments were unable to quantify estimates of several 
important benefits to society due to data limitations or lack of 
existing data or evaluation findings on particular items. Based on a 
review of empirical studies (primarily studies published in peer-
reviewed academic publications and studies sponsored by the 
Departments), the Departments identified a variety of societal 
benefits: (1) Training services increase job placement rates; (2) 
participants in occupational training experience higher reemployment 
rates; (3) training is associated with higher earnings; and (4) State 
performance accountability measures, in combination with the Board 
membership provision requiring employer/business representation, can be 
expected to improve the quality of the training and, ultimately, the 
number and caliber of job placements. The Departments identified 
several channels through which these benefits might be achieved, 
including: (1) Better information about training providers will enable 
workers to make better-informed choices about programs to pursue; and 
(2) enhanced services for dislocated workers, self-employed 
individuals, and workers with disabilities will lead to the benefits 
discussed above.
    The Departments request comment on the costs and benefits of this 
NPRM with the goal of ensuring a thorough consideration and discussion 
at the final rule stage.
1. Need for Regulation
    Section 503(f)(1) of WIOA requires publication of proposed 
implementation regulations. Implementing regulations are necessary in 
order for WIOA to be efficiently and effectively operated and such 
regulations will provide Congress and others with uniform information 
necessary to evaluate the outcomes of the new workforce law.
2. Alternatives in Light of the Required Publication of Proposed 
Regulations
    OMB Circular A-4, which outlines best practices in regulatory 
analysis, directs agencies to analyze alternatives outside the scope of 
their current legal authority if such alternatives best satisfy the 
philosophy and principles of E.O. 12866. While WIOA provides little 
regulatory discretion, the Departments assessed, to the extent 
feasible, alternatives to the proposed regulations.
    In this NPRM, the Departments considered significant alternatives 
to accomplish the stated objectives of WIOA while also attempting to 
minimize any significant economic impact of the proposed rule on small 
entities. This analysis considered the extent to which WIOA's 
prescriptive language presented any regulatory options that also would 
allow for achieving the statute's articulated programmatic goals. In 
many instances, the Departments have reiterated WIOA's language in the 
regulatory text and expansions are offered for clarification and 
guidance to the regulated community. The additional regulatory guidance 
should create more efficient administration of the program by reducing 
ambiguities and subsequent State and local revisions as a result of 
unclear statutory language.
    In addition, the Departments considered and, where feasible, 
proposed to issue sub-regulatory guidance in lieu of additional 
regulatory requirements. This policy option has two primary benefits to 
small entities. First, guidance will be issued following publication of 
the rules, thereby allowing States, local areas, and small entities 
additional time to prepare their compliance efforts. Second, this level 
of guidance is more flexible in nature allowing for faster 
modifications and any subsequent issuances, as necessary.
    The Departments considered three possible alternatives:
    (1) To implement the legislative changes prescribed in WIOA, as 
noted in this NPRM, thereby satisfying the legislative mandate; or
    (2) To take no action, that is, to attempt to implement WIOA 
utilizing existing Workforce Investment Act (WIA) regulations; or
    (3) To not publish any regulation and rescind existing WIA 
regulations, thereby ignoring the WIOA statutory requirement to publish 
implementing regulations and, thus forcing the regulated community to 
follow statutory language for implementation and compliance purposes.

[[Page 20611]]

    The Departments considered these three options in accordance with 
the provisions of E.O. 12866 and chose to publish the WIOA NPRM, i.e., 
the first alternative. The Departments considered the second 
alternative, i.e., retain existing WIA regulations as the guide for 
WIOA implementation, but WIOA has changed WIA's requirements 
substantially enough that new implementing regulations are necessary in 
order for the workforce system to achieve compliance. The Departments 
considered the third alternative, i.e., to not publish an implementing 
regulation and rescind existing WIA regulations, but rejected it 
because this option, in and of itself, does not provide sufficient 
detailed guidance to effectively implement the statutory requirements. 
Thus, regulations are necessary to achieve program compliance.
    In addition to the regulatory alternatives noted above, the 
Departments also considered whether certain aspects of WIOA could be 
phased-in over a prescribed period of time (different compliance 
dates), thereby allowing States and localities additional time for 
planning and successful implementation. As a policy option, this 
alternative appears appealing in a broad theoretical sense and, where 
feasible, the Departments have recognized and made allowances for 
different schedules of implementation. However, upon further discussion 
and in order to begin to achieve the intended legislative benefits of 
WIOA, additional implementation delays beyond those noted in this NPRM 
may create potentially more issues than the benefit of alternative 
starting dates. Specifically, many critical WIOA elements follow upon 
the implementation of other provisions and, therefore, discussions 
around delaying aspects became quite complicated. The interrelatedness 
of WIOA's requirements suggested that the alternative of delaying 
aspects was not operationally feasible.
    Furthermore, the data necessary to fully review this option does 
not yet exist and will not until Local Workforce Development Boards 
(WDBs) conduct procurements and announce awards. Similarly, performance 
standards will be negotiated at a future time and based on a variety of 
factors including State and local economic conditions, resources, and 
priorities. Establishing proposed standards in advance of this 
statutorily-defined process may not be an efficient or effective 
action. The enforcement methods described in the proposed joint rule 
are a reflection of prescribed WIOA requirements and entity size should 
not in and of itself create alternative methods for compliance or 
different time periods for achieving compliance. Although the 
Departments have not determined sufficiently valid reasons for altering 
compliance timeframes in addition to those described in the proposed 
rule for small entities, we seek comment on this issue.
    The Departments' initial impact analysis has concluded that by 
virtue of WIOA's prescriptive language, particularly the requirement to 
publish implementing regulations within 180 days, there are no viable 
regulatory alternatives available other than those discussed above.
    The Departments request comment on these or other alternatives, 
including alternatives on the specific proposed provisions contained in 
this NPRM, with the goal of ensuring a thorough consideration and 
discussion at the final rule stage.
3. Analysis Considerations
    The Departments derived their estimates by comparing the existing 
baseline, i.e., the benefits and costs associated with current 
practices, which at a minimum, must comply with the 2000 WIA Final Rule 
(65 FR 49294, Aug. 11, 2000), against the additional benefits and costs 
associated with implementation of the provisions contained in this 
WIOA-required joint NPRM.
    For a proper evaluation of the additional benefits and costs of 
this NPRM, the Departments explain how the required actions of States, 
WDBs, employers and training entities, government agencies, and other 
related entities are linked to the expected benefits and estimated 
costs. The Departments also considered, when appropriate, the 
unintended consequences of the proposed regulations introduced by this 
NPRM. The Departments make every effort, when feasible, to quantify and 
monetize the benefits and costs of the joint NPRM. The Departments were 
unable to quantify the benefits associated with the proposed rule 
because of data limitations and a lack of operational data or 
evaluation findings on the provisions of the proposed rule or WIOA in 
general. Therefore, the Departments describe the benefits 
qualitatively. The Departments followed the same approach when we were 
unable to quantify the costs.
    Throughout the benefit-cost analysis, the Departments made every 
effort to identify and quantify all potential incremental costs 
associated with the implementation of WIOA as distinct from what 
already exists under WIA, WIOA's predecessor statute. Despite our best 
estimation efforts, however, the Departments might be double-counting 
some activities that are already happening under WIA. Thus, the costs 
itemized below represent an upper bound of the potential cost of 
implementing the statute. The Departments request comment on our cost 
estimates, specifically in terms of whether we have accurately captured 
the additional costs associated with implementation of WIOA.
    In addition to this joint NPRM, the Departments plan to propose 
separate NPRMs to implement program-specific requirements of WIOA that 
fall under each Department's purview; see the Executive Summary section 
of this NPRM for details. While the Departments acknowledge that these 
proposed rules and their associated impacts are not wholly independent 
from one another, we are unaware of any reliable method of quantifying 
the effects of this interdependence. Therefore, this analysis does not 
capture the correlated impacts of the benefits and costs of this 
proposed joint rule and those associated with the other NPRMs. The 
Departments have made an effort to ensure there are no duplication of 
costs and benefits between this and the other NPRMs. We request 
comments from the public about the appropriateness of this assumption.
    In accordance with the regulatory analysis guidance contained in 
OMB Circular A-4 and consistent with the Departments' practices in 
previous rulemakings, this regulatory analysis focuses on the likely 
consequences (benefits and costs that accrue to citizens and residents 
of the United States) of this WIOA-required NPRM. The analysis covers 
10 years (2015 through 2024) to ensure it captures major additional 
benefits and costs that accrue over time. The Departments express all 
quantifiable impacts in 2013 dollars and use 3-percent and 7-percent 
discounting following OMB Circular A-4.
    Exhibit 1 presents the estimated number of entities expected to

[[Page 20612]]

experience an increase in level of effort (workload) due to the 
proposed regulations contained in this joint NPRM. These estimates are 
provided by the Departments and are used extensively throughout this 
analysis to calculate the estimated cost of each proposed provision.
---------------------------------------------------------------------------

    \1\ Based on internal Department of Education data. This figure 
includes the 50 States, the District of Columbia, American Samoa, 
Guam, the Northern Mariana Islands, Puerto Rico, the U.S. Virgin 
Islands, and Palau.
    \2\ Based on internal Department of Labor data. This figure 
includes the 50 States, the District of Columbia, American Samoa, 
Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin 
Islands.
    \3\ Pursuant to sec. 7(34) of the Rehabilitation Act of 1973, as 
amended, this figure includes the 50 States, the District of 
Columbia, American Samoa, Guam, the Northern Mariana Islands, Puerto 
Rico, and the Virgin Islands. Twenty-four States have two designated 
State agencies for the VR program; therefore, there are a total of 
80 VR agencies. The Departments note particularly that we have 
sought to avoid duplication of costs, given the fact that some 
States have two VR agencies.

             Exhibit 1--Number of Affected Entities by Type
------------------------------------------------------------------------
                                                             Number of
                       Entity type                           entities
------------------------------------------------------------------------
States impacted by Adult Education and Family Literacy            \1\ 57
 Act (AEFLA) program requirements.......................
States impacted by DOL program requirements.............          \2\ 56
States impacted by Vocational Rehabilitation (VR)                 \3\ 56
 program requirements...................................
States that need to develop and disseminate best                      40
 practices..............................................
States that need low effort to implement software/IT                  20
 systems................................................
States that need high effort to implement software/IT                 15
 systems................................................
Workforce Development Boards............................             580
------------------------------------------------------------------------

Transfer Payments
    The Departments provide an assessment of transfer payments 
associated with transitioning the nation's public workforce system from 
the requirements of WIA to new requirements imposed by WIOA. In 
accordance with OMB Circular A-4, the Departments consider transfer 
payments as payments from one group to another that do not affect total 
resources available to society. For example, under both WIA and WIOA, 
financial transfers via formula grants will be made from the Federal 
government to the States and from the States to Local WDBs, as 
appropriate. In accordance with the State allotment provisions required 
by WIOA sec. 127, the interstate funding formula methodology is not 
significantly different than that utilized for the distribution of 
funds under WIA.\4\ Final program year grant allocations will reflect 
WIOA requirements and are under development.
---------------------------------------------------------------------------

    \4\ States may elect to change the distribution of funds at the 
local level and appropriately document such changes in the State 
plans. However, as small entities are fully funded by the States, 
which are not small entities, the Departments do not anticipate any 
significant impact on small entities.
---------------------------------------------------------------------------

    One example of where impacts are discussed qualitatively, rather 
than quantified, concerns the expectation that available U.S. workers 
trained and hired who were previously unemployed will no longer need to 
seek new or continued unemployment insurance benefits. Assuming other 
factors remain constant, the Departments expect State unemployment 
insurance expenditures to decline because of the hiring of U.S. workers 
following WIOA implementation. The Departments, however, cannot 
quantify these transfer payments due to a lack of adequate data.
    In the subject-by-subject analysis, the Departments present the 
additional labor and other costs associated with the implementation of 
each of the proposed provisions in this NPRM. Exhibit 2 presents the 
compensation rates for the occupational categories expected to 
experience an increase in level of effort (workload) due to the 
proposed rule. The Departments used wage rates from the Bureau of Labor 
Statistics' Mean Hourly Wage Rate for private and State and local 
employees.\5\ The Departments also used wage rates from the Office of 
Personnel Management's Salary Table for the 2013 General Schedule for 
Federal employees.\6\ The Departments adjusted the wage rates using a 
loaded wage factor to reflect total compensation, which includes health 
and retirement benefits. For the State and local sectors, the 
Departments used a loaded wage factor of 1.55, which represents the 
ratio of total compensation \7\ to wages.\8\ For Federal employees, we 
used a loaded wage factor of 1.69 based on internal data from DOL. The 
Departments then multiplied the loaded wage factor by each occupational 
category's wage rate to calculate an hourly compensation rate.
---------------------------------------------------------------------------

    \5\ Bureau of Labor Statistics, May 2013, National Occupational 
Employment and Wage Estimates, retrieved from: http://www.bls.gov/oes/current/oes_nat.htm.
    \6\ The wage rate for Federal employees is based on Step 5 of 
the General Schedule (source: OPM, 2013, Salary Table for the 2013 
General Schedule, retrieved from: http://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2013/general-schedule/gs_h.pdf).
    \7\ BLS Employment Cost Index, 2013 Average Series ID 
CMU3010000000000D, CMU3010000000000P (source: Bureau of Labor 
Statistics, 2013 Employer Costs for Employee Compensation, retrieved 
from: http://www.bls.gov/schedule/archives/ecec_nr.htm).
    \8\ The State and local loaded wage factor was applied to all 
non-Federal employees. Discerning the number of State and local-
sector employees and private-sector employees at the local level is 
difficult; therefore, the Departments used the State and local-
sector loaded wage factor (1.55) instead of the private-sector wage 
factor (1.42) for all non-Federal employees to avoid underestimating 
the costs.
---------------------------------------------------------------------------

    The Departments invite comments regarding the assumptions used to 
estimate the level of additional effort required for the various 
proposed new activities, as well as data sources for the wages and the 
loaded wage factors that reflect employee benefits used in the 
analysis.
    The Departments use the hourly compensation rates presented in 
Exhibit 2 throughout this analysis to estimate additional labor costs 
for each proposed provision.

[[Page 20613]]



                               Exhibit 2--Calculation of Hourly Compensation Rates
----------------------------------------------------------------------------------------------------------------
                                                                                                      Hourly
                      Position                           Grade        Average       Loaded wage    compensation
                                                         level      hourly wage       factor           rate
                                                                               a               B       c = a x b
----------------------------------------------------------------------------------------------------------------
                                            State and Local Employees
----------------------------------------------------------------------------------------------------------------
Administrative staff \9\............................        N/A           $17.96            1.55          $27.84
Board staff \10\....................................  ..........           45.32            1.55           70.25
Legal counsel/staff \11\............................  ..........           40.68            1.55           63.05
Local stakeholders \12\.............................  ..........           44.52            1.55           69.01
Managers \11\.......................................  ..........           45.32            1.55           70.25
Technical staff \13\................................  ..........           43.38            1.55           67.24
----------------------------------------------------------------------------------------------------------------
                                                Federal Employees
----------------------------------------------------------------------------------------------------------------
Federal positions...................................      GS-13            38.92            1.69           65.77
----------------------------------------------------------------------------------------------------------------

    The section-by-section analysis presents  the total incremental 
cost of the proposed joint rule relative to the baseline, i.e., the 
current practice under WIA. At a minimum, all affected entities are 
currently required to comply with the 2000 WIA Final Rule (65 FR 49294, 
Aug. 11, 2000); however, some affected entities may already be in 
compliance with aspects of the proposed joint rule. This analysis 
estimates the incremental cost that would be incurred by affected 
entities that are not yet in compliance with the proposed rule. The 
equation below shows the method by which the Departments calculated the 
incremental total cost for each provision over the 10-year analysis 
period.
---------------------------------------------------------------------------

    \9\ BLS OES, May 2013, 44-0000 Office and Administrative Support 
Occupations (http://www.bls.gov/oes/current/999201.htm#43-0000).
    \10\ BLS OES, May 2013, 11-1021 General and Operations Managers 
(http://www.bls.gov/oes/current/999201.htm#11-0000).
    \11\ BLS OES, May 2013, 23-10111 Lawyers (http://www.bls.gov/oes/current/999201.htm#23-0000).
    \12\ BLS OES, May 2013, 11-0000 Management Occupations (http://www.bls.gov/oes/current/999201.htm#11-0000).
    \13\ BLS OES, May 2013, average for the following occupational 
categories weighted by the number of employees in State government: 
15-1131 Computer Programmers (http://www.bls.gov/oes/current/999201.htm#15-0000); 15-1132 Software Developers, Applications 
(http://www.bls.gov/oes/current/999201.htm#15-0000); 15-1133 
Software Developers, Systems Software (http://www.bls.gov/oes/current/999201.htm#15-0000); and 15-1134 Web Developers (http://www.bls.gov/oes/current/999201.htm#15-0000).
[GRAPHIC] [TIFF OMITTED] TP16AP15.001

---------------------------------------------------------------------------
Where,

Al = Number of affected entities that would incur labor 
costs,
Ni = Number of staff of labor type i,
Hi = Hours required per staff of labor type i,
Wi = Mean hourly wage of staff of labor type i,
Li = Loaded wage factor of staff of labor type i,
Aj = Number of affected entities incurring non-labor 
costs of type j,
Cj = Non-labor cost of type j,
i = Staff type,
n = Number of staff types,
j = Non-labor cost type,
m = Number of non-labor cost types,
T = Year.

    The total cost of each provision is calculated as the sum of the 
total labor cost and total non-labor cost incurred each year over the 
10-year period (see Exhibit 3 for a summary of the 10-year cost of the 
proposed joint rule by provision). The total labor cost is the sum of 
the labor costs for each labor type i (e.g., administrative staff, 
counsel staff, and managers) multiplied by the number of affected 
entities that will incur labor costs, Al. The labor cost for 
each labor type i is calculated by multiplying the number of staff 
required to perform the proposed activity, Ni; the hours 
required per staff member to perform the proposed activity, 
Hi; the mean hourly wage of staff of labor type i, 
Wi; and the loaded wage factor of staff of labor type i, 
Li. The total non-labor cost is the sum of the non-labor 
costs for each non-labor cost type j (e.g., consulting costs) 
multiplied by the number of affected entities that will incur non-labor 
costs, Aj.
4. Subject-by-Subject Benefit-Cost Analysis
    The Departments' analysis below covers the expected impacts of the 
following proposed provisions of the WIOA joint NPRM against the 
baseline of the current practice under WIA: (a) Time to Review the New 
Rule; (b) New Elements to State and Local Plans; (c) Development and 
Updating of State Performance Accountability Measures; (d) 
Identification and Dissemination of Best Practices; (e) Development of 
Strategies for Aligning Technology and Data Systems across One-stop 
Partner Programs to Enhance Service Delivery and Improve Efficiencies; 
(f) Unified or Combined State Plan; (g) Local Plan Revisions; (h) State 
Performance Accountability Measures; (i) Performance Reports; and (j) 
Evaluation of State Programs.
    The Departments emphasize that many of the proposed provisions in 
this WIOA-required joint NPRM are also existing requirements under WIA. 
For example, the requirement that States ``prepare performance 
reports'' is a current requirement under WIA that States routinely 
undertake. Accordingly, our regulatory analysis focuses on ``new'' 
benefits and costs that can be attributed exclusively to new 
requirements under WIOA, as addressed in this joint NPRM. Much of WIA's 
infrastructure and operations are carried

[[Page 20614]]

forward under WIOA and, therefore, are not considered ``new'' cost 
burdens under this NPRM.
a. Time To Review the New Rule
    Upon publication of this joint NPRM, the regulated community would 
need to learn about the new WIOA requirements, including the proposed 
regulations, and plan for compliance.
Costs
    At the State level for DOL programs, the Departments estimated this 
labor cost by multiplying the estimated average number of managers per 
State (2) by the time required to read and review the new rule (20 
hours), and then by the applicable hourly compensation rate. We 
multiplied this product ($8,189) by the number of States (56) to 
estimate this one-time cost of $458,582.\14\
---------------------------------------------------------------------------

    \14\ The cost estimates in this analysis could be a little bit 
off due to rounding.
---------------------------------------------------------------------------

    At the State level for the AEFLA program, the Departments estimated 
this labor cost by multiplying the estimated average number of managers 
per State (5) by the time required to read and review the new rule (40 
hours) and then by the applicable hourly compensation rate. We 
performed the same calculation for the following occupational 
categories: counsel staff (1 legal counsel for 40 hours), technical 
staff (2 staff for 40 hours), and administrative staff (5 staff for 40 
hours). We summed the labor cost for all four categories ($27,518) and 
multiplied the result by the number of States (57) to estimate this 
one-time cost of $1,568,531.
    At the local level for the AEFLA program, the Departments 
multiplied the estimated average number of managers for all local 
entities within a State (40) by the time required to read and review 
the new rule (40 hours) and then by the hourly compensation rate. We 
repeated the calculation for the technical (40 staff for 40 hours) and 
administrative staff (40 staff for 40 hours). We did not estimate legal 
counsel hours for local level AEFLA programs as our experience 
indicates that this labor category is typically engaged only at the 
State level. We summed the labor cost for all three categories of 
personnel ($264,517) and multiplied the result by the number of States 
(57). This calculation yields a total of $15,077,458 in labor costs in 
the first year of the rule.
    For State VR agencies, the Departments multiplied the estimated 
number of managers per VR agency (3) by the time required to read and 
review the new rule (20 hours) and then by the hourly compensation 
rate. We performed the same calculation for the counsel (1 staff for 40 
hours) and technical staff (1 staff for 20 hours). We summed the labor 
cost for all three categories ($6,821) and multiplied the result by the 
number of VR agencies (80). The one-time cost is estimated to be 
$545,650.
    The sum of these costs yields a total one-time cost of $17,650,220 
for individuals from State-level DOL programs, State and local level 
AEFLA programs, and State VR agencies to read and review the proposed 
new rule. Over the 10-year period of analysis these one-time costs 
result in an average annual cost of $1,765,022.
b. New Elements to State and Local Plans
    WIOA sec. 102(b) establishes new major content areas of the Unified 
or Combined State Plan, which include strategic and operational 
planning elements. Strategic planning elements include State analyses 
of economic and workforce factors, an assessment of workforce 
development activities, and formulation of the State's vision and goals 
for preparing an educated and skilled workforce that meets the needs of 
employers and a strategy to achieve the vision and goals. Operational 
planning elements include State strategy implementation, State 
operating systems and policies, program-specific requirements, 
assurances, and additional requirements imposed by the Secretaries of 
Labor or Education, or other Secretaries, as appropriate. WIOA sec. 
108(b) establishes strategic planning and operational elements for 
local plans. These requirements set the foundation for WIOA principles 
by fostering strategic alignment, improving service integration, and 
ensuring that the workforce system is industry-relevant, responding to 
the economic needs of the local workforce development area, and 
matching employers with skilled workers.
Costs
    At the State level for the AEFLA program, the Departments estimated 
this labor cost by multiplying the estimated average number of managers 
per State (5) by the time required to develop, review, and revise the 
State Plan (40 hours) and the hourly compensation rate. We performed 
the same calculation for the following occupational categories: counsel 
staff (1 staff for 20 hours), technical staff (2 staff for 40 hours), 
and administrative staff (5 staff for 20 hours). We summed the labor 
cost for all four categories ($23,473) and multiplied the result by the 
number of States (57) to estimate this biennial cost of $1,337,972. 
Over the 10-year period, this calculation yields an average annual cost 
of $668,986.
    The Departments estimated the consultant costs for the State-level 
AEFLA program by multiplying the consultant costs per State ($25,000) 
by the number of States (57). This calculation yields a biennial cost 
of $1,425,000. Over the 10-year period, this results in an average 
annual cost of $712,500.
    At the local level for the AEFLA program, the Departments estimated 
this cost by multiplying the estimated average number of managers for 
all local entities within a State (40) by the time required to develop, 
review, and revise the local plan (40 hours) and the hourly 
compensation rate. We repeated the calculation for the administrative 
staff (40 staff for 20 hours). We did not estimate any legal counsel or 
technical staff hours for local level AEFLA programs as our experience 
indicates that these labor categories are typically engaged only at the 
State level. We summed the labor cost for the two occupational 
categories ($134,664) and multiplied the result by the number of States 
(57). The biennial cost at the local level for the AEFLA program is 
estimated to be $7,675,848, which would result in an average annual 
cost of $3,837,924 over the 10-year period.
    For State VR agencies, the Departments estimated this cost by first 
multiplying the estimated number of managers per VR agency (1) by the 
time required to review and revise the State Plan (5 hours) and the 
hourly compensation rate. We performed the same calculation for the 
technical staff (1 staff for 5 hours). Summing the labor cost for both 
categories ($687) and multiplying the result by the number of VR 
agencies (80) results in a biennial cost of $54,994 for State VR 
agencies. Over the 10-year period, this calculation yields an average 
annual cost of $27,497.
    For State Boards, DOL estimates that there will be costs associated 
with State planning attributed to the extra effort to coordinate and 
develop a plan between the six core programs administered by the 
Departments of Education and Labor, respectively, which is a new 
requirement under WIOA. The Departments estimate the costs for this new 
requirement to coordinate among the six core programs in the State plan 
under (f) Unified or Combined State Plan and (g) Local Plan Revisions. 
WIOA requires more substantial labor market information (LMI) data be 
included in the State Plan than was required under WIA. This is a cost 
that

[[Page 20615]]

DOL estimates will impact the State level DOL core programs because the 
State typically provides the LMI data to local areas for the 
formulation of the local plan. Furthermore, WIOA will allow States to 
use existing data for their initial State Plan, so the additional cost 
will be offset substantially for the first State Plan required. For the 
required modification of State Plans and any subsequent State Plan 
under WIOA, the State will incur this cost to include substantial LMI 
data.
    For State-level DOL programs, the Departments estimated this cost 
by first multiplying the estimated number of technical staff per State 
(2) by the time required to review and revise the State Plan (16 hours) 
and the hourly compensation rate. We performed the same calculation for 
administrative staff (1 staff for 16 hours). Summing the labor cost for 
both categories ($2,597) and multiplying the result by the number of 
States (56) results in an annual cost of $145,435.
    The sum of these costs yields a total 10-year cost of $53,923,423, 
or an average annual cost of $5,392,342, for individuals from the State 
and local level for all core programs to review and revise State and 
local plans to ensure they include the new elements.
c. Development and Updating of State Performance Accountability 
Measures
    WIOA sec. 116 establishes performance accountability indicators and 
performance reporting requirements to assess the effectiveness of 
States and local areas in achieving positive outcomes for individuals 
served by the core programs. The core programs are defined in WIOA sec. 
116(b)(3)(A)(ii) to include the adult, dislocated worker, and youth 
programs under title I of WIOA, the AEFLA program under WIOA title II, 
the Wagner-Peyser program under the Wagner-Peyser Act as amended by 
WIOA title III, and the VR program under the Rehabilitation Act of 1973 
as amended by WIOA title IV. With a few exceptions, including the local 
accountability system under WIOA sec. 116(c), the performance 
accountability requirements apply across all the core programs.
Costs
    At the State level for DOL programs, the Departments estimated this 
labor cost by first multiplying the estimated average number of 
managers per State (1) by the time required to develop and update 
metrics and other accountability measures (32 hours) and the hourly 
compensation rate. We performed the same calculation for the technical 
(3 staff for 80 hours) and administrative staff (1 staff for 32 hours). 
We summed the labor cost for all three categories ($19,276) and 
multiplied the result by the number of States to estimate this annual 
cost of $1,079,459, or a total cost of $10,794,587 over the 10-year 
period.
    The Departments estimated the software and IT system cost for 
State-level DOL programs by multiplying the software and IT system cost 
($100,000) by the number of States. This calculation yields an annual 
cost of $5,600,000 or a total cost of $56,000,000 over the 10-year 
period.
    The Departments estimated the licensing fee costs for State-level 
DOL programs by multiplying the licensing fee costs ($50,000) by the 
number of States. This calculation yields an annual cost of $2,800,000 
or a total cost of $28,000,000 over the 10-year period.
    The Departments estimated the consultant cost for State-level DOL 
programs by multiplying the consultant cost ($75,000) by the number of 
States. This calculation yields a one-time cost of $4,200,000, 
representing an average annual cost of $420,000 over the 10-year 
period.
    At the State level for the AEFLA program, the Departments estimated 
this labor cost by first multiplying the estimated average number of 
managers per State (5) by the time required to develop and update 
metrics and other accountability measures (80 hours) and the hourly 
compensation rate. We repeated the calculation for the technical staff 
(2 staff for 80 hours) and administrative staff (5 staff for 80 hours). 
We summed the labor cost for all three categories ($49,992) and 
multiplied the result by the number of States to estimate this one-time 
cost of $2,849,535. Over the 10-year period, this calculation yields an 
average annual cost of $284,954.
    The Departments estimated the consultant cost for the State-level 
AEFLA program by multiplying the consulting costs per State ($25,000) 
by the number of States. This calculation yields a one-time cost of 
$1,425,000. Over the 10-year period, this calculation yields an average 
annual cost of $142,500.
    At the local level for the AEFLA program, the Departments estimated 
this cost by first multiplying the estimated average number of managers 
for all local entities within a State (40) by the time required to 
participate in statewide stakeholder meetings and other activities to 
provide input for the development and updating of metrics and other 
accountability measures (80 hours) and the hourly compensation rate. We 
performed the same calculation for the technical staff (40 staff for 80 
hours). We summed the labor cost for the two occupational categories 
($439,952) and multiplied the result by the number of States to 
estimate this one-time cost of $25,077,264. Over the 10-year period, 
this calculation yields an average annual cost of $2,507,726.
    For State VR agencies, the Departments estimated this cost by first 
multiplying the estimated number of managers per VR agency (6) by the 
time required to develop and update metrics and other accountability 
measures (10 hours) and the hourly compensation rate. We repeated the 
calculation for the technical staff (4 staff for 10 hours). We summed 
the labor cost for both categories ($6,904) and multiplied the result 
by the number of VR agencies to estimate this one-time cost as 
$552,346.
    The sum of these calculations yields a total first year costs of 
$43,583,603 and a subsequent annual cost of $9,479,459 for individuals 
from the State and local level for all core programs to develop and 
update metrics and other accountability measures to assess the 
effectiveness of the core programs in the State. The estimated total 
10-year cost of developing and updating State performance 
accountability measures is $128,898,731, resulting in average annual 
cost of $12,889,873.
d. Identification and Dissemination of Best Practices
    Under WIOA sec. 101(d)(5), State Boards must assist Governors in 
the identification and dissemination of best practices, including 
practices for the effective operation of one-stop centers; the 
development of effective Local Boards; and the development of effective 
training programs that respond to real-time labor market analysis and 
support efficient placement of individuals into employment or career 
pathways.
Costs
    The Departments estimated the labor cost for State WDB staff by 
multiplying the estimated average number of managers per State (1) by 
the time required to identify and disseminate information (20 hours) 
and the hourly compensation rate. We performed the same calculation for 
the technical staff (2 staff for 40 hours) and administrative staff (1 
staff for 20 hours). We summed the labor cost for all three categories 
($7,341) and multiplied the result by the number of States that need to 
develop and disseminate best practices (40) to estimate an average 
annual cost of $293,632.
    This cost is likely a lower bound estimate because we did not 
include the

[[Page 20616]]

effort required for the entities that receive the best practices to 
implement them. The Departments did not have adequate data to estimate 
this implementation cost and invites the public to submit data sources 
or estimates for consideration during the final rule stage.
e. Development of Strategies for Aligning Technology and Data Systems 
Across One-Stop Partner Programs To Enhance Service Delivery and 
Improve Efficiencies
    Under WIOA sec. 101(d)(8), State Boards must assist Governors in 
the development of strategies for aligning technology and data systems 
across one-stop partner programs to enhance service delivery and 
improve efficiencies in reporting on performance accountability 
measures, including design implementation of common intake, data 
collection, case management information, and performance accountability 
measurement and reporting processes and the incorporation of local 
input into such design and implementation to improve coordination of 
services across one-stop partner programs.
Costs
    At the State level for the AEFLA program, the Departments estimated 
this labor cost by first multiplying the estimated average number of 
managers per State (5) by the time required to develop strategies (40 
hours) and the hourly compensation rate. We performed the same 
calculation for the technical staff (2 staff for 120 hours) and 
administrative staff (5 staff for 40 hours). We summed the labor cost 
for all three categories ($35,754) and multiplied the result by the 
number of States to estimate a recurring annual cost of $2,037,987.
    The Departments estimated the software and IT systems cost for the 
State-level AEFLA program by multiplying the software and IT systems 
costs per State ($150,000) by the number of States. This calculation 
yields an estimated recurring annual cost of $8,550,000.\15\
---------------------------------------------------------------------------

    \15\ The Departments estimated the annual software and IT 
systems cost of this provision at the State level for the AEFLA 
program by multiplying the software and IT systems cost per State by 
the number of States ($150,000 x 57). This yields an average annual 
cost of $8,550,000.
---------------------------------------------------------------------------

    At the local level for the AEFLA program, the Departments estimated 
this cost by first multiplying the estimated average number of managers 
for all local entities within a State (40) by the time required to 
develop strategies (40 hours) and the hourly compensation rate. We 
performed the same calculation for the technical staff (40 staff for 
120 hours). We summed the labor cost for the two occupational 
categories ($435,141) and multiplied the result by the number of States 
to estimate a recurring annual cost of $24,803,026.
    For State VR agencies, the Departments estimated this cost by first 
multiplying the estimated number of managers per VR agency (1) by the 
time required to develop strategies (8 hours) and the hourly 
compensation rate. We repeated the calculation for the legal staff (1 
staff for 4 hours) and technical staff (1 staff for 16 hours). We 
summed the labor cost for the two categories ($1,890) and multiplied 
the result by the number of VR agencies to estimate a recurring annual 
cost of $151,201.
    The Departments estimated the labor cost that State WDBs would 
incur by multiplying the estimated average number of WDB staff per 
State (1) by the time required to develop strategies (80 hours) and the 
hourly compensation rate. We repeated the calculation for the technical 
staff (2 staff for 120 hours). We summed the labor cost for both 
categories ($21,757) and multiplied the result by the number of States 
to estimate this one-time cost of $1,218,394.
    The sum of these calculations yields a first year cost of 
$36,760,608 with subsequent annual costs of $35,542,213 for individuals 
from the State and local level for all core programs to develop 
strategies for aligning technology and data systems across one-stop 
partner programs. The estimated total 10-year cost of developing and 
updating State performance accountability measures is $356,640,528, 
resulting in average annual cost of $35,664,053.
f. Unified or Combined State Plan
    WIOA sec. 102 requires the Governor of each State to submit a 
Unified or Combined State Plan to the Secretary of the Department of 
Labor that outlines a 4-year strategy for the State's workforce 
development system. States must have approved State Plans in place to 
receive funding for the six core programs under WIOA--the adult, 
dislocated worker, and youth programs (title I of WIOA); the AEFLA 
program (title II of WIOA); the Wagner-Peyser Employment Service 
(Wagner-Peyser Act as amended by title III of WIOA); and the VR program 
under title I of the Rehabilitation Act of 1973 (as amended by title IV 
of WIOA). At a minimum, States must submit a Unified State Plan, which 
encompasses these six core programs. Although each of the core programs 
was required to submit State Plans under WIA and, thus, the submission 
of the plans does not represent an added cost under WIOA, some programs 
may experience additional costs related to the planning requirements 
unique to becoming part of a Unified or Combined State Plan under WIOA.
    As stated above, WIOA sec. 102 requires, at a minimum, States to 
submit a Unified State Plan, which encompasses the six core programs 
under WIOA. Under WIOA sec. 103, States may submit, in the alternative, 
a Combined State Plan, which includes the six core programs of the 
Unified State Plan, plus one or more of the optional Combined State 
Plan programs described in WIOA sec. 103(a)(2).
Costs
    At the State level for the AEFLA program, the Departments estimated 
this labor cost by first multiplying the estimated average number of 
managers per State (5) by the time required to participate in statewide 
stakeholder meetings and other activities to develop, review, and 
revise the State Plan (24 hours) and the hourly compensation rate. We 
repeated the calculation for the following occupational categories: 
counsel staff (1 staff for 8 hours), technical staff (2 staff for 24 
hours), and administrative staff (5 staff for 16 hours). We summed the 
labor cost for all four categories ($14,388) and multiplied the result 
by the number of States to estimate this one-time cost of $820,142.
    The Departments estimated the consultant costs for the State-level 
AEFLA program by multiplying the consultant costs per State ($25,000) 
by the number of States. This calculation yields a one-time cost of 
$1,425,000.
    At the local level for the AEFLA program, the Departments estimated 
this cost by first multiplying the estimated average number of managers 
for all local entities within a State (40) by the time required to 
participate in statewide stakeholder meetings and other activities to 
develop, review, and revise a Unified or Combined State plan (24 hours) 
and the hourly compensation rate. We repeated the calculation for the 
following occupational categories: counsel staff (3 staff for 8 hours), 
technical staff (40 staff for 24 hours), administrative staff (40 staff 
for 16 hours), and local stakeholders (100 stakeholders for 8 hours). 
We summed the labor cost for the five occupational categories 
($217,221) and multiplied the result by the number of States to 
estimate this one-time cost of $12,381,609.
    For DOL's State-level program costs associated with State WDBs, the 
Departments estimated this labor cost by first multiplying the 
estimated average

[[Page 20617]]

number of managers per State (2) by the time required to submit a 
Unified and Combined State Plan (20 hours) and the hourly compensation 
rate. We performed the same calculation for the following occupational 
categories: counsel staff (1 staff for 8 hours), technical staff (4 
staff for 20 hours), and administrative staff (1 staff for 8 hours). We 
summed the labor cost for all four categories ($8,916) and multiplied 
the result by the number of States to estimate this cost of $499,301 
that occurs in 2016 and 2020.
    For State VR agencies, the Departments estimated this cost by 
multiplying the estimated number of managers per VR agency (2) by the 
time required to engage in the planning process for Unified or Combined 
State Plans (7 hours) and the hourly compensation rate. We performed 
the same calculation for the technical staff (2 staff for 7 hours). We 
summed the labor cost for the two categories ($1,925) and multiplied 
the result by the number of VR agencies to estimate a recurring annual 
cost of $153,983.
    There is no additional cost to DOL State or local programs 
associated with this provision because these programs currently submit 
Unified or Combined State Plans under WIA.
    The sum of these calculations yields first year costs of 
$14,780,735 for individuals from the State and local level for all core 
programs to comply with this provision, subsequent annual costs of 
$153,983 for VR State agencies, and a total cost of $998,603 associated 
with State WDBs for years 2016 and 2020. The estimated total 10-year 
cost of activities related to the submission of the States Unified or 
Combined State Plan is $17,165,187, resulting in average annual cost of 
$1,716,519.
g. Local Plan Revisions
    WIOA sec. 108(b) establishes strategic planning and operational 
elements for local plans. These requirements set the foundation for 
WIOA principles, by fostering strategic alignment, improving service 
integration, and ensuring that the workforce system is industry-
relevant, responding to the economic needs of the local workforce 
development area, and matching employers with skilled workers. The 
previously developed local plans under WIA will have to be revised to 
address new issues and submitted every 4 years.
Costs
    For DOL's local-level program costs associated with local WDBs, the 
Departments estimated this cost by first multiplying the estimated 
average number of managers per local WDB (2) by the time required to 
revise and submit an updated local plan (20) and the hourly 
compensation rate. We performed the same calculation for the following 
occupational categories: counsel staff (1 staff for 8 hours), technical 
staff (4 staff for 20 hours), and administrative staff (1 staff for 8 
hours). We summed the labor cost for all four categories ($8,916) and 
multiplied the result by the number of local WDBs (580) to estimate 
this cost of $5,171,336, which occurs twice during the analysis period 
(2016 and 2020).
    At the local level for the AEFLA program, the Departments estimated 
this cost by first multiplying the estimated average number of managers 
for all local entities within a State (40) by the time required to 
develop, review, revise, and submit an updated local plan (24 hours) 
and the hourly compensation rate. We performed the same calculation for 
the following occupational categories: technical staff (40 staff for 24 
hours), administrative staff (40 staff for 16 hours), and local 
stakeholders (100 stakeholders for 8 hours). We summed the labor cost 
for all four categories ($215,708) and multiplied the result by the 
number of States to estimate this one-time cost as $12,295,351.
    These particular projected costs pertain solely to locally-
administered programs and do not impact the core programs at the State 
level.
    The sum of these calculations yields a total 10-year cost of 
$22,638,023, which results in an average annual cost of $2,263,802 for 
individuals from the local WDBs and the local AEFLA programs to revise 
and submit updated local plans.
h. State Performance Accountability Measures
    WIOA sec. 116(b) establishes performance accountability indicators 
and performance reporting requirements to assess the effectiveness of 
States and local areas in achieving positive outcomes for individuals 
served by the core programs. Under that provision, States must include 
primary indicators of performance in their Unified or Combined State 
Plans, and may identify additional indicators of performance for the 
six core programs. These indicators must be included in the Unified or 
Combined State Plan.
Costs
    At the State level for DOL programs, the Departments estimated this 
labor cost by first multiplying the estimated average number of 
managers per State (1) by the time required to comply with increased 
data collection and processing requirements (32 hours) and the hourly 
compensation rate. We performed the same calculation for the technical 
staff (3 staff for 80 hours) and administrative staff (1 staff for 32 
hours). We summed the labor cost for all three categories ($19,276) and 
multiplied the result by the number of States to estimate this annual 
cost of $96,380.
    The Departments estimated the software and IT system cost for 
State-level DOL programs by multiplying the software and IT system cost 
($100,000) by the number of States expected to submit data (5). This 
calculation yields an annual cost of $500,000.
    The Departments estimated the licensing fee costs for State-level 
DOL programs by multiplying the licensing fee costs ($50,000) by the 
number of States expected to submit data (5). This calculation yields 
an annual cost of $250,000.
    The Departments estimated the consultant cost for State-level DOL 
programs by multiplying the consultant cost ($75,000) by the number of 
States expected to submit data. This calculation yields a one-time cost 
of $375,000.
    At the State level for the AEFLA program, the Departments estimated 
this labor cost by first multiplying the estimated average number of 
managers per State (5) by the time required to obtain these data (7 
hours) and the hourly compensation rate. We performed the same 
calculation for technical staff (2 staff for 7 hours) and 
administrative staff (5 staff for 7 hours). We summed the labor cost 
for all three categories ($4,374) and multiplied the result by the 
number of States expected to submit additional data to estimate this 
one-time cost as $21,871.
    For State VR agencies, the Departments estimated the cost to obtain 
quarterly State unemployment insurance wage data by first multiplying 
the estimated number of managers per VR agency (2) by the time required 
to obtain these data (20 hours) and the hourly compensation rate. We 
performed the same calculation for the counsel staff (1 staff for 20 
hours) and technical staff (2 staff for 20 hours). We summed the labor 
cost for all three categories ($6,760) and multiplied the result by the 
number of VR agencies expected to provide additional information (7) to 
estimate this one-time cost as $47,323.
    For State VR agencies, the Departments estimated the cost to obtain 
additional information for new data fields by multiplying the estimated 
number of technical staff per VR agency (60) by the time required to 
obtain these data (9 hours) and the hourly compensation rate. We 
multiplied the

[[Page 20618]]

result ($36,309) by the number of VR agencies expected to provide 
additional information to estimate this annual cost as $254,163.
    The Departments estimated the software and IT costs for State VR 
agencies to obtain additional information for new data fields by 
multiplying the software and IT costs ($5,000) by the number of VR 
agencies expected to provide additional information. This calculation 
yields a one-time cost of $35,000.
    At the local level for the AEFLA program, the Departments estimated 
this labor cost by multiplying the estimated average number of managers 
for all local entities within a State (40) by the time required to 
obtain additional information (7 hours) and the hourly compensation 
rate. We performed the same calculation for technical staff (40 staff 
for 7 hours). We summed the labor cost for these categories ($38,496) 
and multiplied the number of States expected to provide additional 
information (5) to estimate this one-time cost of $192,479.
    The sum of these calculations yields a total 10-year cost of 
$11,677,110, which results in an average annual cost of $1,167,711 for 
individuals from the State and local levels for core programs to comply 
with increased data collection and processing requirements.
i. Performance Reports
    Under WIOA sec. 116(d), States must make available performance 
reports for local areas and for ETPs under title I of the WIOA. WIOA 
also requires that States cooperate in evaluations of State programs 
overseen by the Departments of Labor and Education. Section 116(d)(1) 
of WIOA requires the Departments to provide a performance reporting 
template for the performance reports required in WIOA secs. 116(d)(2)-
(4).
Costs
    At the Federal level, the Departments estimated this labor cost by 
first multiplying the estimated average number of GS-13 Step 5 managers 
(1) by the time required to develop the reporting template (60 hours) 
and the hourly compensation rate. We performed the same calculation for 
the Federal staff labor category (10 staff for 120 hours). We summed 
the labor cost of these two categories to estimate this one-time cost 
of $82,870.
    At the State level for the AEFLA program, the Departments estimated 
this labor cost by first multiplying the estimated average number of 
managers per State (5) by the time required to develop the reporting 
template (40 hours) and the hourly compensation rate. We performed the 
same calculation for the technical staff (2 staff for 40 hours) and 
administrative staff (5 staff for 40 hours). We summed the labor cost 
for all three categories ($24,996) and multiplied the result by the 
number of States to estimate this one-time cost of $1,399,772.
    The Departments estimated the software and IT system cost for the 
State-level AEFLA programs by multiplying the software and IT system 
cost ($1,750,000) by the number of States. This calculation yields a 
one-time cost of $99,750,000, resulting in an average annual cost of 
$9,975,000 over a 10-year period.
    The Departments estimated the licensing fees for the State-level 
AEFLA programs by multiplying the per-State licensing fees ($25,000) by 
the number of States. This calculation yields a recurring annual cost 
of $1,425,000.
    At the local level for the AEFLA program, the Departments estimated 
this labor cost by multiplying the estimated average number of managers 
for all local entities within a State (40) by the time required to 
participate in statewide stakeholder meetings and other activities to 
develop, review, and revise the reporting template (40 hours) and the 
hourly compensation rate. We multiplied the product by the number of 
States to estimate this one-time cost of $6,406,435.
    The sum of these calculations yields a total one-time cost of 
$107,639,077 for individuals from the Federal, State, and local levels 
to develop the reporting templates and an annual cost of $1,425,000 for 
licensing fees. The 10-year total costs result in an average annualized 
cost of $12,188,908.
j. Evaluation of State Programs
    WIOA sec. 116(e)(1) requires States to conduct ongoing evaluations 
of activities carried out in the State under the core programs. To 
comply with WIOA sec. 116(e)(4), States must, to the extent 
practicable, cooperate in the conduct of evaluations (including related 
research projects) provided for by the Secretary of Labor or the 
Secretary of Education under the provisions of Federal law identified 
in WIOA sec. 116(e)(1); WIOA secs. 169 and 242(c)(2)(D); secs. 
12(a)(5), 14, and sec. 107 of the Rehabilitation Act of 1973 (29 U.S.C. 
709(a)(5), 711, 727) (applied with respect to programs carried out 
under title I of that Act (29 U.S.C. 720 et seq.)); and the 
investigations provided for by the Secretary of Labor under sec. 10(b) 
of the Wagner-Peyser Act (29 U.S.C. 49i(b)).
Costs
    At the State level for DOL programs, the Departments estimated this 
labor cost by first multiplying the estimated average number of 
managers per State (1) by the time required to evaluate ongoing program 
activities (20 hours) and the hourly compensation rate. We performed 
the same calculation for the technical staff (2 staff for 20 hours) and 
administrative staff (1 staff for 10 hours). We summed the labor cost 
for all three categories ($4,373) and multiplied the result by the 
number of States to estimate this annual cost of $244,880.
    At the State level for DOL programs, the Departments estimated the 
software, IT system, and consultant costs for both ``low-effort'' 
States, those with either smaller populations or more robust existing 
IT system infrastructure, and for ``high-effort'' States with larger 
populations or limited IT system infrastructure. We first multiplied 
the software, IT system, and consultant costs for low-effort States 
($200,000) by the number of low-effort States (20). We performed the 
same calculation for high-effort States (15 States at $1,000,000 each). 
We summed these costs for both State categories to estimate an annual 
cost of $19,000,000.\16\ This estimate represents the cost associated 
with the proposed joint rule beyond the IT expenditures currently 
incurred by State workforce agencies.
---------------------------------------------------------------------------

    \16\ To estimate the software, IT, and consultant cost of this 
provision at the State-level for DOL programs, the Departments first 
estimated the software, IT, and consultant cost for low-effort 
States by multiplying the non-labor cost per low-effort State by the 
number of low-effort States ($200,000 x 20 = $4,000,000). We 
estimated the software, IT, and consultant program cost for high-
effort States by multiplying the non-labor cost per high-effort 
State by the number of high-effort States ($1,000,000 x 15 = 
$15,000,000). We summed these non-labor costs for low- and high-
effort States ($4,000,000 + $15,000,000), yielding an estimated 
annual software, IT, and consultant cost of $19,000,000.
---------------------------------------------------------------------------

    At the State level for the AEFLA program, the Departments estimated 
the labor cost by first multiplying the estimated average number of 
managers per State (5) by the time required to evaluate ongoing program 
activities (120 hours) and the hourly compensation rate. We performed 
the same calculation for the technical staff (2 staff for 80 hours) and 
administrative staff (5 staff for 80 hours). We summed the labor cost 
for all three categories ($64,041) and multiplied the result by the 
number of States to estimate an annual cost of $3,650,339.
    At the State level for the AEFLA program, the Departments estimated 
the software and IT system costs by

[[Page 20619]]

multiplying the software and IT system costs ($250,000) by the number 
of States. This calculation yields an annual cost of $14,250,000.\17\
---------------------------------------------------------------------------

    \17\ To estimate the software and IT system cost of this 
provision at the State-level for the AEFLA program, the Departments 
multiplied the software and IT system cost per State by the number 
of States ($250,000 x 57). This yields an annual software and IT 
system cost of $14,250,000.
---------------------------------------------------------------------------

    At the local level for the AEFLA program, the Departments estimated 
this labor cost by first multiplying the estimated average number of 
managers for all local entities within a State (40) by the time 
estimated to collect, review, and revise data provided for the 
evaluation of ongoing program activities (120 hours) and the hourly 
compensation rate. We performed the same calculation for the technical 
staff (40 staff for 80 hours) and administrative staff (40 staff for 80 
hours). We summed the labor cost for all three categories ($641,427) 
and multiplied the result by the number of States to estimate an annual 
cost of $36,561,350.
    For State VR agencies, the Departments estimated this labor cost by 
first multiplying the estimated average number of managers per VR 
agency (1) by the time estimated to evaluate ongoing program activities 
(1 hour) and the hourly compensation rate. We performed the same 
calculation for the technical staff (1 staff for 13 hours) and 
administrative staff (1 staff for 2 hours). We summed the labor cost 
for all three categories ($1,000) and multiplied the result by the 
number of VR agencies to estimate an annual cost of $80,002.
    The sum of these calculations yields a total annual cost of 
$73,786,572, resulting in a total cost over the 10-year period of 
$737,865,722, for individuals from the State and local levels for all 
core programs to evaluate ongoing program activities.
5. Summary of Analysis
    Exhibit 3 summarizes the annual and total costs of the proposed 
joint rule. The exhibit provides the total 10-year costs and the 
average annualized costs for each provision of the proposed joint rule. 
The exhibit also presents a high-level description of the benefits 
resulting from full WIOA implementation for each rule provision. These 
qualitative forecasts are predicated on program experience and are 
outcomes for which data will become available only after 
implementation. The Departments estimate the average annual cost of the 
proposed joint rule over the 10-year period of analysis at $147.1 
million. The largest contributor to this cost is the provision related 
to the evaluation of State programs, which is estimated at $73.8 
million per year. The next largest cost results from the development of 
strategies for aligning technology and data systems across one-stop 
partner programs at an estimated $35.7 million per year, followed by 
the average cost of developing and updating State performance 
accountability measures at an estimated $12.9 million per year.

           Exhibit 3--Cost of the Proposed Departments of Education and Labor Joint Rule by Provision
----------------------------------------------------------------------------------------------------------------
                                        Total 10-year    Average annual
                                             cost             cost         Percent of      Qualitative benefit
                                        (undiscounted)   (undiscounted)    total cost           highlights
----------------------------------------------------------------------------------------------------------------
(a) Time to Review the New Rule......      $17,650,220       $1,765,022            1.20  General requirement.
(b) New Elements to State and Local         53,923,423        5,392,342            3.67  Enhanced data for
 Plans.                                                                                   management decision-
                                                                                          making and policy
                                                                                          integration.
(c) Development and Updating of State      128,898,731       12,889,873            8.76  Clear articulation of
 Performance Accountability Measures.                                                     expectations and
                                                                                          outcomes for
                                                                                          evaluation and
                                                                                          accountability
                                                                                          purposes.
(d) Identification and Dissemination         2,936,320          293,632            0.20  Mission clarification
 of Best Practices.                                                                       and system building.
(e) Development of Strategies for          356,640,528       35,664,053           24.24  More efficient use of
 Aligning Technology and Data Systems                                                     public resources;
 across One-stop Partner Programs to                                                      enhanced customer
 Enhance Service Delivery and Improve                                                     service; improved
 Efficiencies.                                                                            program management
                                                                                          based on actual client
                                                                                          data.
(f) Unified or Combined State Plan...       17,165,187        1,716,519            1.17  Avoided program service
                                                                                          duplication; enhanced
                                                                                          internal State
                                                                                          planning; avoided
                                                                                          ``silos'' and service
                                                                                          duplications; more
                                                                                          efficient use of
                                                                                          public resources.
(g) Local Plan Revisions.............       22,638,023        2,263,802            1.54  Continued
                                                                                          accountability and
                                                                                          linkage to outcomes
                                                                                          and customer service.
(h) State Performance Accountability        11,677,110        1,167,711            0.79  Improved policy and
 Measures.                                                                                management decision-
                                                                                          making from measure
                                                                                          data.
(i) Performance Reports..............      121,889,077       12,188,908            8.28  Better management and
                                                                                          policy decisions using
                                                                                          outcome data; improved
                                                                                          service and
                                                                                          placements; more
                                                                                          accountability.
(j) Evaluation of State Programs.....      737,865,722       73,786,572           50.15  Improved service
                                                                                          delivery and customer
                                                                                          service; enhanced
                                                                                          policy-making and
                                                                                          system building; more
                                                                                          accountability.
                                      --------------------------------------------------
    Total............................    1,471,284,341      147,128,434          100.00  .......................
----------------------------------------------------------------------------------------------------------------
Note: Totals might not sum due to rounding.

    Exhibit 4 summarizes the first-year cost for each provision of the 
proposed joint rule. The Departments estimate the total first-year cost 
of the proposed joint rule at $320.6 million. The largest contributor 
to the first-year cost is the provision related to performance report 
development at $109.1 million. The next largest first-year cost results 
from evaluating State programs, amounting to $73.8 million, followed by 
the cost of developing and updating State performance accountability 
measures at $43.6 million.

[[Page 20620]]



   Exhibit 4--First-Year Cost of the Proposed Joint Rule by Provision
------------------------------------------------------------------------
                                                            Percent of
                                           Total first-    total first-
                                             year cost       year cost
------------------------------------------------------------------------
(a) Time to Review the New Rule.........     $17,650,220            5.50
(b) New Elements to State and Local           10,639,250            3.32
 Plans..................................
(c) Development and Updating of State         43,583,603           13.59
 Performance Accountability Measures....
(d) Identification and Dissemination of          293,632            0.09
 Best Practices.........................
(e) Development of Strategies for             36,760,608           11.47
 Aligning Technology and Data Systems
 across One-stop Partner Programs to
 Enhance Service Delivery and Improve
 Efficiencies...........................
(f) Unified or Combined State Plan......      14,780,735            4.61
(g) Local Plan Revisions................      12,295,351            3.83
(h) State Performance Accountability           1,772,217            0.55
 Measures...............................
(i) Performance Reports.................     109,064,077           34.02
(j) Evaluation of State Programs........      73,786,572           23.01
                                         -------------------------------
    Total...............................     320,626,265          100.00
------------------------------------------------------------------------
Note: Totals might not sum due to rounding.

    Exhibit 5 summarizes the annual and total costs of the proposed 
joint Departments of Labor and Education rule. The total (undiscounted) 
cost of the rule sums to $1.5 billion over the 10-year analysis period, 
which amounts to an average annual cost of $147.1 million per year. In 
total, the 10-year discounted costs of the proposed rule range from 
$1.2 billion to $1.3 billion (with 7- and 3-percent discounting, 
respectively).
    To contextualize the cost of the proposed joint rule, the average 
annual budget for WIA implementation over the past three years for the 
Departments of Labor and Education combined was $6.4 billion. Thus, the 
annual additional cost of implementing this proposed rule is between 
2.6 percent and 2.7 percent of the current WIA budget (with 3 percent 
and 7 percent discounting, respectively).

    Exhibit 5--Monetized Costs of Departments of Labor and Education
                   Proposed Joint Rule (2013 dollars)
------------------------------------------------------------------------
                          Year                              Total costs
------------------------------------------------------------------------
2015....................................................    $320,626,265
2016....................................................     127,597,475
2017....................................................     132,420,653
2018....................................................     121,926,838
2019....................................................     132,420,653
2020....................................................     127,597,475
2021....................................................     132,420,653
2022....................................................     121,926,838
2023....................................................     132,420,653
2024....................................................     121,926,838
Undiscounted 10-year Total..............................   1,471,284,341
10-year Total with 3% Discounting.......................   1,316,646,285
10-year Total with 7% Discounting.......................   1,154,622,032
10-year Average.........................................     147,128,434
Annualized with 3% Discounting..........................     154,351,111
Annualized with 7% Discounting..........................     164,392,201
------------------------------------------------------------------------
Note: Totals might not sum due to rounding.

Benefits
    The Departments were unable to quantify the benefits associated 
with the proposed joint rule because of data limitations and a lack of 
operational (WIOA) data or evaluation findings on the provisions of the 
proposed joint rule. Thus, the Departments cannot provide monetary 
estimates of several important benefits to society, including the 
increased employment opportunities for unemployed or under-employed 
U.S. workers, enhanced ETP process, and evaluation of State programs. 
In support of a State's strategic plan and goals, State-conducted 
evaluation and research of programs would enable each State to test 
various interventions geared toward State conditions and opportunities. 
Results from such evaluation and research, if used by States, could 
improve service quality and effectiveness and, thus, potentially lead 
to higher employment rates and earnings among participants. 
Implementing various innovations that have been tested and found 
effective could also lead to lower unit costs and increased numbers of 
individuals served within a State. Sharing the findings nationally 
could lead to new service or management practices that other States 
could adopt and use to improve participant results, lower unit costs, 
or increase the number served.
    The Departments invite comments regarding possible data sources or 
methodologies for estimating these benefits. In addition, the 
Departments invite comments regarding other benefits that might arise 
from the proposed joint rule and how these benefits could be estimated.
    The Departments provide a qualitative description of the 
anticipated WIOA benefits below. These qualitative forecasts are 
predicated on program experience and are outcomes for which data will 
only become available after implementation. Although these studies are 
largely based on programs and their existing requirements under WIA, 
they capture the essence of the societal benefits that can be expected 
from this proposed joint rule.
    Training's impact on placement. A recent study found that flexible 
and innovative training that is closely related to a real and in-demand 
occupation is associated with better labor market outcomes for training 
participants. Youth disconnected from work and school can benefit from 
comprehensive and integrated models of training that combine education, 
occupational skills, and support services.\18\ However, the study noted 
that evidence for effective employment and training-related programs 
for youth is less extensive than for adults, and that there are fewer 
positive findings from evaluations.\19\ The WIA youth program remains 
largely untested.\20\ One study found that WIA training services 
increase placement rates by 4.4 percent among adults and by 5.9 percent 
among dislocated workers,\21\ while another study concluded that 
placement rates are 3 to 5 percent higher among all training 
recipients.\22\
---------------------------------------------------------------------------

    \18\ Department of Labor et. al. ``What Works In Job Training: A 
Synthesis of the Evidence.'' July 2014.
    \19\ Ibid.
    \20\ Decker, Paul T. and Jillian A. Berk. 2011. ``Ten Years of 
the Workforce Investment Act (WIA): Interpreting the Research on WIA 
and Related Programs.'' Journal of Policy Analysis and Management 30 
(4): 906-926.
    \21\ Hollenbeck, Kevin, Daniel Schroeder, Christopher T. King, 
and Wei-Jang Huang. ``Net Impact Estimates for Services Provided 
through the Workforce Investment Act.'' Washington, DC: U.S. 
Department of Labor, 2005. Available at http://wdr.doleta.gov/research/keyword.cfm?fuseaction=dsp_puListingDetails&pub_id=2367∓=y&start=81&sort=7.
    \22\ Heinrich, Carolyn J., Peter R. Mueser, and Kenneth R. 
Troske. ``Workforce Investment Act Non-Experimental Net Impact 
Evaluation.'' Columbia, MD: IMPAQ International, LLC, 2009.

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

[[Page 20621]]

    Participants in occupational training had a ``5 percentage points 
higher reemployment rate than those who received no training, and 
reemployment rates were highest among recipients of on-the-job 
training, a difference of 10 to 11 percentage points.'' \23\ However, 
the study found that training did not correspond to higher employment 
retention or earnings.\24\ A Youth Opportunity Grant Initiative study 
found that Youth Opportunity was successful at improving outcomes for 
high-poverty youth. Youth Opportunity also increased the labor-force 
participation rate overall and for subgroups, including 16- to 19-year-
old adolescents, women, African Americans, and in-school youth.\25\ 
DOL-sponsored research found that participants who received core 
services (often funded by Employment Services) and other services in 
American Job Centers were more likely to enter and retain 
employment.\26\
---------------------------------------------------------------------------

    \23\ Park, Jooyoun. ``Does Occupational Training by the Trade 
Adjustment Assistance Program Really Help Reemployment? Success 
Measured as Matching.'' Washington, DC: U.S. Department of Labor, 
Employment and Training Administration, 2011.
    \24\ Ibid.
    \25\ Jackson, Russell H., Jamie Diamandopoulos, Carol Pistorino, 
Paul Zador, John Lopdell, Juanita Lucas-McLean, and Lee Bruno. 
``Youth Opportunity Grant Initiative (YO).'' Houston, TX: Decision 
Information Resources, Inc., 2008. Available at http://wdr.doleta.gov/research/FullText_Documents/YO%20Impact%20and%20Synthesis%20Report.pdf.
    \26\ Office of Policy Development and Research, U.S. Department 
of Labor. ``Five-Year Research and Evaluation Strategic Plan Program 
Years 2012-2017.'' May 2013. Available at http://wdr.doleta.gov/research/keyword.cfm?fuseaction=dsp_resultDetails&pub_id=2516∓=y.
---------------------------------------------------------------------------

    Training's impact on wages. Before enactment of WIA, Job Training 
Partnership Act services had a modest but statistically significant 
impact on the earnings of adult participants.\27\ WIA training 
increased participants' quarterly earnings by $660; these impacts 
persisted beyond 2 years and were largest among women.\28\ WIA adult 
program participants who received core services (e.g., skill 
assessment, labor market information) or intensive services (e.g., 
specialized assessments, counseling) earned up to $200 more per quarter 
than non-WIA participants. Participants who received training services 
in addition to core and intensive services initially earned less but 
caught up within 10 quarters with the earnings of participants who only 
received core or intensive services; marginal benefits of training 
could exceed $400 per quarter. Earnings progressions were similar for 
WIA adult program participants and users of the labor exchange 
only.\29\ WIA training services also improved participants' long-term 
wage rates, doubling earnings after 10 quarters over those not 
receiving training services.\30\ However, WIA participants who did not 
receive training earned $550 to $700 more in the first quarter after 
placement. The study also noted that individuals who did not receive 
training received effective short-term counseling that enabled them to 
gain an immediate advantage in the labor market.\31\
---------------------------------------------------------------------------

    \27\ Barnow, Burt, and Daniel Gubits. ``Review of Recent Pilot, 
Demonstration, Research, and Evaluation Initiatives to Assist in the 
Implementation of Programs under the Workforce Investment Act.'' 
Baltimore, MD: Johns Hopkins University, 2003. Available at http://wdr.doleta.gov/research/keyword.cfm?fuseaction=dsp_puListingDetails&pub_id=2365∓=y&start=81&sort=7.
    \28\ Ibid.
    \29\ Earnings Progression among Workforce Development 
Participants: Evidence from Washington State.'' Eugene, OR: 
University of Oregon, 2011. Available at http://wdr.doleta.gov/research/keyword.cfm?fuseaction=dsp_puListingDetails&pub_id=2468∓=y&start=1&sort=7.
    \30\ Heinrich, Carolyn J., Peter R. Mueser, and Kenneth R. 
Troske. ``Workforce Investment Act Non-Experimental Net Impact 
Evaluation.'' Columbia, MD: IMPAQ International, LLC, 2009.
    \31\ Heinrich, Carolyn J., Peter R. Mueser, and Kenneth R. 
Troske. ``Workforce Investment Act Non-Experimental Net Impact 
Evaluation.'' Columbia, MD: IMPAQ International, LLC, 2009. 
Available at http://wdr.doleta.gov/research/FullText_Documents/Workforce%20Investment%20Act%20Non-Experimental%20Net%20Impact%20Evaluation%20-%20Final%20Report.pdf.
---------------------------------------------------------------------------

    Another DOL program, the Job Corps program for disadvantaged youth 
and young adults, produced sustained increases in earnings for 
participants in their early twenties. Students who completed Job Corps 
vocational training experienced average earnings increases by the 
fourth follow-up year over the comparison group, whereas those who did 
not complete training experienced no increase.\32\
---------------------------------------------------------------------------

    \32\ Gritz, Mark, and Terry Johnson. ``National Job Corps Study: 
Assessing Program Effects on Earnings for Students Achieving Key 
Program Milestones.'' Seattle, WA: Battelle Memorial Institute, 
2001. Available at http://wdr.doleta.gov/research/keyword.cfm?fuseaction=dsp_puListingDetails&pub_id=2257∓=y&start=141&sort=7.
---------------------------------------------------------------------------

    Another publication also noted that on average, adults experienced 
a $743 quarterly post-exit earnings boost.\33\
---------------------------------------------------------------------------

    \33\ Hollenbeck, Kevin, Daniel Schroeder, Christopher T. King, 
and Wei-Jang Huang. ``Net Impact Estimates for Services Provided 
through the Workforce Investment Act.'' Washington, DC: U.S. 
Department of Labor, 2005. Available at http://wdr.doleta.gov/research/FullText_Documents/Net%20Impact%20Estimates%20for%20Services%20Provided%20through%20the%20Workforce%20Investment%20Act-%20Final%20Report.pdf.
---------------------------------------------------------------------------

    Those who completed training experienced a 15-percent increase in 
employment rates and an increase in hourly wages of $1.21 relative to 
participants without training.\34\ Participation in WIA training also 
had a distinct positive, but smaller, impact on employment and 
earnings, with employment 4.4 percentage points higher and quarterly 
earnings $660 higher than comparison group members.
---------------------------------------------------------------------------

    \34\ Needels, Karen, Jeanne Bellotti, Mina Dadgar, and Walter 
Nicholson. ``Evaluation of the Military Base National Emergency 
Grants: Final Report.'' Princeton, NJ: Mathematica Policy Research, 
2006.
---------------------------------------------------------------------------

    National and international studies provided strong evidence for the 
need for and economic value of adult basic skills. One study shows that 
not only do individuals who participate in adult basic skills training 
programs have higher future earnings, but income premiums are higher 
with more intensive participation. At 100 hours or more, the average 
treatment effect corresponded to $9,621 in 2013 dollars.\35\
---------------------------------------------------------------------------

    \35\ Reder, Stephen. Portland State University. 2013. Briefs 
available at http://LINCS.ed.gov.
---------------------------------------------------------------------------

    Vocational and adult literacy's education impact. Vocational 
managers indicate that closely aligning service offerings with labor 
market reports improves the likelihood that participants will learn 
applicable skills. The lengthy and involved process of implementing 
changes to existing programs and developing new programs, however, 
might delay the benefits derived from improved labor market data.\36\
---------------------------------------------------------------------------

    \36\ Johnson, Terry, Mark Gritz, Russell Jackson, John 
Burghardt, Carol Boussy, Jan Leonard, and Carlyn Orians. ``National 
Job Corps Study: Report on the Process Analysis.'' Princeton, NJ: 
Mathematica Policy Research, 1999. Available at http://wdr.doleta.gov/research/keyword.cfm?fuseaction=dsp_puListingDetails&pub_id=2213∓=y&start=201&sort=7.
---------------------------------------------------------------------------

    Studies examining the impact of participation on literacy 
proficiency determined that individuals who participated in adult basic 
skills programs tended to have higher levels of future literacy 
proficiency.\37\ Additional studies examined the impact of 
participation in adult basic skills training on General Education 
Development credential attainment and concluded that rates were 
elevated by 0.20 and 0.32 by adult basic skills program 
participation.\38\ Another study found a robust impact of adult basic 
skills program participation on engagement in post-secondary education. 
The findings show that the programs increase adult basic skills 
students' success in the early stages of post-secondary engagement and 
serve as

[[Page 20622]]

effective tools for nontraditional student populations.\39\
---------------------------------------------------------------------------

    \37\ Reder, Stephen. Portland State University. 2013. Briefs 
available at http://LINCS.ed.gov.
    \38\ Ibid.
    \39\ Ibid.
---------------------------------------------------------------------------

    The following are channels through which these benefits might be 
achieved:
    Better information for workers. The accountability measures would 
provide workers with higher-quality information about potential 
training program providers and enable them to make better-informed 
choices about which programs to pursue. The information analyzed and 
published by the WDBs about local labor markets also would help 
trainees and providers target their efforts and develop reasonable 
expectations about outcomes.
    Consumers of educational services, including disadvantaged and 
displaced workers, require reliable information on the value of 
different training options to make informed choices. Displaced workers 
tend to be farther removed from schooling and lack information about 
available courses and the fields with the highest economic return.\40\ 
Given these information gaps and financial pressures, it is important 
that displaced workers learn of the economic returns to various 
training plans.\41\ Still, one study determined that the cost-
effectiveness of WIA job training for disadvantaged workers is 
``modestly positive'' due to the limited sample of States on which the 
research was based.\42\
---------------------------------------------------------------------------

    \40\ Greenstone, Michael, and Adam Looney. ``Building America's 
Job Skills with Effective Workforce Programs: A Training Strategy to 
Raise Wages and Increase Work Opportunities.'' Washington, DC: 
Brookings Institution, 2011.
    \41\ Jacobson, Louis, Robert LaLonde, and Daniel Sullivan. 
``Policies to reduce high-tenured displaced workers' earnings losses 
through retraining.'' Discussion Paper 2011-11, The Hamilton 
Project, Brookings Institution, Washington, DC, 2011.
    \42\ Heinrich, Carolyn J., Peter R. Mueser, Kenneth R. Troske, 
Kyung-Seong Jeon, Daver C. Kahvecioglu. 2009 (November). ``New 
Estimates of Public Employment and Training Program Net Impacts: A 
Nonexperimental Evaluation of the Workforce Investment Act 
Program.'' Discussion Paper 4569, Institute for the Study of Labor 
(IZA), Bonn, Germany.
---------------------------------------------------------------------------

    State performance accountability measures. This requirement would 
include significant data collection for Local Boards to address 
performance measures for the core programs in their jurisdictions. This 
data collection would permit the State WDBs to assess performance 
across each State. Training providers would be required to provide data 
to Local Boards, which would represent a cost in the form of increased 
data collection and processing. Employers and employees also would have 
to provide information to the training providers, which would take 
time. This provision, in combination with the Board membership 
provision requiring employer/business representation, is expected to 
improve the quality of local training and, ultimately, the number and 
caliber of job placements.
    Implementation of follow-up measures, rather than termination-based 
measures, might improve long-term labor market outcomes, although some 
could divert resources from training activities.\43\
---------------------------------------------------------------------------

    \43\ Courty, Pascal, and Gerald Marschke. ``Making Government 
Accountable: Lessons from a Federal Job Training Program.'' Public 
Administration Review 67.5 (2007): 904-916.
---------------------------------------------------------------------------

    Before-after earning metrics capture the contribution of training 
to earnings potential and minimize incentives to select only training 
participants with high initial earnings.\44\ The study found that value 
added net of social cost is one objective that is too difficult to 
measure on a regular basis. With the exception of programs in a few 
States, current incentives do not reward enrollment of the least 
advantaged.\45\ In addition, the study noted evidence that the 
performance-standards can be ``gamed'' in an attempt to maximize their 
centers' measured performance.\46\
---------------------------------------------------------------------------

    \44\ Heckman, James J., Carolyn Heinrich, and Jeffrey A. Smith. 
1997. ``Assessing the Performance of Performance Standards in Public 
Bureaucracies.'' American Economic Review 87(2): 389-95.
    \45\ Ibid.
    \46\ Ibid.
---------------------------------------------------------------------------

    Pressure to meet performance levels could lead providers to focus 
on offering services to participants most likely to succeed. For 
example, current accountability measures might create incentives for 
training providers to screen participants for motivation, delay 
participation for those needing significant improvement, or discourage 
participation by those with high existing wages.\47\
---------------------------------------------------------------------------

    \47\ Dunham, Kate, Melissa Mack, Jeff Salzman, and Andrew 
Wiegand. ``Evaluation of the WIA Performance Measurement System: 
Survey Report.'' Oakland, CA: SPR Associates, 2005. Available at 
http://wdr.doleta.gov/research/keyword.cfm?fuseaction=dsp_puListingDetails&pub_id=2408∓=y&start=41&sort=7.
---------------------------------------------------------------------------

    The following subsections present additional channels by which 
economic benefits may be associated with various aspects of the 
proposed joint rule.
    Dislocated workers. A study found that for dislocated workers, 
receiving WIA services significantly increased employment rates by 13.5 
percent and boosted post-exit quarterly earnings by $951.\48\ However, 
another study found that training in the WIA dislocated worker program 
had a net benefit close to zero or even negative.\49\
---------------------------------------------------------------------------

    \48\ Hollenbeck, Kevin, Daniel Schroeder, Christopher T. King, 
and Wei-Jang Huang. ``Net Impact Estimates for Services Provided 
through the Workforce Investment Act.'' Washington, DC: U.S. 
Department of Labor, 2005. Available at http://wdr.doleta.gov/research/FullText_Documents/Net%20Impact%20Estimates%20for%20Services%20Provided%20through%20the%20Workforce%20Investment%20Act-%20Final%20Report.pdf.
    \49\ Heinrich, Carolyn J., Peter R. Mueser, and Kenneth R. 
Troske. ``Workforce Investment Act Non-Experimental Net Impact 
Evaluation.'' Columbia, MD: IMPAQ International, LLC, 2009. 
Available at http://wdr.doleta.gov/research/keyword.cfm?fuseaction=dsp_puListingDetails&pub_id=2419∓=y&start=41&sort=7.
---------------------------------------------------------------------------

    Self-employed individuals. Job seekers who received self-employment 
services started businesses sooner and had longer lasting businesses 
than nonparticipants. Self-employment assistance participants were 19 
times more likely to be self-employed than nonparticipants and 
expressed high levels of satisfaction with self-employment. A study of 
Maine, New Jersey, and New York programs found that participants were 
four times more likely to obtain employment of any kind than 
nonparticipants.\50\
---------------------------------------------------------------------------

    \50\ Kosanovich, William, Heather Fleck, Berwood Yost, Wendy 
Armon, and Sandra Siliezar. ``Comprehensive Assessment of Self-
Employment Assistance Programs.'' Arlington, VA: DTI Associates, 
2002. Available at http://wdr.doleta.gov/research/keyword.cfm?fuseaction=dsp_puListingDetails&pub_id=2293∓=y&start=121&sort=7.
---------------------------------------------------------------------------

    Workers with disabilities. A study of individuals with disabilities 
enrolled in training for a broad array of occupations (including 
wastewater treatment, auto body repair, meat cutter/wrapper, clerical 
support staff, surgical tools technician, and veterinary assistant) 
found that the mean hourly wage and hours worked per quarter for 
program graduates were higher than for individuals who did not complete 
the program.
    In conclusion, after a review of the quantitative and qualitative 
analysis of the impacts of this NPRM, the Departments have determined 
that the societal benefits justify the anticipated costs.
Transfers
    The Reemployment and Eligibility Assessment program was effective 
in assisting claimants to exit the unemployment insurance program and 
avoid exhausting regular unemployment insurance benefits in Florida, 
Idaho, and Nevada. By avoiding unemployment insurance benefit 
exhaustion, the program led to reductions in the likelihood of 
receiving Extended Unemployment Compensation benefits. There exists 
notable evidence that the Reemployment and Eligibility Assessment 
program is cost-effective.\51\

[[Page 20623]]

The program reduced unemployment insurance payments and increased tax 
revenue resulting from increased worker earnings.
---------------------------------------------------------------------------

    \51\ Poe-Yamagata, Eileen, Jacob Benus, Nicholas Bill, Hugh 
Carrington, Marios Michaelides, and Ted Shen. ``Impact of the 
Reemployment and Eligibility Assessment (REA) Initiative.'' IMPAQ 
International, 2011. Available at http://wdr.doleta.gov/research/keyword.cfm?fuseaction=dsp_puListingDetails&pub_id=2487∓=y&start=21&sort=7.
---------------------------------------------------------------------------

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 603, requires 
agencies to prepare a regulatory flexibility analysis to determine 
whether a regulation will have a significant economic impact on a 
substantial number of small entities. Section 605 of the RFA allows an 
agency to certify a rule in lieu of preparing an analysis if the 
regulation is not expected to have a significant economic impact on a 
substantial number of small entities. Further, under the Small Business 
Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 801 (SBREFA), an 
agency is required to produce compliance guidance for small entities if 
the rule has a significant economic impact.
    The Small Business Administration (SBA) defines a small business as 
one that is ``independently owned and operated and which is not 
dominant in its field of operation.'' The definition of small business 
varies from industry to industry to the extent necessary to reflect 
industry size differences properly. An agency must either use the SBA 
definition for a small entity or establish an alternative definition, 
in this instance, for the workforce industry. The Departments have 
adopted the SBA definition for purposes of this certification.
    The Departments have notified the Chief Counsel for Advocacy, SBA, 
under the RFA at 5 U.S.C. 605(b), and proposes to certify that this 
rule will not have a significant economic impact on a substantial 
number of small entities. This finding is supported, in very large 
measure, by the fact that small entities are already receiving 
financial assistance under the WIA program and will likely continue to 
do so under the WIOA program as articulated in this NPRM.
Affected Small Entities
    The proposed rule can be expected to impact small one-stop center 
operators. One-stop operators can be a single entity (public, private, 
or nonprofit) or a consortium of entities. The types of entities that 
might be a one-stop operator include: (1) An institution of higher 
education; (2) an employment service State agency established under the 
Wagner-Peyser Act; (3) a community-based organization, nonprofit 
organization, or workforce intermediary; (4) a private for-profit 
entity; (5) a government agency; (6) a Local Board, with the approval 
of the chief local elected official and the Governor; or (7) another 
interested organization or entity that can carry out the duties of the 
one-stop operator. Examples include a local chamber of commerce or 
other business organization, or a labor organization.
    The proposed joint rule can also be expected to impact a variety of 
AEFLA local providers: (1) Local education agencies; (2) community-
based organizations; (3) faith-based organizations; (4) libraries; 
community, junior, and technical colleges; (5) 4-year colleges and 
universities; (6) correctional institutions; and (7) other 
institutions, such as medical and special institutions not designed for 
criminal offenders.\52\
---------------------------------------------------------------------------

    \52\ In terms of VR grantees, they are State government entities 
and, by definition, are not small entities.
---------------------------------------------------------------------------

Impact on Small Entities
    The Departments indicate that transfer payments are a significant 
aspect of this analysis in that the majority of WIOA program cost 
burdens on State and Local WDBs will be fully financed through Federal 
transfer payments to States. The Departments have highlighted costs 
that are new to WIOA implementation and this NPRM. Therefore, the 
Departments expect that the WIOA joint NPRM will have no cost impact on 
small entities.

C. Small Business Regulatory Enforcement Fairness Act of 1996

    The Departments have determined that this proposed joint rulemaking 
does not impose a significant economic impact on a substantial number 
of small entities under the RFA; therefore, the Departments are not 
required to produce any Compliance Guides for Small Entities, as 
mandated by the SBREFA.

D. Paperwork Reduction Act

    The purposes of the Paperwork Reduction Act of 1995 (PRA), 44 
U.S.C. 3501 et seq., include minimizing the paperwork burden on 
affected entities. The PRA requires certain actions before an agency 
can adopt or revise a collection of information, including publishing 
for public comment a summary of the collection of information and a 
brief description of the need for and proposed use of the information.
    As part of continuing efforts to reduce paperwork and respondent 
burden, the Departments conduct preclearance consultation activities to 
provide the general public and Federal agencies with an opportunity to 
comment on proposed and continuing collections of information in 
accordance with the PRA. See 44 U.S.C. 3506(c)(2)(A). This activity 
helps to ensure that: (1) The public understands the collection 
instructions; (2) respondents can provide the requested data in the 
desired format; (3) reporting burden (time and financial resources) is 
minimized; (4) respondents clearly understand the collection 
instruments; and (5) the Departments can properly assess the impact of 
collection requirements on respondents. Furthermore, the PRA requires 
all Federal agencies to analyze proposed regulations for potential time 
burdens on the regulated community created by provisions in the 
proposed regulations, which require the submission of information. The 
information collection requirements must also be submitted to the OMB 
for approval.
    The Departments note that a Federal agency may not conduct or 
sponsor a collection of information unless it is approved by the OMB 
under the PRA and displays a currently valid OMB Control Number. The 
public is also not required to respond to a collection of information 
unless it displays a currently valid OMB Control Number. In addition, 
notwithstanding any other provisions of law, no person will be subject 
to penalty for failing to comply with a collection of information if 
the collection of information does not display a currently valid OMB 
Control Number (44 U.S.C. 3512).
    The information collections in this joint NPRM are summarized in 
the section-by-section discussion of this NPRM, Section IV. The table 
below captures the current and proposed burden hours associated with 
the information collections.

[[Page 20624]]



                               Current and Proposed Information Collection Burdens
----------------------------------------------------------------------------------------------------------------
                                                                              Annual burden
                                                           Annual burden      hours proposed
                    OMB Approval No.                      hours currently        for new             Change
                                                              approved         requirements
                                                                                under WIOA
----------------------------------------------------------------------------------------------------------------
1205-0420--WIOA Common Performance Management and                        0          2,351,905        * 2,351,905
 Information and Reporting for Core Programs...........
1205-4NEW--Required Elements for Submission of the                       0              3,279           ** 3,279
 Unified or Combined State Plan and Plan Modifications
 under the Workforce Innovation and Opportunity Act....
                                                        --------------------------------------------------------
    Total..............................................                  0          2,355,184          2,355,184
----------------------------------------------------------------------------------------------------------------
* OMB 1205-0420 will be the information collection for the common performance accountability data collected
  under sec. 116 of WIOA. Hours associated with this information collection represent the burden associated with
  reporting the new common performance data elements by the core programs. Burden hours associated with program-
  specific reporting for each of the core programs, which are currently approved and will continue in addition
  to the common performance reporting, will be reported and summarized in other NPRMs published elsewhere in
  this Federal Register. The currently-approved program-specific data reporting that will continue, as
  applicable, for the core programs include:
 Control Number 1205-0420, Workforce Investment Act Management Information and Reporting System, with an
  annual burden of 508,589;
 Control Number 1205-0240, Labor Exchange Reporting System, with an annual burden of 568,192;
 Control Number 1830-0027, Measures and Methods for the National Reporting System for Adult Education,
  with an annual burden of 5,700; and
 Control Number 1820-0508, RSA-911 Case Service Report, with an annual burden of 6,500.
The Departments anticipate that the above collections may be phased out or modified, as appropriate, as the WIOA
  performance measures are fully implemented.
The above-described currently-approved reporting burdens are presented here in order to provide respondents full
  transparency of the complete reporting burden that is imposed by WIOA, both in terms of the new common
  performance data elements as well as program-specific reporting requirements. However, to be clear, the net
  new burden as listed in the table above only reflects the additional burden imposed by the new common
  performance reporting requirements, set forth at sec. 116 of WIOA, that are applicable to all core programs.
** OMB 1205-4NEW is the information collection for the submission of the Unified or Combined State Plan under
  secs. 102 and 103 of WIOA, which will replace the following currently-approved State Plan collections for the
  core programs:
 Control Number 1205-0398, Planning Guidance and Instructions for Submission of the Strategic State Plan
  and Plan Modifications for Title I of the Workforce Investment Act and Wagner-Peyser Act, with an annual
  burden of 2,280;
 Control Number 1830-0026, Adult Education and Family Literacy Act State Plan, with an annual burden of
  2,565; and
 Control Number 1820-0500, 1820-0500, State Plan for the Vocational Rehabilitation Services Program and
  Supplement for the Supported Employment Services Program (now referred under WIOA as the VR services portion
  of the Unified or Combined State Plan), with an annual burden of 2,000.

    In an effort to give full meaning to the requirement that States 
submit a Unified or Combined State Plan, the Departments propose to 
consolidate all currently-approved program-specific State Plan 
submissions for each of the core programs into one information 
collection instrument. To that end, the total burden hours associated 
with this proposed new consolidated information collection is the sum 
of the additional burden required to satisfy the integrated strategic 
and operational planning requirements (see table above) plus the 
currently-approved requirements (see bullets above). However, to be 
clear, the net additional burden to respondents is only that associated 
with the new planning requirements.
    Agency: DOL-ETA.
    Title of Collection: WIOA Common Performance Management and 
Information and Reporting for Core Programs
    OMB Control Number: 1205-0420.
    Description: This new information collection will collect common 
performance data required under sec. 116 of WIOA from all core 
programs, including WIOA adult and dislocated workers, youth, Wagner-
Peyser, Adult Education and Literacy, Eligible Training Providers, and 
Vocational Rehabilitation Services programs. The Departments of 
Education and Labor will use a common approach to standardize the 
quarterly, as appropriate, and annual reporting of common data elements 
for all core programs and Eligible Training Providers. These data are 
in addition to other performance data reported by each of the core 
programs under current and proposed regulations discussed in program-
specific NPRMs available elsewhere in this Federal Register.
    Affected Public: State, local and tribal governments, private 
sector.
    Obligation to Respond: Required to obtain or retain benefits (WIOA 
sec. 116).
    Total Estimated Number of Respondents Annually: 53 for DOL 
programs, 80 for RSA, 57 for OCTAE (no additional respondents resulting 
from this proposed rulemaking).
    Total Estimated Number of Annual Responses: 722--each DOL and RSA 
respondent reports 5 times per year (quarterly plus annually); and each 
OCTAE respondent reports only annually (no additional responses 
resulting from this proposed rulemaking).
    Total Estimated Annual Time Burden: 2,351,905 hours. This includes 
hours estimated for both collecting the information and reporting.
    Total Estimated Annual Other Costs Burden: $0 (no change as a 
result of this proposed rulemaking).
    Proposed Regulations Containing Information Collections Approved 
Under this Control Number: 20 CFR part 680 (Adult, Dislocated Workers, 
and Eligible Training Providers); 20 CFR part 681 (Youth); 20 CFR part 
652 (Wagner-Peyser); 34 CFR parts 462 and 463 (Office of Career, 
Technical, and Adult Education); and 34 CFR part 361 (Rehabilitation 
Services Administration).
    Title of Collection: Required Elements for Submission of the 
Unified or Combined State Plan and Plan Modifications under the 
Workforce Innovation and Opportunity Act: Wagner-Peyser and WIOA Title 
I programs (Department of Labor) and Vocational Rehabilitation and 
Adult Education programs (Department of Education).
    OMB Control Number: 1205-4NEW.
    Description: The proposed rule would require each State (which 
includes applicable outlying areas) to submit a Unified or Combined 
State Plan that fosters strategic alignment of the core programs, which 
include the title I adult, dislocated worker, and youth

[[Page 20625]]

programs; title II adult education and literacy programs; the Wagner-
Peyser program as amended by title III of WIOA; and the title IV 
Vocational Rehabilitation program. The Unified or Combined State Plan 
requirements improve service integration and ensure that the workforce 
system is industry-relevant and responds to the economic needs of the 
State and matches employers with skilled workers. The Unified or 
Combined State Plan would describe how the State will develop and 
implement a unified, integrated service delivery system rather than 
separately discuss the State's approach to operating each core program 
individually. This consolidated information collection implements secs. 
102 and 103 of WIOA. The Unified or Combined State Plan would replace 
the planning requirements collected under the currently-approved 
program-specific State Plan information collections.
    While each State, at a minimum, must submit a Unified State Plan 
covering all core programs, sec. 103 of WIOA permits a State to submit 
a Combined State Plan that would include the core programs plus one or 
more additional Federal programs listed in sec. 103(b). If the State 
chooses to include these programs, the Combined Plan will include all 
of the common planning elements included in the Unified State Plan, and 
an additional element describing how the State will coordinate the 
additional programs with the core programs (WIOA sec. 103(b)(3)).
    As with the Unified State Plan collection for the core programs 
described above, the total burden associated with the Combined State 
Plan would represent the total burden for the new (additional) WIOA 
planning requirements (as described in the table above), plus an 
additional 0.25 hours per Combined State Plan to account for the one 
additional new question that will be included in Combined State Plans. 
The burden required for fulfilling the program-specific State Plan 
requirements (for the non-core additional programs that may be included 
in the Combined State Plan) will continue to be separately accounted 
for under the non-core programs' existing, approved Information 
Collections. Those existing Information Collections are described in 
the table below for reference:

------------------------------------------------------------------------
                                                               Approved
               Additional program control No.                   burden
                                                                hours
------------------------------------------------------------------------
Control Number 1830-0029, Carl D. Perkins Career and               2,240
 Technical Education Improvement Act of 2006 (P.L. 109-270)
 State Plan Guide..........................................
Control Number 0970-0145, Temporary Assistance for Needy             594
 Families (TANF) State Plan Guidance.......................
Control Number 0584-0083, Supplemental Nutrition Assistance         1431
 Program Operating Guidelines, Forms, and Waivers, Program
 and Budget Summary Statement..............................
Control Number 1225-0086, Grant Application Requirements            1620
 for the Jobs for Veteran State Grants Program.............
Control Number 1205-0132, Unemployment Insurance State              1530
 Quality Service Plan Planning and Reporting Guidelines....
Control Number 1205-0040, Senior Community Service                   406
 Employment Program Performance Measurement System.........
Control Number 0970-0382, Community Services Block Grant             112
 (CSBG) Program Model Plan Applications....................
------------------------------------------------------------------------

    The table does not include the additional programs that may be part 
of a Combined State Plan but do not have currently-approved planning 
requirements of their own, such as the Housing and Urban Development 
Employment and Training Programs and the Trade Adjustment Assistance 
Program. Because these programs do not have currently-approved planning 
collections, the additional burden hours would be the total additional 
burden associated with the new unified planning requirements set forth 
in the table above that would be true for any program included in the 
Unified or Combined State Plan.
    Affected Public: State, local and tribal governments.
    Obligation to Respond: Required to obtain or maintain benefits 
(WIOA, secs. 102 and 103).
    Total Estimated Number of Respondents Annually: 38. (This is the 
annualized number of respondents.) Fifty-seven jurisdictions submit a 
plan the first year and all 57 are required to submit an update in the 
third year of the planning cycle. No submissions are required the 
second year. This is the same as the current planning documents. (No 
additional respondents resulting from this proposed rulemaking.)
    Total Estimated Number of Annual Responses: 38 (Annualized as 
described above; no additional responses resulting from this proposed 
rulemaking).
    Total Estimated Annual Time Burden: 3,279. This number includes the 
hours for all the jurisdictions to submit a Unified State Plan, plus an 
additional 0.25 hours for each respondent submitting a Combined State 
Plan. We estimate that 10 respondents will submit a Combined State 
Plan. It also includes the estimate that all respondents will submit an 
update in the third planning year, which is estimated to require a 
third of the hours compared to submitting the initial plan. Then the 
number has been annualized over 3 years.
    Total Estimated Annual Other Costs Burden: $0 (no change as a 
result of this proposed rulemaking).
    Proposed Regulations Containing Information Collections Approved 
Under this Control Number: DOL programs--20 CFR 652.211, 653.107(d), 
653.109(d), 676.105, 676.110, 676.115, 676.120, 676.135, 676,140, 
676.145, 677.230, 678.310, 678.405, 678.750(a), 681.400(a)(1), 
681.410(b)(2), 682.100, 683.115. Department of Education programs--34 
CFR parts 361, 462 and 463.
    Interested parties may obtain a copy free of charge of one or more 
of the information collection requests submitted to the OMB on the 
reginfo.gov Web site at http://www.reginfo.gov/public/do/PRAMain. From 
the Information Collection Review tab, select Information Collection 
Review. Then select the applicable Department (e.g., Department of 
Education or Department of Labor) from the Currently Under Review 
dropdown menu, and lookup the Control Number. A free copy of the 
requests may also be obtained by contacting the person named in the 
ADDRESSES section of this preamble.
    As noted in the ADDRESSES section of this joint NPRM, interested 
parties may send comments about the information collections to the 
applicable Department throughout the 60-day comment period and/or to 
the OMB within 30 days of publication of this notice in the Federal 
Register. In order to help ensure appropriate consideration, comments 
should mention the applicable OMB Control Number(s). The Departments 
and OMB are particularly interested in comments that:
     Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Departments, including whether the information will have practical 
utility;

[[Page 20626]]

     Evaluate the accuracy of the Departments' estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.
    The Departments note that in order to meet WIOA requirements, the 
information collections mentioned in this NPRM need to be in place 
prior to the final rule taking effect. The Departments will follow PRA 
requirements in clearing the collections (emergency procedures, as 
appropriate), including providing appropriate public engagement and 
taking into account the comments received as part of this rulemaking.

E. Executive Order 13132 (Federalism)

    E.O. 13132 requires Federal agencies to ensure that the principles 
of Federalism established by the Framers of our Constitution guide the 
executive departments and agencies in the formulation and 
implementation of policies and to further the policies of the Unfunded 
Mandates Reform Act. Further, agencies must strictly adhere to 
constitutional principles. Agencies must closely examine the 
constitutional and statutory authority supporting any action that would 
limit the policy-making discretion of the States and they must 
carefully assess the necessity for any such action. To the extent 
practicable, State and local officials must be consulted before any 
such action is implemented. Section 3(b) of the E.O. further provides 
that Federal agencies must implement regulations that have a 
substantial direct effect only if statutory authority permits the 
regulation and it is of national significance. The Departments have 
reviewed the WIOA joint NPRM in light of these requirements and have 
determined that, with the enactment of WIOA and its clear requirement 
to publish national implementing regulations, E.O. sec. 3(b) has been 
fully reviewed and its requirement satisfied.
    Accordingly, the Departments have reviewed this WIOA-required joint 
NPRM and have determined that the proposed rulemaking has no Federalism 
implications. The proposed joint rule, as noted above, has no 
substantial direct effects on States, on the relationships between the 
States, or on the distribution of power and responsibilities among the 
various levels of government as described by E.O. 13132. Therefore, the 
Departments have determined that this proposed rule does not have a 
sufficient Federalism implication to warrant the preparation of a 
summary impact statement.

F. Unfunded Mandates Reform Act of 1995

    This Act directs agencies to assess the effects of Federal 
regulatory actions on State, local, and tribal governments, and the 
private sector. A Federal mandate is any provision in a regulation that 
imposes an enforceable duty upon State, local, or tribal governments, 
or imposes a duty upon the private sector that is not voluntary.
    WIOA contains specific language supporting employment and training 
activities for Indian, Alaska Natives, and Native Hawaiian individuals. 
These program requirements are supported, as is the WIOA workforce 
development system generally, by Federal formula grant funds and are 
accordingly not considered unfunded mandates. Similarly, Migrant and 
Seasonal Farmworker activities are authorized and funded under the WIOA 
program as is currently done under the WIA program. The States are 
mandated to perform certain activities for the Federal government under 
WIOA and will be reimbursed (grant funding) for the resources required 
to perform those activities. The same process and grant relationship 
exists between States and Local WDBs under the WIA program and must 
continue under the WIOA program as identified in this NPRM.
    WIOA contains language establishing procedures regarding the 
eligibility of training providers to receive funds under the WIOA 
program and also contains clear State information collection 
requirements for training entities (e.g., submission of appropriate, 
accurate, and timely information). A decision by a private training 
entity to participate as a provider under the WIOA program is purely 
voluntary and, therefore, information collection burdens do not impose 
a duty on the private sector that is not voluntarily assumed.
    The Departments following consideration of these factors have 
determined that this proposed joint rule contains no unfunded Federal 
mandates, which are defined in 2 U.S.C. 658(6) to include either a 
``Federal intergovernmental mandate'' or a ``Federal private sector 
mandate.''

G. Plain Language

    The Departments drafted this joint NPRM in plain language.

H. Assessment of Federal Regulations and Policies on Families

    Section 654 of the Treasury and General Government Appropriations 
Act, enacted as part of the Omnibus Consolidated and Emergency 
Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 
2681) requires the assessment of the impact of this proposed rule on 
family well-being. A rule that is determined to have a negative effect 
on families must be supported with an adequate rationale. The 
Departments have assessed this proposed joint rule in light of this 
requirement and determined that the joint NPRM would not have a 
negative effect on families.

I. Executive Order 13175 (Indian Tribal Governments)

    The Departments reviewed this proposed joint rule under the terms 
of E.O. 13175 and have determined it would have no tribal implications 
in addition to those created through the reimbursement of WIA and 
future WIOA program expenses via Federally disbursed formula grant 
funds. However, the proposed joint rule would have substantial direct 
effects on one or more Indian Tribes, on the relationship between the 
Federal government and Indian Tribes, or on the distribution of power 
and responsibilities between the Federal government and Indian Tribes. 
As a result, a tribal summary impact statement has been prepared.
    Prior to developing the proposed joint rule, the Department of 
Labor held three events to talk with the tribal institutions about 
their concerns about the current state of Indian and Native American 
Programs (INAP) as well as what concerns they see in the future. These 
three events consisted of a consultation webinar and two in-person town 
hall meetings. The consultation webinar, entitled ``Listening session 
on Indian and Native American Programs,'' occurred on September 15, 
2014. Two other consultations were held, including an October 21, 2014, 
town hall meeting with Indian and Native American (INA) leaders and 
membership organizations serving Indians and Native Americans, 
Hawaiians, and Alaskan Natives, and a formal consultation December 17, 
2014, with members of the Native American Employment and Training 
Advisory Council to the Secretary of Labor.
    The Department of Labor received feedback from the INA community 
and the public that established several areas

[[Page 20627]]

of interest concerning the Department of Labor's relationship with INA 
Tribes and tribal governments. These areas of interest are summarized 
below.
Services Received in American Job Centers
    Specifically, the INA community expressed interest in learning how 
American Job Centers will account for the use of their INA funding 
dollars and how to ensure that the funds intended for the INA 
population will be dedicated to that population. In addition, several 
individuals expressed concerns that INA individuals that enter an 
American Job Center may not get the general assistance that is intended 
for all people that seek assistance. In other words, several commenters 
wanted to ensure that INA individuals should receive assistance 
intended for other populations for which they may qualify when seeking 
service. Finally, several commenters were interested in learning more 
about how INA programs may be required to contribute to American Job 
Center infrastructure funding and how American Job Centers will account 
for INA members served to ensure that the American Job Center network 
is responding to the relevant INA population needs.
Funding per Participant was Low for INA Programs Especially When 
Compared to Other Job Training Programs
    Many commenters expressed concern that the funds made available on 
a per-participant basis for INA programs were not sufficient to meet 
the needs of the populations being served. Specifically, many 
commenters stated that funds available for INA youth are inadequate to 
fully meet their needs. In addition, commenters felt that more funds 
were needed for INA job training programs to ensure that career pathway 
training could be carried out. Several commenters compared the cost per 
participant funding for other programs, such as Job Corps, as evidence 
of the lack of funding for INA programs. The commenters went on to 
request a comparison of other WIA-funded programs and the INA programs. 
Finally, one commenter felt that because of the lack of funds, INA 
youth were being served instead of INA adults.
    The majority of comments focused on the use of new funding streams 
and the requirements attached to those funds. Commenters expressed 
concern about the issue of using and transferring WIOA funding to 
support activities under Indian Employment, Training, and Related 
Services Demonstration Act of 1992, as amended (Pub. L. 102-477). 
Specifically, commenters talked about the importance of flexibility in 
adherence to the requirements because Pub. L. 102-477 programs are 
tribal programs, may be located in rural areas, and have been 
effectively and efficiently reporting through existing processes, 
including a single reporting feature in the annual report. 
Additionally, commenters suggested that vocational rehabilitation, 
adult education reentry, and other applicable job/education-related 
program funding also should be allowed to support Pub. L. 102-477 
programs. Clarity around which funding streams are allowable also was 
suggested. Commenters also expressed hope that the Department of 
Education will integrate Carl D. Perkins funding under Pub. L. 102-477 
which allows Federally-recognized Tribes and Alaska Native entities to 
combine formula-funded Federal grant funds administered by the 
Department of Interior, which are employment and training-related into 
a single plan with a single budget and a single reporting system. 
Commenters noted that the Native American Career and Technical 
Education Program (NACTEP) is a required partner and that NACTEP has 
limited the partner funds available to fund supportive services and 
work experiences. One commenter asked if statutory language regarding 
key investments in vulnerable populations would result in an increase 
in funding for Division of Indian and Native American Programs (DINAP) 
programs. Lastly, it was suggested that the 166 Advisory Council 
continue, and DINAP programs continue to be staffed with Native 
Americans and Native American Chiefs.
Concerns About the Effects of the New Performance Reporting 
Requirements Established in WIOA on the INA Community
    Many commenters expressed concern that INA programs would not be 
able to meet the performance reporting requirements established by WIOA 
for several reasons, including limited funds to train individuals for 
the new performance standards and the need to purchase new technology 
and equipment to meet the reporting requirements. In addition, several 
commenters said that INA programs will have to be more selective in 
determining eligibility for training programs because of insufficient 
funding and the increased focus on performance outcomes.
Lack of Funding To Hire and Effectively Train Staff and Ensuring Policy 
is Responsive to INA Community Needs
    Commenters stated concerns that INA programs will not be able to 
achieve expected performance levels because they lacked funding to 
adequately staff programs. Several commenters stated concerns about the 
limited number of staff, increased training needs for staff, and the 
need to ensure that technical assistance is made available to staff. 
Specifically, commenters are concerned that INA programs may transition 
slower than States to the new WIOA requirements because of funding and 
staff needs. In addition, they stated that INA programs need more funds 
to implement new administrative tasks as well as provide services to 
the INA community.
Working With States and Other Programs
    Commenters expressed concerns about States' accountability to the 
INA community and how to make other training programs administered by 
the State work comprehensively with INA programs. Others encouraged 
flexibility and freedom in funding in working with these same entities 
and lauded this flexibility as a way to get more out of funds. 
Furthermore, the commenters emphasized how important it is for INA 
leaders to have a voice in the policy and guidance formulation process 
so that policy is directly responsive to the needs and funding has to 
go hand in hand with the needs identified. Some commenters suggested an 
ongoing dialogue between INA leaders, Workforce Investment Boards, 
local and State agencies, and the American Job Centers to discuss 
training and education that leads to jobs. Some commenters asserted 
that State-run programs need to be more accountable for how they 
interact with INA populations. Other commenters expressed frustration 
that some State programs do not see a need to work with INA programs 
because the States think that the INA programs get money from other 
sources, such as casinos. Many of the commenters said that they wanted 
better collaboration with State-run programs and increased networking 
among INA programs and State agencies. Finally, one commenter stated 
that collaboration between INA programs and the State-run training 
systems would make services to individuals more efficient because it 
would prevent ``double-dipping'' in programs. The Department invites 
public comment about what can be done to address the areas summarized 
above.

[[Page 20628]]

J. Executive Order 12630 (Government Actions and Interference With 
Constitutionally Protected Property Rights)

    The Departments have determined that this joint NPRM is not subject 
to E.O. 12630, Governmental Actions and Interference with 
Constitutionally Protected Property Rights, because it does not involve 
implementation of a policy with takings implications.

K. Executive Order 12988 (Civil Justice Reform)

    This WIOA joint NPRM was drafted and reviewed in accordance with 
E.O. 12988, Civil Justice Reform, and the Departments have determined 
that the proposed rule will not unduly burden the Federal court system. 
The proposed WIOA regulations were written to minimize litigation and 
to the extent feasible, provide a clear legal standard for affected 
conduct, and have been reviewed carefully to eliminate drafting errors 
and ambiguities.

L. Executive Order 13211 (Energy Supply)

    This joint NPRM was drafted and reviewed in accordance with E.O. 
13211, Energy Supply. The Departments have determined the joint NPRM 
will not have a significant adverse effect on the supply, distribution, 
or use of energy and is not subject to E.O. 13211.

List of Subjects

20 CFR Parts 676, 677, and 678

    Employment, Grant programs--labor.

34 CFR Part 361

    Administrative practice and procedure, Grant programs--education, 
Grant programs--social programs, Reporting and recordkeeping 
requirements, Vocational rehabilitation.

34 CFR Part 463

    Adult education, Grant programs--education, Reporting and 
recordkeeping requirements.

Department of Labor

Employment and Training Administration

    20 CFR Chapter V

    For the reasons stated in the preamble, ETA proposes to amend 20 
CFR chapter V as follows:

0
1. Add part 676 to read as follows:

PART 676--UNIFIED AND COMBINED STATE PLANS UNDER TITLE I OF THE 
WORKFORCE INNOVATION AND OPPORTUNITY ACT

Sec.
676.100 What is the purpose of the Unified and Combined State Plans?
676.105 What are the general requirements for the Unified State 
Plan?
676.110 What are the program-specific requirements in the Unified 
State Plan for the adult, dislocated worker, and youth workforce 
investment activities in Workforce Innovation and Opportunity Act 
title I?
676.115 What are the program-specific requirements in the Unified 
State Plan for the Adult Education and Literacy Program in Workforce 
Innovation and Opportunity Act title II?
676.120 What are the program-specific requirements in the Unified 
State Plan for Wagner-Peyser Act Employment Service programs in 
title III of the Workforce Innovation and Opportunity Act?
676.125 What are the program-specific requirements in the Unified 
State Plan for the State Vocational Rehabilitation program in 
Workforce Innovation and Opportunity Act title IV?
676.130 What is the submission and approval process of the Unified 
State Plan?
676.135 What are the requirements for modification of the Unified 
State Plan?
676.140 What are the general requirements for submitting a Combined 
State Plan?
676.143 What is the submission and approval process of the Combined 
State Plan?
676.145 What are the requirements for modifications of the Combined 
State Plan?

    Authority: Secs. 503, 102, 103, Pub. L. 113-128, 128 Stat. 1425 
(Jul. 22, 2014).


Sec.  676.100  What is the purpose of the Unified and Combined State 
Plans?

    (a) The Unified and Combined State Plans provide the framework for 
States to outline a strategic vision of, and goals for, how their 
workforce development systems will achieve the purposes of Workforce 
Innovation and Opportunity Act (WIOA).
    (b) The Unified and Combined State Plans serve as 4-year action 
plans to develop, align, and integrate the State's systems and provide 
a platform to achieve the State's vision and strategic and operational 
goals. A Unified or Combined State Plan is intended to:
    (1) Align, in strategic coordination, the six core programs 
required in the Unified State Plan pursuant to Sec.  676.105(b), and 
additional optional programs that may be part of the Combined State 
Plan pursuant to Sec.  676.140;
    (2) Direct investments in economic, education, and workforce 
training programs to focus on providing relevant education and training 
to ensure that individuals, including youth and individuals with 
barriers to employment, have the skills to compete in the job market 
and that employers have a ready supply of skilled workers;
    (3) Apply strategies for job-driven training consistently across 
Federal programs, and;
    (4) Enable economic, education, and workforce partners to build a 
skilled workforce through innovation in, and alignment of, employment, 
training, and education programs.


Sec.  676.105  What are the general requirements for the Unified State 
Plan?

    (a) The Unified State Plan must be submitted in accordance with 
Sec.  676.130 and joint planning guidelines issued by the Secretary of 
Labor and the Secretary of Education.
    (b) The Governor of each State must submit, in accordance with 
Sec.  676.130, a Unified or Combined State Plan to the Secretary of 
Labor to be eligible to receive funding for the workforce development 
system's six core programs:
    (1) The adult, dislocated worker, and youth programs authorized 
under subtitle B of title I of WIOA and administered by the U.S. 
Department of Labor;
    (2) The Adult Education and Family Literacy Act (AEFLA) program 
authorized under title II of WIOA and administered by the U.S. 
Department of Education;
    (3) The Wagner-Peyser Act Employment Services programs amended by 
title III of WIOA and administered by the U.S. Department of Labor; and
    (4) The State Vocational Rehabilitation program amended by title IV 
of WIOA and administered by the U.S. Department of Education.
    (c) The Unified State Plan must outline the State's 4-year strategy 
for the core programs described in paragraph (b) of this section and 
meet the requirements of sec. 102(b) of WIOA, as explained in the joint 
planning guidance issued by the Secretary of Labor and the Secretary of 
Education.
    (d) The Unified State Plan must include strategic and operational 
planning elements to facilitate the development of an aligned, 
coordinated, and comprehensive workforce development system. The 
Unified State Plan must include:
    (1) Strategic planning elements that describe the State's strategic 
vision and goals for preparing an educated and skilled workforce under 
sec. 102(b)(1) of WIOA. The strategic planning elements must be 
informed by and include an analysis of the State's economic conditions 
and employer and workforce needs, including education and skill needs.

[[Page 20629]]

    (2) Strategies for aligning the core programs and optional 
programs, as well as other resources available to the State, to achieve 
the strategic vision and goals in accordance with sec. 102(b)(1)(E) of 
WIOA.
    (3) Operational planning elements in accordance with sec. 102(b)(2) 
of WIOA that support the strategies for aligning the core programs and 
other resources available to the State to achieve the State's vision 
and goals and a description of how the State Workforce Development 
Board will implement its functions, in accordance with sec. 101(d) of 
WIOA. Operational planning elements must include:
    (i) A description of how the State strategy will be implemented by 
each core program's lead State agency;
    (ii) State operating systems, including data systems, and policies 
that will support the implementation of the State's strategy identified 
in paragraph (d)(1) of this section;
    (iii) Program-specific requirements for the core programs required 
by WIOA sec. 102(b)(2)(D);
    (iv) Assurances required by sec. 102(b)(2)(E) of WIOA and others 
deemed necessary by the Secretaries of Labor and Education under sec. 
102(b)(2)(E)(x) of WIOA; and
    (v) Any additional operational planning requirements imposed by the 
Secretary of Labor or the Secretary of Education under sec. 
102(b)(2)(C)(viii) of WIOA.


Sec.  676.110  What are the program-specific requirements in the 
Unified State Plan for the adult, dislocated worker, and youth 
workforce investment activities in Workforce Innovation and Opportunity 
Act title I?

    The program-specific requirements for the adult, dislocated worker, 
and youth workforce investment activities that must be included in the 
Unified State Plan are described in sec. 102(b)(2)(D) of WIOA. 
Additional planning requirements may be required by the Secretary of 
Labor or the Secretary of Education in accordance with joint planning 
guidelines issued by the Secretary of Labor and the Secretary of 
Education.


Sec.  676.115  What are the program-specific requirements in the 
Unified State Plan for the Adult Education and Family Literacy Act 
program in Workforce Innovation and Opportunity Act title II?

    The program-specific requirements for the AEFLA program in title II 
that must be included in the Unified State Plan are described in secs. 
102(b)(2)(D)(ii) and 102(b)(2)(C) of WIOA.
    (a) With regard to the description required in sec. 
102(b)(2)(D)(ii)(I) of WIOA pertaining to content standards, the 
Unified State Plan must describe how the eligible agency will, by July 
1, 2016, align its content standards for adult education with State-
adopted challenging academic content standards under the Elementary and 
Secondary Education Act of 1965, as amended.
    (b) With regard to the description required in sec. 
102(b)(2)(C)(iv) of WIOA pertaining to the methods and factors the 
State will use to distribute funds under the core programs, for title 
II of WIOA, the Unified State Plan must include--
    (1) How the eligible agency will award multi-year grants on a 
competitive basis to eligible providers in the State; and
    (2) How the eligible agency will provide direct and equitable 
access to funds using the same grant or contract announcement and 
application procedure.
    (c) With regard to the description required under sec. 
102(b)(2)(C)(v)(I) of WIOA pertaining to the integration of workforce 
and education data on core programs, unemployment insurance programs, 
and education through post-secondary education, for title II of WIOA, 
the Unified State Plan must include how the State will ensure 
interoperability of data systems in the reporting on core indicators of 
performance and performance reports required to be submitted by the 
State.


Sec.  676.120  What are the program-specific requirements in the 
Unified State Plan for Wagner-Peyser Act Employment Service programs in 
title III of the Workforce Innovation and Opportunity Act?

    Wagner-Peyser Act Employment Services programs amended by title III 
are subject to requirements in sec. 102(b) of WIOA and any additional 
requirements imposed by the Secretary of Labor under sec. 
102(b)(2)(C)(viii) of WIOA, in accordance with joint planning 
guidelines issued by the Secretary of Labor and the Secretary of 
Education.


Sec.  676.125  What are the program-specific requirements in the 
Unified State Plan for the State Vocational Rehabilitation program in 
Workforce Innovation and Opportunity Act title IV?

    The program specific requirements for the vocational rehabilitation 
services portion of the Unified or Combined State Plan are set forth in 
sec. 101(a) of the Rehabilitation Act of 1973, as amended. All 
submission requirements of the Vocational Rehabilitation Services 
portion of the Unified or Combined State Plan are in addition to the 
jointly developed strategic and operational content requirements 
prescribed by secs. 102(b) and 103 of WIOA.


Sec.  676.130  What is the submission and approval process of the 
Unified State Plan?

    (a) The Unified State Plan described in Sec.  676.105 must be 
submitted in accordance with planning guidelines issued jointly by the 
Secretaries of Labor and Education which explain the submission and 
approval process in WIOA sec. 102(c).
    (b) A State must submit its Unified State Plan to the Secretary of 
Labor pursuant to a process identified by the Secretary.
    (1) The initial Unified State Plan must be submitted no later than 
120 days prior to the commencement of the second full program year of 
WIOA.
    (2) The subsequent Unified State Plan must be submitted no later 
than 120 days prior to the end of the 4-year period described in 
paragraph (b)(1) of this section.
    (3) For purposes of paragraph (b) of this section, ``program year'' 
means July 1 through June 30 of any year.
    (c) The State must provide an opportunity for public comment on and 
input into the development of the Unified State Plan prior to its 
submission.
    (1) The opportunity for public comment must include an opportunity 
for comment by representatives of Local Boards and chief elected 
officials, businesses, representatives of labor organizations, 
community-based organizations, adult education providers, institutions 
of higher education, other stakeholders with an interest in the 
services provided by the six core programs, and the general public, 
including individuals with disabilities.
    (2) Consistent with the ``Sunshine Provision'' of WIOA in sec. 
101(g), the State Board must make information regarding the Unified 
State Plan available to the public through electronic means and 
regularly occurring open meetings in accordance with State law. The 
Unified State Plan must describe the State's process and timeline for 
ensuring a meaningful opportunity for public comment.
    (d) Upon receipt of the Unified State Plan from the State, the 
Secretary of Labor will ensure that the entire Unified State Plan is 
submitted to the Secretary of Education pursuant to a process developed 
by the Secretaries.
    (e) The Unified State Plan is subject to the approval of both the 
Secretary of Labor and the Secretary of Education.
    (f) Before the Secretary of Labor and the Secretary of Education 
approve the Unified State Plan, the vocational

[[Page 20630]]

rehabilitation portion of the Unified State Plan described in WIOA sec. 
102(b)(2)(D)(iii) must be approved by the Commissioner of the 
Rehabilitation Services Administration.
    (g) The Secretary of Labor and the Secretary of Education will 
review and approve the Unified State Plan within 90 days of receipt by 
the appropriate Secretary, unless the Secretary of Labor or the 
Secretary of Education determines in writing within that period that:
    (1) The plan is inconsistent with a core program's requirements;
    (2) The Unified State Plan is inconsistent with any requirement of 
sec. 102 of WIOA; or
    (3) The plan is incomplete or otherwise insufficient to determine 
whether it is consistent with a core program's requirements or other 
requirements of WIOA.
    (h) If neither the Secretary of Labor nor the Secretary of 
Education makes the written determination described in paragraph (g) of 
this section within 90 days of the receipt by the Secretaries, the 
Unified State Plan will be considered approved.


Sec.  676.135  What are the requirements for modification of the 
Unified State Plan?

    (a) In addition to the required modification review set forth in 
paragraph (b) of this section, a Governor may submit a modification of 
its Unified State Plan at any time during the 4-year period of the 
plan.
    (b) Modifications are required, at a minimum:
    (1) At the end of the first 2-year period of any 4-year State Plan, 
wherein the State Board must review the Unified State Plan, and the 
Governor must submit modifications to the plan to reflect changes in 
labor market and economic conditions or other factors affecting the 
implementation of the Unified State Plan;
    (2) When changes in Federal or State law or policy substantially 
affect the strategies, goals, and priorities upon which the Unified 
State Plan is based;
    (3) When there are changes in the statewide vision, strategies, 
policies, State adjusted levels of performance, the methodology used to 
determine local allocation of funds, reorganizations which change the 
working relationship with system employees, changes in organizational 
responsibilities, changes to the membership structure of the State 
Board or alternative entity, and similar substantial changes to the 
State's workforce investment system.
    (c) Modifications to the Unified State Plan are subject to the same 
public review and comment requirements in Sec.  676.130(c) that apply 
to the development of the original Unified State Plan.
    (d) Unified State Plan modifications must be approved by the 
Secretary of Labor and the Secretary of Education, based on the 
approval standards applicable to the original Unified State Plan under 
Sec.  676.130. This approval must come after the approval of the 
Commissioner of the Rehabilitation Services Administration for 
modification of any portion of the plan described in sec. 
102(b)(2)(D)(iii) of WIOA.


Sec.  676.140  What are the general requirements for submitting a 
Combined State Plan?

    (a) A State may choose to develop and submit a 4-year Combined 
State Plan in lieu of the Unified State Plan described in Sec.  
676.105.
    (b) A State that submits a Combined State Plan covering an activity 
or program described in paragraph (d) of this section that is approved 
under WIOA sec. 103(c) or determined complete under the law relating to 
the program will not be required to submit any other plan or 
application in order to receive Federal funds to carry out the core 
programs or the program or activities described under paragraph (d) of 
this section that are covered by the Combined State Plan.
    (c) If a State develops a Combined State Plan, it must be submitted 
in accordance with the process described in Sec.  676.143.
    (d) If a State chooses to submit a Combined State Plan, the Plan 
must include the six core programs and one or more of the optional 
programs and activities described in sec. 103(a)(2) of WIOA. The 
optional programs and activities that may be included in the Combined 
State Plan are:
    (1) Career and technical education programs authorized under the 
Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 
2301 et seq.);
    (2) Temporary Assistance for Needy Families or TANF, authorized 
under part A of title IV of the Social Security Act (42 U.S.C. 601 et 
seq.);
    (3) Employment and training programs authorized under sec. 6(d)(4) 
of the Food and Nutrition Act of 2008 (7 U.S.C. 2015(d)(4));
    (4) Work programs authorized under sec. 6(o) of the Food and 
Nutrition Act of 2008 (7 U.S.C. 2015(o));
    (5) Trade adjustment assistance activities under chapter 2 of title 
II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.);
    (6) Services for veterans authorized under chapter 41 of title 38 
United States Code;
    (7) Programs authorized under State unemployment compensation laws 
(in accordance with applicable Federal law);
    (8) Senior Community Service Employment Programs under title V of 
the Older Americans Act of 1956 (42 U.S.C. 3056 et seq.);
    (9) Employment and training activities carried out by the 
Department of Housing and Urban Development;
    (10) Employment and training activities carried out under the 
Community Services Block Grant Act (42 U.S.C. 9901 et seq.); and
    (11) Reintegration of offenders programs authorized under sec. 212 
of the Second Chance Act of 2007 (42 U.S.C. 17532).
    (e) A Combined State Plan must contain:
    (1) For the core programs, the information required by sec. 102(b) 
of WIOA and Sec.  676.105, as explained in the joint planning guidance 
issued by the Secretaries;
    (2) For the optional programs, except as described in paragraph (h) 
of this section, the information required by the law authorizing and 
governing that program to be submitted to the appropriate Secretary, 
any other applicable legal requirements, and any common planning 
requirements described in sec. 102(b) of WIOA, as explained in the 
joint planning guidance issued by the Secretaries;
    (3) A description of joint planning methods across all programs 
included in the Combined State Plan; and
    (4) An assurance that all of the entities responsible for planning 
or administering the programs described in the Combined State Plan have 
had a meaningful opportunity to review and comment on all portions of 
the Plan.
    (f) Each optional program included in the Combined State Plan 
remains subject to the applicable program-specific requirements of the 
Federal law and regulations, and any other applicable legal or program 
requirements, governing the implementation and operation of that 
program.
    (g) For purposes of Sec. Sec.  676.140 through 676.145 the term 
``appropriate Secretary'' means the head of the Federal agency who 
exercises either plan or application approval authority for the program 
or activity under the Federal law authorizing the program or activity 
or, if there are no planning or application requirements, who exercises 
administrative authority over the program or activity under that 
Federal law.
    (h) States that include employment and training activities carried 
out under

[[Page 20631]]

the Community Services Block Grant (CSBG) Act (42 U.S.C. 9901 et seq.) 
under a Combined State Plan would submit all other required elements of 
a complete CSBG State Plan directly to the Federal agency that 
administers the program, according to the requirements of Federal law 
and regulations.


Sec.  676.143  What is the submission and approval process of the 
Combined State Plan?

    (a) For purposes of Sec.  676.140(a), if a State chooses to develop 
a Combined State Plan it must submit the Combined State Plan in 
accordance with the requirements described below and the joint planning 
guidelines, which will further explain the submission and approval 
procedures for the Combined State Plan, issued by the Secretaries.
    (b) The State must submit to the Secretaries of Labor and Education 
and to the Secretary of the agency with responsibility for approving 
the program's plan or determining it complete under the law governing 
the program, as part of its Combined State Plan, any plan, application, 
form, or any other similar document that is required as a condition for 
the approval of Federal funding under the applicable program or 
activity. Such submission must occur in accordance with a process 
identified by the relevant Secretaries in paragraph (a) of this 
section.
    (c) The Combined State Plan will be approved or disapproved in 
accordance with the requirements of sec. 103(c) of WIOA.
    (1) The portion of the Combined State Plan covering programs 
administered by the Departments of Labor and Education must be 
reviewed, and approved or disapproved, by the appropriate Secretary 
within 90 days beginning on the day the plan is received by the 
appropriate Secretary from the State, except as provided in paragraph 
(d) of this section.
    (2) If an appropriate Secretary other than the Secretary of Labor 
or the Secretary of Education has authority to approve or determine 
complete a portion of the Combined State Plan for a program or activity 
described in Sec.  676.140(d), that portion of the plan must be 
reviewed, and approved, disapproved, or have a determination of 
completeness, by the appropriate Secretary within 120 days beginning on 
the day the plan is received by the appropriate Secretary from the 
State except as provided in paragraph (e) of this section.
    (d) The review and determination of approval or disapproval, or 
determination of completeness, of the relevant portion of the Combined 
State Plan must occur within 90 days for all Department of Labor and 
Education programs included in the State Plan and within 120 days for 
the programs administered by other Federal Agencies unless the 
appropriate Secretary determines in writing within that period that:
    (1) The Plan is inconsistent with the requirements of the six core 
programs or the Federal laws authorizing or applicable to the program 
or activity involved, including the criteria for approval of a plan or 
application, or determining the plan's completeness, if any, under such 
law;
    (2) The portion of the Plan describing the six core programs or the 
program or activity described in paragraph (a) of this section involved 
does not satisfy the criteria as provided in sec. 102 or 103 of WIOA, 
as applicable; or
    (3) The Plan is incomplete, or otherwise insufficient to determine 
whether it is consistent with a core program's requirements, other 
requirements of WIOA, or the Federal laws authorizing, or applicable 
to, the program or activity described in Sec.  676.140(d), including 
the criteria for approval of a plan or application, if any, under such 
law.
    (e) If the Secretary of Labor, the Secretary of Education, or the 
appropriate Secretary does not make the written determination described 
in paragraph (d) of this section within the relevant period of time 
after submission of the Plan, that portion of the Combined State Plan 
over which the Secretary has jurisdiction will be considered approved.
    (f) Special rule. In paragraphs (d)(1) and (3) of this section, the 
term ``criteria for approval of a plan or application,'' with respect 
to a State or a core program or a program under the Carl D. Perkins 
Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.), 
includes a requirement for agreement between the State and the 
appropriate Secretaries regarding State performance measures or State 
performance accountability measures, as the case may be, including 
levels of performance.


Sec.  676.145  What are the requirements for modifications of the 
Combined State Plan?

    (a) For the core program portions of the Combined State Plan, 
modifications are required at the end of the first 2-year period of any 
4-year Combined State Plan. The State Board must review the Combined 
State Plan, and the Governor must submit a modification of the Combined 
State Plan to reflect changes in labor market and economic conditions 
or in other factors affecting the implementation of the Combined State 
Plan.
    (b) In addition to the required modification review described in 
paragraph (a) of this section, a State may submit a modification of its 
Combined State Plan at any time during the 4-year period of the plan.
    (c) For any programs and activities described in Sec.  676.140(d) 
that are included in a State's Combined State Plan, the State--
    (1) May decide if the modification requirements under WIOA sec. 
102(c)(3) that apply to the core programs will apply to the optional 
programs or activities described in Sec.  676.140(d) that are included 
in the Combined State Plan or may comply with the procedures and 
requirements applicable to only the particular optional program or 
activity; and
    (2) Must submit, in accordance with the procedure described in 
Sec.  676.143, any other modification, amendment, or revision required 
by the Federal law authorizing, or applicable to, the program or 
activity described in Sec.  676.140(d). If the underlying programmatic 
requirements change for Federal laws authorizing such programs, a State 
must either modify its Combined State Plan or submit a separate plan to 
the appropriate Federal agency in accordance with the new Federal law 
authorizing the optional program or activity and other legal 
requirements applicable to such program or activity. A State also may 
amend its Combined State Plan to add an optional program or activity 
described in Sec.  676.140(d).
    (d) Modifications of the Combined State Plan are subject to the 
same public review and comment requirements that apply to the 
development of the original Combined State Plan as described in Sec.  
676.130(c) except that, if the modification, amendment, or revision 
affects the administration of a particular optional program and has no 
impact on the Combined State Plan as a whole or the integration and 
administration of the core and optional programs at the State level, a 
State may comply instead with the procedures and requirements 
applicable to the particular optional program.
    (e) Modifications for the core program portions of the Combined 
State Plan must be approved by the Secretary of Labor and the Secretary 
of Education, based on the approval standards applicable to the 
original Combined State Plan under Sec.  676.143. This approval must 
come after the approval of the Commissioner of the Rehabilitation 
Services Administration for modification of any portion of the

[[Page 20632]]

Combined State Plan described in sec. 102(b)(2)(D)(iii) of WIOA.
    (f) Modifications for the portions of the Combined State Plan for 
any optional program or activity described in Sec.  676.140(d) must be 
submitted for approval by only the appropriate Secretary, based on the 
approval standards applicable to the original Combined State Plan under 
Sec.  676.143, if the State elects, or in accordance with the 
procedures and requirements applicable to the particular optional 
program if the modification, amendment, or revision affects the 
administration of only that particular optional program and has no 
impact on the Combined State Plan as a whole or the integration and 
administration of the core and optional programs at the State level.
0
2. Add part 677 to read as follows:

PART 677--PERFORMANCE ACCOUNTABILITY UNDER TITLE I OF THE WORKFORCE 
INNOVATION AND OPPORTUNITY ACT

Sec.
677.150 What definitions apply to Workforce Innovation and 
Opportunity Act performance measurement and reporting requirements?
Subpart A--State Indicators of Performance for Core Programs
677.155 What are the primary indicators of performance under the 
Workforce Innovation and Opportunity Act?
677.160 What information is required for State performance reports?
677.165 May a State require additional indicators of performance?
677.170 How are State adjusted levels of performance for primary 
indicators established?
677.175 What responsibility do States have to use quarterly wage 
record information for performance accountability?
Subpart B--Sanctions for State Performance and the Provision of 
Technical Assistance
677.180 What State actions are subject to a financial sanction under 
Workforce Innovation and Opportunity Act?
677.185 When are sanctions applied for failure to report?
677.190 When are sanctions applied for failure to achieve adjusted 
levels of performance?
677.195 What should States expect when a sanction is applied to the 
Governor's Reserve Allotment?
677.200 What other administrative actions will be applied to States' 
performance requirements?
Subpart C--Local Performance Accountability for Workforce Innovation 
and Opportunity Act Title I Programs
677.205 What performance indicators apply to local areas?
677.210 How are local performance levels established?
Subpart D--Incentives and Sanctions for Local Performance for Workforce 
Innovation and Opportunity Act Title I Programs
677.215 Under what circumstances are local areas eligible for State 
Incentive Grants?
677.220 Under what circumstances may a corrective action or sanction 
be applied to local areas for poor performance?
677.225 Under what circumstances may local areas appeal a 
reorganization plan?
Subpart E--Eligible Training Provider Performance for Workforce 
Innovation and Opportunity Act Title I Programs
677.230 What information is required for the eligible training 
provider performance reports?
Subpart F--Performance Reporting Administrative Requirements
677.235 What are the reporting requirements for individual records 
for core Workforce Innovation and Opportunity Act title I, III, and 
IV programs?
677.240 What are the requirements for data validation of State 
annual performance reports?

    Authority: Secs. 503, 116, 189, Pub. L. 113-128, 128 Stat. 1425 
(Jul. 22, 2014).


Sec.  677.150  What definitions apply to Workforce Innovation and 
Opportunity Act performance measurement and reporting requirements?

    (a) Participant. A reportable individual who has received staff-
assisted services after satisfying all applicable programmatic 
requirements for the provision of services, such as eligibility 
determination.
    (1) For the Vocational Rehabilitation (VR) program, a Participant 
is an individual who has an approved and signed Individualized Plan for 
Employment (IPE) and has begun to receive services.
    (2) The following individuals are not Participants:
    (i) Individuals who have not completed at least 12 contact hours in 
the Adult Education and Family Literacy Act (AEFLA) program;
    (ii) Individuals who only use the self-service system; and
    (iii) Individuals who only receive information services or 
activities.
    (3) Programs must include participants in their performance 
calculations.
    (b) Reportable individual. An individual who has taken action that 
demonstrates an intent to use program services and who meets specific 
reporting criteria of the core program, including:
    (1) Individuals who provide identifying information;
    (2) Individuals who only use the self-service system; and
    (3) Individuals who only receive information on services or 
activities.
    (c) Exit. As defined for the purpose of performance calculations, 
exit is the point after which an individual who has received services 
through any program meets the following criteria:
    (1) For the adult, dislocated worker, and youth programs under 
Workforce Innovation and Opportunity Act (WIOA) title I, the AEFLA 
program under WIOA title II, and the Employment Services authorized by 
the Wagner-Peyser Act as amended by WIOA title III, exit date is the 
last date of service:
    (i) The exit date cannot be determined until 90 days of no services 
has elapsed. At that point the exit date is applied retroactively to 
the last date of service.
    (A) Ninety days of no service does not include self-service or 
information-only activities or follow-up services and
    (B) There are no future services planned, excluding follow-up 
services.
    (ii) [Reserved]
    (2)(i) For the VR program as amended by WIOA title IV:
    (A) The participant's record of service is closed in accordance 
with 34 CFR 361.56 because the participant has achieved an employment 
outcome; or
    (B) The participant's service record is closed because the 
individual has not achieved an employment outcome or the individual has 
been determined ineligible after receiving services in accordance with 
34 CFR 361.43.
    (ii) Notwithstanding any other provision of this section, a 
participant will not be considered as meeting the definition of exit 
from the Vocational Rehabilitation program if the individual's service 
record is closed because the individual has achieved a supported 
employment outcome in an integrated setting but not in competitive 
integrated employment.

Subpart A--State Indicators of Performance for Core Programs


Sec.  677.155  What are the primary indicators of performance under the 
Workforce Innovation and Opportunity Act?

    (a) All States submitting either a Unified or Combined State Plan 
under Sec. Sec.  676.130 and 676.143 of this chapter, must propose 
expected levels of performance for each of the primary indicators of 
performance for the adult, dislocated worker, and youth programs under 
title I of WIOA, the AEFLA program under title II of WIOA, the Wagner-
Peyser Act as amended by title III of WIOA, and the VR program as 
amended by WIOA.

[[Page 20633]]

    (1) The six primary indicators for performance are:
    (i) The percentage of participants, who are in unsubsidized 
employment during the second quarter after exit from the program;
    (ii) The percentage of participants, who are in unsubsidized 
employment during the fourth quarter after exit from the program;
    (iii) Median earnings of participants, who are in unsubsidized 
employment during the second quarter after exit from the program;
    (iv) The percentage of participants who obtained a recognized post-
secondary credential or a secondary school diploma, or its recognized 
equivalent during participation in or within 1 year after exit from the 
program. A participant who has obtained a secondary school diploma or 
its recognized equivalent is only included in this measure if the 
participant is also employed or is enrolled in an education or training 
program leading to a recognized post-secondary credential within 1 year 
from program exit;
    (v) The percentage of participants who during a program year, are 
in an education or training program that leads to a recognized post-
secondary credential or employment and who are achieving measurable 
skill gains, defined as documented academic, technical, occupational or 
other forms of progress, towards such a credential or employment.
    (vi) Effectiveness in serving employers, based on indicators 
developed as required by sec. 116(b)(2)(A)(iv) of WIOA.
    (2) [Reserved]
    (b) The indicators in paragraphs (a)(1)(i) through (vi) of this 
section apply to the adult, dislocated worker, AEFLA and VR programs.
    (c) The indicators in paragraphs (a)(1)(i) through (iii) and (vi) 
of this section apply to the Employment Services.
    (d) For the youth program under title I of WIOA, the indicators 
are:
    (1) Percentage of participants who are in education or training 
activities, or in unsubsidized employment, during the second quarter 
after exit from the program;
    (2) Percentage of participants in education or training activities, 
or in unsubsidized employment, during the fourth quarter after exit 
from the program;
    (3) Median earnings of participants who are in unsubsidized 
employment during the second quarter after exit from the program;
    (4) The percentage of participants who obtained a recognized post-
secondary credential or a secondary school diploma, or its recognized 
equivalent, during participation or up to 1 year after exit. A 
participant who has obtained a secondary school diploma or its 
recognized equivalent is only included in this measure if the 
participant is also employed or is enrolled in an education or training 
program leading to a recognized post-secondary credential within 1 year 
from program exit;
    (5) The percentage of participants who during a program year, are 
in an education or training program that leads to a recognized post-
secondary credential or employment and who are achieving measurable 
skill gains, defined as documented academic, technical, occupational or 
other forms of progress towards such a credential or employment;
    (6) Effectiveness in serving employers, based on indicators 
developed as required by sec. 116(b)(2)(iv) of WIOA.


Sec.  677.160  What information is required for State performance 
reports?

    (a) Section 116(d)(2) of WIOA requires States to submit a State 
performance report. The State performance report must be submitted 
annually using a template the Departments will disseminate and must 
provide, at a minimum, information on the actual performance levels 
achieved consistent with Sec.  677.175 with respect to:
    (1) The total number of participants served, and the total number 
of participants who exited each of the core programs identified in sec. 
116(b)(3)(A)(ii) of WIOA, including disaggregated counts of those who 
participated in and exited a core program, by:
    (i) Individuals with barriers to employment as defined in WIOA sec. 
3(24); and
    (ii) Co-enrollment in any of the programs in WIOA sec 
116(b)(3)(A)(ii).
    (2) Information on the performance levels achieved for the primary 
indicators for all of the core programs identified in Sec.  677.155 
including disaggregated levels for:
    (i) Individuals with barriers to employment as defined in WIOA sec. 
3(24);
    (ii) Age;
    (iii) Sex; and
    (iv) Race and ethnicity.
    (3) The total number of participants and exiters who received 
career and training services for the most recent program year and the 
three preceding program years, as applicable to the program;
    (4) Information on the performance levels achieved for the primary 
indicators consistent with Sec.  677.155 for career and training 
services for the most recent program year and the 3 preceding program 
years, as applicable to the program;
    (5) The percentage of participants in a program who obtained 
unsubsidized employment related to the training received (often 
referred to as training-related employment) through WIOA title I-B 
programs;
    (6) The amount of funds spent on each type of career and training 
service for the most recent program year and the 3 preceding program 
years, as applicable to the program;
    (7) The average cost per participant for those participants who 
received career and training services, respectively, during the most 
recent program year and the 3 preceding program years for, as 
applicable to the program;
    (8) The percentage of a State's annual allotment under WIOA sec. 
132(b) that the State spent on administrative costs; and
    (9) Information that facilitates comparisons of programs with 
programs in other States.
    (10) For WIOA title I programs, a State performance narrative, 
which, for States in which a local area is implementing a pay-for-
performance contracting strategy, at a minimum provides:
    (i) A description of pay-for-performance contract strategies being 
used for programs;
    (ii) The performance of service providers entering into contracts 
for such strategies, measured against the levels of performance 
specified in the contracts for such strategies; and
    (iii) An evaluation of the design of the programs and performance 
strategies and, when available, the satisfaction of employers and 
participants who received services under such strategies.
    (b) The disaggregation of data for the State performance report 
must be done in compliance with WIOA sec. 116(d)(6)(C).
    (c) The State performance reports must include a mechanism of 
electronic access to the State's local area and ETP performance 
reports.
    (d) States must comply with these requirements from sec. 116 of 
WIOA as explained in joint guidance issued by the Departments of 
Education and Labor, which may include information on reportable 
individuals as determined by the Secretaries.


Sec.  677.165  May a State require additional indicators of 
performance?

    States may identify additional indicators of performance for the 
six

[[Page 20634]]

core programs. These indicators must be included in the Unified or 
Combined State Plan.


Sec.  677.170  How are State adjusted levels of performance for primary 
indicators established?

    (a) A State must submit in the State Plan expected levels of 
performance on the primary indicators for each core program as required 
by sec. 116(b)(iv) of WIOA as explained in joint guidance issued by the 
Secretaries of Education and Labor.
    (1) The initial State Plan submitted under WIOA must contain 
expected levels of performance for the first 2 years of the State Plan 
period.
    (2) States must submit expected levels of performance for the third 
and fourth year of the State Plan before the third program year 
consistent with Sec. Sec.  676.135 and 676.145 of this chapter.
    (b) The State must reach agreement on levels of performance with 
the Secretaries of Education and Labor for each of the core programs 
based on the following factors:
    (1) How the levels of performance compare with State adjusted 
levels of performance established for other States;
    (2) The application of an objective statistical model established 
by the Secretaries of Education and Labor, subject to paragraph (d) of 
this section;
    (3) How the levels promote continuous improvement in performance 
based on the primary indicators and ensure optimal return on investment 
of Federal funds; and
    (4) The extent to which the levels assist the State in meeting the 
performance goals established by the Secretaries of Education and Labor 
for the core programs in accordance with the Government Performance and 
Results Act of 1993, and its amendments.
    (c) An objective statistical adjustment model will be developed and 
disseminated by the Secretaries. The model will be based on:
    (1) Differences among States in actual economic conditions, 
including unemployment rates and job losses or gains in particular 
industries; and
    (2) The characteristics of participants, including:
    (i) Indicators of poor work history;
    (ii) Lack of work experience;
    (iii) Lack of educational or occupational skills attainment;
    (iv) Dislocation from high-wage and high-benefit employment;
    (v) Low levels of literacy;
    (vi) Low levels of English proficiency;
    (vii) Disability status;
    (viii) Homelessness;
    (ix) Ex-offender status; and
    (x) Welfare dependency.
    (d) The objective statistical adjustment model developed under 
paragraph (c) of this section will be:
    (1) Applied to the core programs' primary indicators upon 
availability of data which is necessary to populate the model and apply 
it to the programs;
    (2) Subject to paragraph (d)(1) of this section, used before the 
beginning of a program year in order to establish State performance 
targets for the upcoming program year; and
    (3) subject to paragraph (d)(1) of this section, used to revise 
performance levels at the end of a program year based on actual 
circumstances, consistent with sec. 116(b)(3)(vii) of WIOA.
    (e) States must comply with these requirements from sec. 116 of 
WIOA as explained in joint guidance issued by the Departments of 
Education and Labor.


Sec.  677.175  What responsibility do States have to use quarterly wage 
record information for performance accountability?

    (a) States must, consistent with State laws, use quarterly wage 
record information in measuring the progress on State adjusted levels 
of performance for the primary indicators outlined in Sec.  677.155 and 
local performance indicators identified in Sec.  677.205. The use of 
social security numbers from participants and such other information as 
is necessary to measure the progress of those participants through 
quarterly wage record information is authorized.
    (b) ``Quarterly wage record information'' means intrastate and 
interstate wages paid to an individual, the social security number (or 
numbers, if more than one) of the individual and the name, address, 
State, and the Federal employer identification number of the employer 
paying the wages to the individual.
    (c) The Governor may designate a State agency [or appropriate State 
entity] to assist in carrying out the performance reporting 
requirements for WIOA core programs and eligible training providers. 
The Governor or such agency [or appropriate State entity] is 
responsible for:
    (1) Facilitating data matches; and
    (2) Data quality reliability, protection against disaggregation 
that would violate privacy.

Subpart B--Sanctions for State Performance and the Provision of 
Technical Assistance


Sec.  677.180  What State actions are subject to a financial sanction 
under Workforce Innovation and Opportunity Act?

    The following failures by a State are subject to financial sanction 
under WIOA sec. 116(d):
    (a) The failure by a State to submit the State annual performance 
report required under WIOA sec. 116(d)(2); or
    (b) The failure by a State to meet adjusted levels of performance 
for the primary indicators of performance in accordance with sec. 
116(f) of WIOA.


Sec.  677.185  When are sanctions applied for failure to report?

    (a) Sanctions will be applied when a State fails to submit the 
State annual performance reports required under sec. 116(d)(2) of WIOA. 
It is a failure to report if the State either:
    (1) Does not submit a State annual performance report by the date 
for timely submission set in performance reporting guidance; or
    (2) Submits a State annual performance report by the date for 
timely submission, but the report is incomplete.
    (b) Sanctions will not be assessed if the reporting failure is due 
to exceptional circumstances outside of the State's control. 
Exceptional circumstances may include, but are not limited to:
    (1) Natural disasters;
    (2) Unexpected personnel transitions; and
    (3) Unexpected technology related impacts.
    (c) In the event that a State may not be able to submit a complete 
and accurate performance report by the deadline for timely reporting:
    (1) The State must notify the Secretary of Labor or Secretary of 
Education as soon as possible of a potential impact on the ability to 
submit their State annual performance reports by no later than 30 days 
prior to the established deadline in order to not be considered failing 
to report.
    (2) In circumstances where unexpected events occur within the 30-
day period before the deadline for submission of the State annual 
performance reports, the Secretary of Labor and Secretary of Education 
will review requests for extending the reporting deadline in accordance 
with the Departments' procedures explained in guidance on reporting 
timelines.

[[Page 20635]]

Sec.  677.190  When are sanctions applied for failure to achieve 
adjusted levels of performance?

    (a) States' negotiated levels of performance will be adjusted 
through the application of the statistical adjustment model established 
under Sec.  677.170 to account for actual conditions experienced during 
a program year and characteristics of participants, annually at the 
close of each program year.
    (b) States that fail to meet adjusted levels of performance for the 
primary indicators of performance outlined in Sec.  677.155 for any 
year will receive technical assistance, including assistance in the 
development of a performance improvement plan provided by the Secretary 
of Labor or Secretary of Education.
    (c) State failure to meet adjusted levels of performance will be 
determined through three criteria:
    (1) Overall State program scores, based on the percent achieved by 
a program on each of the six primary indicators compared to the 
adjusted goal for each primary indicator. The average of the percentage 
of the adjusted goal achieved for each primary indicator will 
constitute the overall program score for the State;
    (2) Overall State indicator scores, based on the percent achieved 
by each program on each of the individual primary indicators compared 
to the adjusted goal. The average of the percentage of the adjusted 
goal achieved for each of the six core programs' will constitute an 
overall indicator score for the State; and
    (3) Individual indicator scores, based on the percent achieved by 
each program on each of the individual primary indicators compared to 
the adjusted goals.
    (d) A performance failure occurs when:
    (1) Any overall State program score or overall State indicator 
score falls below 90 percent for the program year; or
    (2) Any of the States' individual indicator scores fall below 50 
percent for the program year.
    (e) Sanctions based on performance failure will be applied to 
States if, for 2 consecutive years, the State fails to meet 90 percent 
of the overall State program score, 90 percent of the overall State 
indicator score, or 50 percent on any individual indicator score for 
the same program or indicator.


Sec.  677.195  What should States expect when a sanction is applied to 
the Governor's Reserve Allotment?

    (a) The Secretary of Labor and the Secretary of Education will 
reduce the Governor's Reserve Allotment by 5 percent of the maximum 
available amount for the immediately succeeding program year if:
    (1) The State fails to submit the State annual performance reports 
as required under WIOA sec. 116(d)(2), as defined in Sec.  677.185; or
    (2) The State fails to meet State adjusted levels of performance 
for the same primary performance indicator(s) under either Sec.  
677.190(d)(1) or Sec.  677.190(d)(2) for the second consecutive year as 
defined in Sec.  677.190.
    (b) If the State fails under paragraphs (a)(1) and (2) of this 
section in the same program year, the Secretary of Labor and the 
Secretary of Education will reduce the Governor's Reserve Allotment by 
10 percent of the maximum available amount for the immediately 
succeeding program year.
    (c) If a State's Governor's Reserve Allotment is reduced:
    (1) The reduced amount will not be returned to the State in the 
event that the State later improves performance or submits its annual 
performance report; and
    (2) The Governor's reserve will continue to be set at the reduced 
level in each subsequent year until the Secretary of Labor or the 
Secretary of Education, dependent upon the impacted program, determines 
that the State met the State adjusted levels of performance for the 
applicable primary performance indicators and has submitted all of the 
required performance reports.
    (d) A State may request review of a sanction the U.S. Department of 
Labor imposes in accordance with the provisions of Sec.  683.800 of 
this chapter.


Sec.  677.200  What other administrative actions will be applied to 
States' performance requirements?

    (a) In addition to sanctions for failure to report or failure to 
meet adjusted levels of performance, States will be subject to 
administrative actions in the case of poor performance.
    (b) States' performance achievement on the individual primary 
indicators will be assessed in addition to the overall program score 
and overall indicator score. Based on this assessment, as clarified and 
explained in guidance, for performance on any individual primary 
indicator, the Secretary of Labor or the Secretary of Education will 
require the State to establish a performance risk plan to address 
continuous improvement on the individual primary indicator.

Subpart C--Local Performance Accountability for Workforce 
Innovation and Opportunity Act Title I Programs


Sec.  677.205  What performance indicators apply to local areas?

    (a) Each local workforce investment area in a State under title I 
of WIOA is subject to the same primary indicators of performance for 
the core programs for WIOA title I under Sec.  677.155(a)(1) and (d) 
that apply to the State.
    (b) In addition to the indicators described in paragraph (a) of 
this section, under Sec.  677.165, the Governor may apply additional 
indicators of performance to local areas in the State.
    (c) States must annually make local area performance reports 
available to the public using a template that the Departments will 
disseminate in guidance, including by electronic means. The State must 
provide electronic access to the public local area performance report 
in its annual State performance report.
    (d) The local area performance report must provide information on 
the actual performance levels for the local area based on quarterly 
wage records consistent with the requirements for States under Sec.  
677.175.
    (e) The local area performance report must include:
    (1) Performance levels achieved by the local area for the 
indicators for the adult, dislocated worker, and youth programs under 
title I of WIOA in Sec.  677.155(a)(1) and (3);
    (2) Performance levels achieved by the local area for the adult, 
dislocated worker, and youth programs under title I of WIOA in Sec.  
677.160(a);
    (3) The percentage of a local area's allotment under WIOA sec. 
128(b) and sec. 133(b) that the local area spent on administrative 
costs; and
    (4) Other information that facilitates comparisons of programs with 
programs in other local areas (or planning regions if the local area is 
part of a planning region).
    (f) States must comply with any requirements from sec. 116(d)(3) of 
WIOA as explained in guidance, including the use of the performance 
reporting template, issued by the Department of Labor.


Sec.  677.210  How are local performance levels established?

    (a) The objective statistical adjustment model required under sec. 
116(b)(3)(A)(viii) of WIOA and described in the Sec.  677.170 must be:
    (1) Used to establish local performance targets for the upcoming 
program year; and

[[Page 20636]]

    (2) Used to revise performance levels at the end of a program year 
based on actual circumstances, consistent with WIOA sec. 116(c)(3).
    (b) The Governor, Local Board, and chief elected official must 
reach agreement on local targets and levels based on a negotiations 
process before the start of a program year with the use of the 
objective statistical model described in paragraph (a) of this section. 
The negotiations will include a discussion of circumstances not 
accounted for in the model and will take into account the extent to 
which the levels promote continuous improvement. The objective 
statistical model will be applied at the end of the program year based 
on actual conditions experienced.
    (c) The negotiations process described in paragraph (b) of this 
section must be developed by the Governor and disseminated to all Local 
Boards and chief elected officials.
    (d) The Local Boards may apply performance measures to service 
providers that differ from the performance measures that apply to the 
local area. These performance measures should be established after 
considering:
    (1) The established local performance levels;
    (2) The services provided by each provider; and
    (3) The populations the service providers are intended to serve.

Subpart D--Incentives and Sanctions for Local Performance for 
Workforce Innovation and Opportunity Act Title I Programs


Sec.  677.215  Under what circumstances are local areas eligible for 
State Incentive Grants?

    (a) The Governor is not required to award local incentive funds. 
The Governor may use non-Federal funds to create incentives for Local 
Boards to implement pay-for-performance contract strategies for the 
delivery of training services described in WIOA sec. 134(c)(3) or 
activities described in WIOA sec. 129(c)(2) in the local areas served 
by the Local Boards.
    (b) Pay-for-performance contract strategies must be implemented in 
accordance with Sec. Sec.  683.500 through 683.530 of this chapter and 
Sec.  677.160.


Sec.  677.220  Under what circumstances may a corrective action or 
sanction be applied to local areas for poor performance?

    (a) If a local area fails to meet the levels of performance agreed 
to under Sec.  677.210 for the primary indicators of performance in the 
adult, dislocated worker, and youth programs authorized under WIOA 
title I in any program year, technical assistance must be provided by 
the Governor or, upon the Governor's request, by the Secretary of 
Labor.
    (1) A State must establish the threshold for failure in meeting 
levels of performance for a local area before negotiating the adjusted 
levels of performance for the local area.
    (2) The technical assistance may include:
    (i) Assistance in the development of a performance improvement 
plan;
    (ii) The development of a modified local or regional plan; or
    (iii) Other actions designed to assist the local area in improving 
performance.
    (b) If a local area fails to meet the levels of performance agreed 
to under Sec.  677.210 for the primary indicators of performance for 
the adult, dislocated worker, and youth programs authorized under WIOA 
title I for a third consecutive program year, the Governor must take 
corrective actions. The corrective actions must include the development 
of a reorganization plan under which the Governor:
    (1) Requires the appointment and certification of a new Local 
Board, consistent with the criteria established under Sec.  679.350 of 
this chapter;
    (2) Prohibits the use of eligible providers and one-stop partners 
that have been identified as achieving poor levels of performance; or
    (3) Takes such other significant actions as the Governor determines 
are appropriate.


Sec.  677.225  Under what circumstances may local areas appeal a 
reorganization plan?

    (a) The Local Board and chief elected official for a local area 
that is subject to a reorganization plan under WIOA sec. 116(g)(2)(A) 
may appeal to the Governor to rescind or revise the reorganization plan 
not later than 30 days after receiving notice of the reorganization 
plan. The Governor must make a final decision within 30 days after 
receipt of the appeal.
    (b) The Local Board and chief elected official may appeal the final 
decision of the Governor to the Secretary of Labor not later than 30 
days after receiving the decision from the Governor. Any appeal of the 
Governor's final decision must be:
    (1) Appealed jointly by the Local Board and chief elected official 
to the Secretary under Sec.  683.650 of this chapter; and
    (2) Must be submitted by certified mail, return receipt requested, 
to the Secretary, U.S. Department of Labor, 200 Constitution Ave. NW., 
Washington DC 20210, Attention: ASET. A copy of the appeal must be 
simultaneously provided to the Governor.
    (c) Upon receipt of the joint appeal from the Local Board and chief 
elected official, the Secretary must make a final decision within 30 
days. In making this determination the Secretary may consider any 
comments submitted by the Governor in response to the appeals.
    (d) The decision by the Governor to impose a reorganization plan 
becomes effective at the time it is issued and remains effective unless 
the Secretary of Labor rescinds or revises the reorganization plan 
under WIOA sec. 116(g)(2)(B)(ii).

Subpart E--Eligible Training Provider Performance for Workforce 
Innovation and Opportunity Act Title I Programs


Sec.  677.230  What information is required for the eligible training 
provider performance reports?

    (a) States are required to make available, and publish, annually 
using a template the Departments will disseminate including through 
electronic means, the eligible training provider performance reports 
for eligible training providers who provide services under sec. 122 of 
WIOA that are described in Sec. Sec.  680.400 through 680.530 of this 
chapter. These reports at a minimum must include, consistent with Sec.  
677.175 and with respect to each program of study that is eligible to 
receive funds under WIOA:
    (1) The total number of participants who received training services 
under the adult and dislocated worker programs authorized under WIOA 
title I for the most recent year and the 3 preceding program years, 
including:
    (i) The number of participants under the adult and dislocated 
worker programs disaggregated by barriers to employment;
    (ii) The number of participants under the adult and dislocated 
worker programs disaggregated by race, ethnicity, sex, and age;
    (iii) The number of participants under the adult and dislocated 
worker programs disaggregated by the type of training entity for the 
most recent program year and the 3 preceding program years;
    (2) The total number of participants who exit a program of study or 
its equivalent, including disaggregate counts by the type of training 
entity during the most recent program year and the 3 preceding program 
years;
    (3) The average cost-per-participant for participants who received 
training services for the most recent program year and the 3 preceding 
program years disaggregated by type of training entity;
    (4) The total number of individuals exiting from the program of 
study (or the equivalent); and

[[Page 20637]]

    (5) The levels of performance achieved for the primary indicators 
of performance identified in Sec. Sec.  677.155(a)(1)(i) through (iv) 
with respect to all individuals in a program of study (or the 
equivalent).
    (b) Registered apprenticeship programs are not required to submit 
performance information. See Sec.  680.470 of this chapter. If a 
registered apprenticeship program voluntarily submits performance 
information to a State, the State must include this information in the 
report.
    (c) The State must provide electronic access to the public eligible 
training provider performance report in its annual State performance 
report.
    (d) States must comply with any requirements from sec. 116(d)(4) of 
WIOA as explained in guidance issued by the Department of Labor.
    (e) The Governor may designate one or more State agencies such as a 
State education agency or State educational authority to assist in 
overseeing eligible training provider performance and facilitating the 
production and dissemination of eligible training provider performance 
reports. These agencies may be the same agencies that are designated as 
responsible for administering the eligible training providers list as 
provided under Sec.  680.500 of this chapter. The Governor or such 
agencies, or authorities, is responsible for:
    (1) Facilitating data matches between ETP records and UI wage data 
in order to produce the report;
    (2) The creation and dissemination of the reports as described in 
paragraphs (a) through (d) of this section;
    (3) Coordinating the dissemination of the performance reports with 
the eligible training provider list and the information required to 
accompany the list, as provided in Sec.  680.500 of this chapter.

Subpart F--Performance Reporting Administrative Requirements


Sec.  677.235  What are the reporting requirements for individual 
records for core Workforce Innovation and Opportunity Act title I, III, 
and IV programs?

    (a) On a quarterly basis, each State must submit to the Secretary 
of Labor or Secretary of Education, as appropriate, individual records 
that include demographic information, information on services received, 
and information on resulting outcomes, as appropriate, for each 
reportable individual in a core program administered by the Secretary 
of Labor or Education. Such records submitted to the Department of 
Labor must be submitted in one record that is integrated across all 
core Department of Labor programs.
    (b) For individual records submitted to the Secretary of Labor, 
records must be integrated across all core programs administered by the 
Secretary of Labor in one single file.
    (c) States must comply with any other requirements from sec. 
116(d)(2) of WIOA as explained in guidance issued by the Department of 
Labor.


Sec.  677.240  What are the requirements for data validation of State 
annual performance reports?

    (a) States must establish procedures, consistent with guidelines 
issued by the Secretary of Education or Secretary of Labor, to submit 
complete annual performance reports that contain information that is 
valid and reliable.
    (b) If a State fails to meet standards in paragraph (a) of this 
section as determined by the Secretary of Labor or Secretary of 
Education, the appropriate Secretary will provide technical assistance 
and may require the State to develop and implement corrective actions, 
which may require the State to provide training for its subrecipients.
    (c) The Secretary of Labor and the Secretary of Education will 
provide training and technical assistance to States in order to 
implement this section.
0
 3. Add part 678 to read as follows:

PART 678--DESCRIPTION OF THE ONE-STOP SYSTEM UNDER TITLE I OF THE 
WORKFORCE INNOVATION AND OPPORTUNITY ACT

Subpart A--General Description of the One-Stop Delivery System
Sec.
678.300 What is the one-stop delivery system?
678.305 What is a comprehensive one-stop center and what must be 
provided there?
678.310 What is an affiliated site and what must be provided there?
678.315 Can a stand-alone Wagner-Peyser employment service office be 
designated as an affiliated one-stop site?
678.320 Are there any requirements for networks of eligible one-stop 
partners or specialized centers?
Subpart B--One-Stop Partners and the Responsibilities of Partners
678.400 Who are the required one-stop partners?
678.405 Is Temporary Assistance for Needy Families a required one-
stop partner?
678.410 What other entities may serve as one-stop partners?
678.415 What entity serves as the one-stop partner for a particular 
program in the local area?
678.420 What are the roles and responsibilities of the required one-
stop partners?
678.425 What are the applicable career services that must be 
provided through the one-stop delivery system by required one-stop 
partners?
678.430 What are career services?
678.435 What are the business services provided through the one-stop 
delivery system, and how are they provided?
678.440 When may a fee be charged for the business services in this 
subpart?
Subpart C--Memorandum of Understanding for the One-Stop Delivery System
678.500 What is the Memorandum of Understanding for the one-stop 
delivery system and what must be included in the Memorandum of 
Understanding?
678.505 Is there a single Memorandum of Understanding for the local 
area, or must there be separate Memoranda of Understanding between 
the Local Board and each partner?
678.510 How should the Memorandum of Understanding be negotiated?
Subpart D--One-Stop Operators
678.600 Who may operate one-stop centers?
678.605 How is the one-stop operator selected?
678.610 How is sole source selection of one-stop operators 
accomplished?
678.615 Can an entity serving as one-stop operator compete to be a 
one-stop operator under the procurement requirements of this 
subpart?
678.620 What is the one-stop operator's role?
678.625 Can a one-stop operator also be a service provider?
678.630 Can State merit staff still work in a one-stop where the 
operator is not a governmental entity?
678.635 What is the effective date of the provisions of this 
subpart?
Subpart E--One-Stop Operating Costs
678.700 What are one-stop infrastructure costs?
678.705 What guidance must the Governor issue regarding one-stop 
infrastructure funding?
678.710 How are infrastructure costs funded?
678.715 How are one-stop infrastructure costs funded in the local 
funding mechanism?
678.720 What funds are used to pay for infrastructure costs in the 
local one-stop infrastructure funding mechanism?
678.725 What happens if consensus on infrastructure funding is not 
reached at the local level between the Local Board, chief elected 
officials, and one-stop partners?
678.730 What is the State one-stop infrastructure funding mechanism?
678.735 How are partner contributions determined in the State one-
stop funding mechanism?
678.740 What funds are used to pay for infrastructure costs in the 
State one-stop infrastructure funding mechanism?
678.745 How is the allocation formula used by the Governor 
determined in the State one-stop funding mechanism?
678.750 When and how can a one-stop partner appeal a one-stop 
infrastructure

[[Page 20638]]

amount designated by the State under the State infrastructure 
funding mechanism?
678.755 What are the required elements regarding infrastructure 
funding that must be included in the one-stop Memorandum of 
Understanding?
678.760 How do one-stop partners jointly fund other shared costs 
under the Memorandum of Understanding?
Subpart F--One-Stop Certification
678.800 How are one-stop centers and one-stop delivery systems 
certified for effectiveness, physical and programmatic 
accessibility, and continuous improvement?
Subpart G--Common Identifier
678.900 What is the common identifier to be used by each one-stop 
delivery system?

    Authority: Secs. 503, 107, 121, 134, 189, Pub. L. 113-128, 128 
Stat. 1425 (Jul. 22, 2014).

Subpart A--General Description of the One-Stop Delivery System


Sec.  678.300  What is the one-stop delivery system?

    (a) The one-stop delivery system brings together workforce 
development, educational, and other human resource services in a 
seamless customer-focused service delivery network that enhances access 
to the programs' services and improves long-term employment outcomes 
for individuals receiving assistance. One-stop partners administer 
separately funded programs as a set of integrated streamlined services 
to customers.
    (b) Title I of the Workforce Innovation and Opportunity Act (WIOA) 
assigns responsibilities at the local, State, and Federal level to 
ensure the creation and maintenance of a one-stop delivery system that 
enhances the range and quality of education and workforce development 
services that business and individual customers can access.
    (c) The system must include at least one comprehensive physical 
center in each local area as described in Sec.  678.305.
    (d) The system may also have additional arrangements to supplement 
the comprehensive center. These arrangements include:
    (1) An affiliated site or a network of affiliated sites, where one 
or more partners make programs, services, and activities available, as 
described in Sec.  678.310;
    (2) A network of eligible one-stop partners, as described in 
Sec. Sec.  678.400 through 678.410, through which each partner provides 
one or more of the programs, services, and activities that are linked, 
physically or technologically, to an affiliated site or access point 
that assures customers are provided information on the availability of 
career services, as well as other program services and activities, 
regardless of where they initially enter the workforce system in the 
local area; and
    (3) Specialized centers that address specific needs, including 
those of dislocated workers, youth, or key industry sectors, or 
clusters.
    (e) Required one-stop partner programs must provide access to 
programs, services, and activities through electronic means if 
applicable and practicable. This is in addition to providing access to 
services through the mandatory comprehensive physical one-stop center 
and any affiliated sites or specialized centers. The provision of 
programs and services by electronic methods such as Web sites, 
telephones, or other means must improve the efficiency, coordination, 
and quality of one-stop partner services. Electronic delivery must not 
replace access to such services at a comprehensive one-stop center or 
be a substitute to making services available at an affiliated site if 
the partner is participating in an affiliated site. Electronic delivery 
systems must be in compliance with the nondiscrimination and equal 
opportunity provisions of WIOA in sec. 188 and its implementing 
regulations at 29 CFR part 37.
    (f) The design of the local area's one-stop delivery system must be 
described in the Memorandum of Understanding (MOU) executed with the 
one-stop partners, described in Sec.  678.500.


Sec.  678.305  What is a comprehensive one-stop center and what must be 
provided there?

    (a) A comprehensive one-stop center is a physical location where 
jobseeker and employer customers can access the programs, services, and 
activities of all required one-stop partners. A comprehensive one-stop 
center must have at least one title I staff person physically present.
    (b) The comprehensive one-stop center must provide:
    (1) Career services, described in Sec.  678.430;
    (2) Access to training services described in Sec.  680.200 of this 
chapter;
    (3) Access to any employment and training activities carried out 
under sec. 134(d) of WIOA;
    (4) Access to programs and activities carried out by one-stop 
partners listed in Sec. Sec.  678.400 through 678.410, including 
Wagner-Peyser employment services; and
    (5) Workforce and labor market information.
    (c) Customers must have access to these programs, services, and 
activities during regular business days at a comprehensive one-stop 
center. The Local Board may establish other service hours at other 
times to accommodate the schedules of individuals who work on regular 
business days. The State Board will evaluate the hours of access to 
service as part of the evaluation of effectiveness in the one-stop 
certification process described in Sec.  678.800(b).
    (d) ``Access'' to programs and services means having either: 
Program staff physically present at the location; having partner 
program staff physically present at the one-stop appropriately trained 
to provide information to customers about the programs, services, and 
activities available through partner programs; or providing direct 
linkage through technology to program staff who can provide meaningful 
information or services.
    (1) A ``direct linkage'' means providing direct connection at the 
one-stop, within a reasonable time, by phone or through a real-time 
Web-based communication to a program staff member who can provide 
program information or services to the customer.
    (2) A ``direct linkage'' does not include providing a phone number 
or computer Web site that can be used at an individual's home; 
providing information, pamphlets, or materials; or making arrangements 
for the customer to receive services at a later time or on a different 
day.
    (e) All comprehensive one-stop centers must be physically and 
programmatically accessible to individuals with disabilities, as 
described in Sec.  678.800.


Sec.  678.310  What is an affiliated site and what must be provided 
there?

    (a) An affiliated site, or affiliate one-stop center, is a site 
that makes available to jobseeker and employer customers one or more of 
the one-stop partners' programs, services, and activities. An 
affiliated site does not need to provide access to every required one-
stop partner program. The frequency of program staff's physical 
presence in the affiliated site will be determined at the local level. 
Affiliated sites are access points in addition to the Comprehensive 
one-stop center(s) in each local area. If used by local areas as a part 
of the service delivery strategy, affiliate sites should be implemented 
in a manner that supplements and enhances customer access to services.

[[Page 20639]]

    (b) As described in Sec.  678.315, Wagner-Peyser employment 
services cannot be a stand-alone affiliated site.
    (c) States, in conjunction with the Local Workforce Development 
Boards, must examine lease agreements and property holdings throughout 
the one-stop delivery system in order to use property in an efficient 
and effective way. Where necessary and appropriate, States and Local 
Boards must take expeditious steps to align lease expiration dates with 
efforts to consolidate one-stop operations into service points where 
Wagner-Peyser employment services are collocated as soon as reasonably 
possible. These steps must be included in the State Plan.
    (d) All affiliated sites must be physically and programmatically 
accessible to individuals with disabilities, as described in Sec.  
678.800.


Sec.  678.315  Can a stand-alone Wagner-Peyser employment service 
office be designated as an affiliated one-stop site?

    (a) Separate stand-alone Wagner-Peyser employment services offices 
are not permitted under WIOA, as also described in Sec.  652.202 of 
this chapter.
    (b) If Wagner-Peyser employment services are provided at an 
affiliated site, there must be at least one other partner in the 
affiliated site with staff physically present more than 50 percent of 
the time the center is open. Additionally, the other partner must not 
be the partner administering local veterans' employment 
representatives, disabled veterans' outreach program specialists, or 
unemployment compensation programs. If Wagner-Peyser employment 
services and any of these three programs are provided at an affiliated 
site, an additional partner must have staff present in the center more 
than 50 percent of the time the center is open.


Sec.  678.320  Are there any requirements for networks of eligible one-
stop partners or specialized centers?

    Any network of one-stop partners or specialized centers must be 
connected to, such as having processes in place to make referrals to, 
the comprehensive and any appropriate affiliate one-stop centers. 
Wagner-Peyser employment services cannot stand alone in a specialized 
center. Just as described in Sec.  678.315 for an affiliated site, a 
specialized center must include other programs besides Wagner-Peyser 
employment services, local veterans' employment representatives, 
disabled veterans' outreach program specialists, and unemployment 
compensation.

Subpart B--One-Stop Partners and the Responsibilities of Partners


Sec.  678.400  Who are the required one-stop partners?

    (a) Section 121(b)(1)(B) of WIOA identifies the entities that are 
required partners in the local one-stop systems.
    (b) The required partners are the entities responsible for 
administering the following programs and activities in the local area:
    (1) Programs authorized under title I of WIOA, including:
    (i) Adults;
    (ii) Dislocated workers;
    (iii) Youth;
    (iv) Job Corps;
    (v) YouthBuild;
    (vi) Native American programs; and
    (vii) Migrant and seasonal farmworker programs;
    (2) Employment services authorized under the Wagner-Peyser Act (29 
U.S.C. 49 et seq.);
    (3) Adult education and literacy activities authorized under title 
II of WIOA;
    (4) The Vocational Rehabilitation program authorized under title I 
of the Rehabilitation Act of 1973 (29 U.S.C. 720 et seq.);
    (5) The Senior Community Service Employment Program authorized 
under title V of the Older Americans Act of 1965 (42 U.S.C. 3056 et 
seq.);
    (6) Career and technical education programs at the post-secondary 
level authorized under the Carl D. Perkins Career and Technical 
Education Act of 2006 (20 U.S.C. 2301 et seq.);
    (7) Trade Adjustment Assistance activities authorized under chapter 
2 of title II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.);
    (8) Jobs for Veterans State Grants programs authorized under 
chapter 41 of title 38, U.S.C.;
    (9) Employment and training activities carried out under the 
Community Services Block Grant (42 U.S.C. 9901 et seq.);
    (10) Employment and training activities carried out by the 
Department of Housing and Urban Development;
    (11) Programs authorized under State unemployment compensation laws 
(in accordance with applicable Federal law);
    (12) Programs authorized under sec. 212 of the Second Chance Act of 
2007 (42 U.S.C. 17532); and
    (13) Temporary Assistance for Needy Families (TANF) authorized 
under part A of title IV of the Social Security Act (42 U.S.C. 601 et 
seq.), unless exempted by the Governor under Sec.  678.405(b).


Sec.  678.405  Is Temporary Assistance for Needy Families a required 
one-stop partner?

    (a) Yes, TANF, authorized under part A of title IV of the Social 
Security Act (42 U.S.C. 601 et seq.), is a required partner. (WIOA sec. 
121(b)(1)(B)(xiii)).
    (b) The Governor may determine that TANF will not be a required 
partner in the State, or within some specific local areas in the State. 
In this instance, the Governor must notify the Secretaries of the U.S. 
Departments of Labor and Health and Human Services in writing of this 
determination.
    (c) In States, or local areas within a State, where the Governor 
has determined that TANF is not required to be a partner, local TANF 
programs may still opt to be a one-stop partner, or to work in 
collaboration with the one-stop center.


Sec.  678.410  What other entities may serve as one-stop partners?

    (a) Other entities that carry out a workforce development program, 
including Federal, State, or local programs and programs in the private 
sector, may serve as additional partners in the one-stop system if the 
Local Board and chief elected official(s) approve the entity's 
participation.
    (b) Additional partners may include:
    (1) Employment and training programs administered by the Social 
Security Administration, including the Ticket to Work and Self-
Sufficiency Program established under sec. 1148 of the Social Security 
Act (42 U.S.C. 1320b-19);
    (2) Employment and training programs carried out by the Small 
Business Administration;
    (3) Supplemental Nutrition Assistance Program (SNAP) employment and 
training programs, authorized under secs. 6(d)(4) and 6(o) of the Food 
and Nutrition Act of 2008 (7 U.S.C. 2015(d)(4));
    (4) Client Assistance Program authorized under sec. 112 of the 
Rehabilitation Act of 1973 (29 U.S.C. 732);
    (5) Programs authorized under the National and Community Service 
Act of 1990 (42 U.S.C. 12501 et seq.); and
    (6) Other appropriate Federal, State or local programs, including 
employment, education, and training programs provided by public 
libraries or in the private sector.


Sec.  678.415  What entity serves as the one-stop partner for a 
particular program in the local area?

    (a) The entity that carries out the program and activities listed 
in Sec.  678.400 or Sec.  678.405, and therefore

[[Page 20640]]

serves as the one-stop partner, is the grant recipient, administrative 
entity, or organization responsible for administering the funds of the 
specified program in the local area. The term ``entity'' does not 
include the service providers that contract with, or are subrecipients 
of, the local administrative entity. For programs that do not include 
local administrative entities, the responsible State agency should be 
the partner. Specific entities for particular programs are identified 
in paragraph (b) of this section. If a program or activity listed in 
Sec.  678.400 is not carried out in a local area, the requirements 
relating to a required one-stop partner are not applicable to such 
program or activity in that local one-stop system.
    (b) For title II of WIOA, the entity that carries out the program 
for the purposes of paragraph (a) of this section is the sole entity or 
agency in the State or outlying area responsible for administering or 
supervising policy for adult education and literacy activities in the 
State or outlying area. The State eligible entity may delegate its 
responsibilities under paragraph (a) of this section to one or more 
eligible providers or consortium of eligible providers.
    (c) For the Vocational Rehabilitation program, authorized under 
title I of the Rehabilitation Act, the entity that carries out the 
program for the purposes of paragraph (a) of this section is the 
designated State agencies or designated State units specified under 
sec. 101(a)(2) of the Rehabilitation Act that is primarily concerned 
with vocational rehabilitation, or vocational and other rehabilitation, 
of individuals with disabilities.
    (d) Under WIOA, the national programs, including Job Corps, the 
Native American program, YouthBuild, and Migrant and Seasonal 
Farmworker programs are required one-stop partners. The entity for the 
Native American program and Migrant and Seasonal Farmworker programs is 
the grantee of those respective programs. The entity for Job Corps is 
the Job Corps center.
    (e) For the Carl D. Perkins Career and Technical Education Act of 
2006, the entity that carries out the program for the purposes of 
paragraph (a) of this section is the State eligible agency. The State 
eligible agency may delegate its responsibilities under paragraph (a) 
of this section to one or more State agencies, eligible recipients at 
the post-secondary level, or consortia of eligible recipients at the 
post-secondary level.


Sec.  678.420  What are the roles and responsibilities of the required 
one-stop partners?

    Each required partner must:
    (a) Provide access to its programs or activities through the one-
stop delivery system, in addition to any other appropriate locations; 
(WIOA sec. 121(b)(1)(A)(i).)
    (b) Use a portion of funds made available to the partner's program, 
to the extent consistent with the Federal law authorizing the partner's 
program and with Federal cost principles in 2 CFR parts 200 and 2900 
(requiring, among other things, that costs are allowable, reasonable, 
necessary, and allocable), to:
    (1) Provide applicable career services; and
    (2) Work collaboratively with the State and Local Boards to 
establish and maintain the one-stop delivery system. This includes 
jointly funding the one-stop infrastructure through partner 
contributions that are based upon:
    (i) A reasonable cost allocation methodology by which 
infrastructure costs are charged to each partner in proportion to the 
relative benefits;
    (ii) Federal cost principles; and
    (iii) Any local administrative cost requirements in the Federal law 
authorizing the partner's program. (This is further described in Sec.  
678.700). (WIOA sec. 121(b)(1)(A)(ii).)
    (c) Enter into an MOU with the Local Board relating to the 
operation of the one-stop system that meets the requirements of Sec.  
678.500(d);
    (d) Participate in the operation of the one-stop system consistent 
with the terms of the MOU, requirements of authorizing laws, the 
Federal cost principles, and all other applicable legal requirements; 
(WIOA sec. 121(b)(1)(A)(iv)); and
    (e) Provide representation on the State and Local Workforce 
Development Boards as required and participate in Board committees as 
needed. (WIOA secs. 101(b)(iii) and 107(b)(2)(C) and (D))


Sec.  678.425  What are the applicable career services that must be 
provided through the one-stop delivery system by required one-stop 
partners?

    (a) The applicable career services to be delivered by required one-
stop partners are those services listed in Sec.  678.430 that are 
authorized to be provided under each partner's program.
    (b) One-stop centers provide services to individual customers based 
on individual needs, including the seamless delivery of multiple 
services to individual customers. There is no required sequence of 
services. (WIOA sec. 121(e)(1)(A).)


Sec.  678.430  What are career services?

    Career services, as identified in sec. 134(c)(2) of WIOA, consist 
of three types:
    (a) Basic career services must be made available and, at a minimum, 
must include the following services, as consistent with allowable 
program activities and Federal cost principles:
    (1) Determinations of whether the individual is eligible to receive 
assistance from the adult, dislocated worker, or youth programs;
    (2) Outreach, intake (including worker profiling), and orientation 
to information and other services available through the one-stop 
delivery system;
    (3) Initial assessment of skill levels including literacy, 
numeracy, and English language proficiency, as well as aptitudes, 
abilities (including skills gaps), and supportive services needs;
    (4) Labor exchange services, including--
    (i) Job search and placement assistance, and, when needed by an 
individual, career counseling, including--
    (A) Provision of information on in-demand industry sectors and 
occupations (as defined in sec. 3(23) of WIOA); and
    (B) Provision of information on nontraditional employment; and
    (ii) Appropriate recruitment and other business services on behalf 
of employers, including information and referrals to specialized 
business services other than those traditionally offered through the 
one-stop delivery system;
    (5) Provision of referrals to and coordination of activities with 
other programs and services, including programs and services within the 
one-stop delivery system and, when appropriate, other workforce 
development programs;
    (6) Provision of workforce and labor market employment statistics 
information, including the provision of accurate information relating 
to local, regional, and national labor market areas, including--
    (i) Job vacancy listings in labor market areas;
    (ii) Information on job skills necessary to obtain the vacant jobs 
listed; and
    (iii) Information relating to local occupations in demand and the 
earnings, skill requirements, and opportunities for advancement for 
those jobs;
    (7) Provision of performance information and program cost 
information on eligible providers of training services by program and 
type of providers;
    (8) Provision of information, in usable and understandable formats 
and

[[Page 20641]]

languages, about how the local area is performing on local performance 
accountability measures, as well as any additional performance 
information relating to the area's one-stop delivery system;
    (9) Provision of information, in usable and understandable formats 
and languages, relating to the availability of supportive services or 
assistance, and appropriate referrals to those services and assistance, 
including: child care; child support; medical or child health 
assistance available through the State's Medicaid program and 
Children's Health Insurance Program; benefits under SNAP; assistance 
through the earned income tax credit; and assistance under a State 
program for Temporary Assistance for Needy Families, and other 
supportive services and transportation provided through that program;
    (10) Provision of information and assistance regarding filing 
claims for unemployment compensation, by which the one-stop must 
provide meaningful assistance to individuals seeking assistance in 
filing a claim for unemployment compensation.
    (i) ``Meaningful assistance'' means:
    (A) Providing assistance on-site using staff who are well-trained 
in unemployment compensation claims filing and the rights and 
responsibilities of claimants; or
    (B) Providing assistance by phone or via other technology, as long 
as the assistance is provided by trained and available staff and within 
a reasonable time.
    (ii) The costs associated in providing this assistance may be paid 
for by the State's unemployment insurance program, or the WIOA adult or 
dislocated worker programs, or some combination thereof.
    (11) Assistance in establishing eligibility for programs of 
financial aid assistance for training and education programs not 
provided under WIOA.
    (b) Individualized career services must be made available if 
determined to be appropriate in order for an individual to obtain or 
retain employment. These services include the following services, as 
consistent with program requirements and Federal cost principles:
    (1) Comprehensive and specialized assessments of the skill levels 
and service needs of adults and dislocated workers, which may include--
    (i) Diagnostic testing and use of other assessment tools; and
    (ii) In-depth interviewing and evaluation to identify employment 
barriers and appropriate employment goals;
    (2) Development of an individual employment plan, to identify the 
employment goals, appropriate achievement objectives, and appropriate 
combination of services for the participant to achieve his or her 
employment goals, including the list of, and information about, the 
eligible training providers (as described in Sec.  680.180 of this 
chapter);
    (3) Group counseling;
    (4) Individual counseling;
    (5) Career planning;
    (6) Short-term pre-vocational services including development of 
learning skills, communication skills, interviewing skills, 
punctuality, personal maintenance skills, and professional conduct 
services to prepare individuals for unsubsidized employment or 
training;
    (7) Internships and work experiences that are linked to careers (as 
described in Sec.  680.170 of this chapter);
    (8) Workforce preparation activities;
    (9) Financial literacy services as described in sec. 129(b)(2)(D) 
of WIOA and Sec.  681.500 of this chapter;
    (10) Out-of-area job search assistance and relocation assistance; 
and
    (11) English language acquisition and integrated education and 
training programs.
    (c) Follow-up services must be provided, as appropriate, including: 
counseling regarding the workplace, for participants in adult or 
dislocated worker workforce investment activities who are placed in 
unsubsidized employment, for up to 12 months after the first day of 
employment.


Sec.  678.435  What are the business services provided through the one-
stop delivery system, and how are they provided?

    (a) Certain career services must be made available to local 
businesses, specifically labor exchange activities and labor market 
information described in Sec. Sec.  678.430(a)(4)(ii) and 
678.430(a)(6). Local areas must establish and develop relationships and 
networks with large and small employers and their intermediaries. (WIOA 
sec. 134(c)(1)(A)(iv).) Local areas also must develop, convene, or 
implement industry or sector partnerships. (WIOA sec. 134(c)(1)(A)(v).)
    (b) Customized business services may be provided to employers, 
employer associations, or other such organizations (WIOA sec. 
134(d)(1)(A)(ii)). These services are tailored for specific employers 
and may include:
    (1) Customized screening and referral of qualified participants in 
training services to employers;
    (2) Customized services to employers, employer associations, or 
other such organizations, on employment-related issues;
    (3) Customized recruitment events and related services for 
employers including targeted job fairs;
    (4) Human resource consultation services, including but not limited 
to assistance with:
    (i) Writing/reviewing job descriptions and employee handbooks;
    (ii) Developing performance evaluation and personnel policies;
    (iii) Creating orientation sessions for new workers;
    (iv) Honing job interview techniques for efficiency and compliance;
    (v) Analyzing employee turnover; or
    (vi) Explaining labor laws to help employers comply with wage/hour 
and safety/health regulations;
    (5) Customized labor market information for specific employers, 
sectors, industries or clusters; and
    (6) Other similar customized services.
    (c) Local areas may also provide other business services and 
strategies that meet the workforce investment needs of area employers, 
in accordance with partner programs' statutory requirements and 
consistent with Federal cost principles. These business services may be 
provided through effective business intermediaries working in 
conjunction with the Local Board, or through the use of economic 
development, philanthropic, and other public and private resources in a 
manner determined appropriate by the Local Board and in cooperation 
with the State. Allowable activities, consistent with each partner's 
authorized activities, include, but are not limited to:
    (1) Developing and implementing industry sector strategies 
(including strategies involving industry partnerships, regional skills 
alliances, industry skill panels, and sectoral skills partnerships);
    (2) Customized assistance or referral for assistance in the 
development of a registered apprenticeship program;
    (3) Developing and delivering innovative workforce investment 
services and strategies for area employers, which may include career 
pathways, skills upgrading, skill standard development and 
certification for recognized post-secondary credential or other 
employer use, and other effective initiatives for meeting the workforce 
investment needs of area employers and workers;
    (4) Assistance to area employers in managing reductions in force in 
coordination with rapid response activities and with strategies for the 
aversion of layoffs, which may include strategies such as early 
identification of

[[Page 20642]]

firms at risk of layoffs, use of feasibility studies to assess the 
needs of and options for at-risk firms, and the delivery of employment 
and training activities to address risk factors;
    (5) The marketing of business services to appropriate area 
employers, including small and mid-sized employers; and
    (6) Assisting employers with accessing local, State, and Federal 
tax credits.
    (d) All business services and strategies must be reflected in the 
local plan, described in Sec.  679.560(b)(3) of this chapter.


Sec.  678.440  When may a fee be charged for the business services in 
this subpart?

    (a) There is no requirement that a fee-for-service be charged to 
employers.
    (b) No fee may be charged for services provided in Sec.  
678.435(a).
    (c) A fee may be charged for services provided under Sec. Sec.  
678.435(b) and (c). Services provided under Sec.  678.435(c) may be 
provided through effective business intermediaries working in 
conjunction with the Local Board and may also be provided on a fee-for-
service basis or through the leveraging of economic development, 
philanthropic, and other public and private resources in a manner 
determined appropriate by the Local Board. The Local Workforce 
Development Board may examine the services provided compared with the 
assets and resources available within the local one-stop delivery 
system and through its partners to determine an appropriate cost 
structure for services, if any.

Subpart C--Memorandum of Understanding for the One-Stop Delivery 
System


Sec.  678.500  What is the Memorandum of Understanding for the one-stop 
delivery system and what must be included in the Memorandum of 
Understanding?

    (a) The MOU is the product of local discussion and negotiation, and 
is an agreement developed and executed between the Local Board, with 
the agreement of the chief elected official and the one-stop partners, 
relating to the operation of the one-stop delivery system in the local 
area. Two or more local areas in a region may develop a single joint 
MOU, if they are in a region that has submitted a regional plan under 
sec. 106 of WIOA.
    (b) The MOU must include:
    (1) A description of services to be provided through the one-stop 
delivery system, including the manner in which the services will be 
coordinated and delivered through the system;
    (2) A final plan, or an interim plan if needed, on how the costs of 
the services and the operating costs of the system will be funded, 
including:
    (i) Funding of infrastructure costs of one-stop centers in 
accordance with Sec. Sec.  678.700 through 678.755; and
    (ii) Funding of the shared services and operating costs of the one-
stop delivery system described in Sec.  678.760;
    (3) Methods for referring individuals between the one-stop 
operators and partners for appropriate services and activities;
    (4) Methods to ensure that the needs of workers, youth, and 
individuals with barriers to employment, including individuals with 
disabilities, are addressed in providing access to services, including 
access to technology and materials that are available through the one-
stop delivery system;
    (5) The duration of the MOU and procedures for amending it; and
    (6) Assurances that each MOU will be reviewed, and if substantial 
changes have occurred, renewed, not less than once every 3-year period 
to ensure appropriate funding and delivery of services.
    (c) The MOU may contain any other provisions agreed to by the 
parties that are consistent with WIOA title I, the authorizing statutes 
and regulations of one-stop partner programs, and the WIOA regulations. 
(WIOA sec. 121(c).)
    (d) When fully executed, the MOU must contain the signatures of the 
Local Board, one-stop partners, the chief elected official(s), and the 
time period in which the agreement is effective. The MOU must be 
updated not less than every 3 years to reflect any changes in the 
signatory official of the Board, one-stop partners, and chief elected 
officials, or one-stop infrastructure funding.
    (e) If a one-stop partner appeal to the State regarding 
infrastructure costs, using the process described in Sec.  678.750, 
results in a change to the one-stop partner's infrastructure cost 
contributions, the MOU must be updated to reflect the final one-stop 
partner infrastructure cost contributions.


Sec.  678.505  Is there a single Memorandum of Understanding for the 
local area, or must there be separate Memoranda of Understanding 
between the Local Board and each partner?

    (a) A single ``umbrella'' MOU may be developed that addresses the 
issues relating to the local one-stop delivery system for the Local 
Board, chief elected official and all partners. Alternatively, the 
Local Board (with agreement of chief elected official) may enter into 
separate agreements between each partner or groups of partners.
    (b) Under either approach, the requirements described in Sec.  
678.500 apply. Since funds are generally appropriated annually, the 
Local Board may negotiate financial agreements with each partner 
annually to update funding of services and operating costs of the 
system under the MOU.


Sec.  678.510  How should the Memorandum of Understanding be 
negotiated?

    (a) WIOA emphasizes full and effective partnerships between Local 
Boards, chief elected officials, and one-stop partners. Local Boards 
and partners must enter into good-faith negotiations. Local Boards, 
chief elected officials, and one-stop partners may also request 
assistance from a State agency responsible for administering the 
partner program, the Governor, State Board, or other appropriate 
parties on other aspects of the MOU.
    (b) Local Boards and one-stop partners must establish, in the MOU, 
a final plan for how the Local Board and programs will fund the 
infrastructure costs of the one-stop centers. If a final plan regarding 
infrastructure costs is not complete when other sections of the MOU are 
ready, an interim infrastructure cost plan may be included instead, as 
described in Sec.  678.715(c). Once the final infrastructure cost plan 
is approved, the Local Board and one-stop partners must amend the MOU 
to include the final plan for funding infrastructure costs of the one-
stop centers, including a description of the funding mechanism 
established by the Governor relevant to the local area. Infrastructure 
cost funding is described in detail in subpart E of this part. (WIOA 
sec. 121(h)(2).)
    (c) The Local Board must report to the State Board, Governor, and 
relevant State agency when MOU negotiations with one-stop partners have 
reached an impasse.
    (1) The Local Board and partners must document the negotiations and 
efforts that have taken place in the MOU. The State Board, one-stop 
partner programs, and the Governor may consult with the appropriate 
Federal agencies to address impasse situations related to issues other 
than infrastructure funding after attempting to address the impasse. 
Impasses related to infrastructure cost funding must be resolved using 
the State infrastructure cost funding mechanism described in Sec.  
678.730.
    (2) The Local Board must report failure to execute an MOU with a 
required partner to the Governor, State Board, and the State agency 
responsible for administering the partner's program. Additionally, if 
the State cannot assist the Local Board in resolving the

[[Page 20643]]

impasse, the Governor or the State Board must report the failure to the 
Secretary of Labor and to the head of any other Federal agency with 
responsibility for oversight of a partner's program.

Subpart D--One-Stop Operators


Sec.  678.600  Who may operate one-stop centers?

    (a) One-stop operators may be a single entity (public, private, or 
nonprofit) or a consortium of entities. If the consortium of entities 
is one of one-stop partners, it must include a minimum of three of the 
one-stop partners described in Sec.  678.400.
    (b) The one-stop operator may operate one or more one-stop centers. 
There may be more than one one-stop operator in a local area.
    (c) The types of entities that may be a one-stop operator include:
    (1) An institution of higher education;
    (2) An Employment Service State agency established under the 
Wagner-Peyser Act;
    (3) A community-based organization, nonprofit organization, or 
workforce intermediary;
    (4) A private for-profit entity;
    (5) A government agency;
    (6) A Local Board, with the approval of the chief local elected 
official and the Governor; or
    (7) Another interested organization or entity, which is capable of 
carrying out the duties of the one-stop operator. Examples may include 
a local chamber of commerce or other business organization, or a labor 
organization.
    (d) Elementary schools and secondary schools are not eligible as 
one-stop operators, except that a nontraditional public secondary 
school such as a night school, adult school, or an area career and 
technical education school may be selected.
    (e) The State and Local Boards must ensure that, in carrying out 
WIOA programs and activities, one-stop operators:
    (1) Disclose any potential conflicts of interest arising from the 
relationships of the operators with particular training service 
providers or other service providers (further discussed in Sec.  
679.430 of this chapter);
    (2) Do not establish practices that create disincentives to 
providing services to individuals with barriers to employment who may 
require longer-term career and training services; and
    (3) Comply with Federal regulations and procurement policies 
relating to the calculation and use of profits, including those at 
Sec.  683.295 of this chapter, the Uniform Guidance at 2 CFR chapter 
II, and other applicable regulations and policies.


Sec.  678.605  How is the one-stop operator selected?

    (a) Consistent with paragraphs (b) and (c) of this section, the 
Local Board must select the one-stop operator through a competitive 
process, as required by sec. 121(d)(2)(A) of WIOA, at least once every 
4 years. A State may require, or a Local Board may choose to implement, 
a competitive selection process more than once every 4 years.
    (b) In instances in which a State is conducting the competitive 
process described in paragraph (a) of this section, the State must 
follow the same policies and procedures it uses for procurement with 
non-Federal funds.
    (c) All other non-Federal entities, including subrecipients of a 
State (such as local areas), must use a competitive process based on 
the principles of competitive procurement in the Uniform Administrative 
Guidance set out at 2 CFR 200.318 through 200.326.
    (d) Entities described in paragraph (c) of this section must first 
determine the nature of the process to be used to comply with sec. 
121(d)(2)(A) of WIOA. The acceptable processes are:
    (1) Procurement by sealed bids;
    (2) Procurement by competitive proposals; or
    (3) Procurement by sole source, permitted only if:
    (i) Analysis of market conditions and other factors lead to a 
determination that it is necessary to use sole-source procurement 
because:
    (A) There is only one entity that could serve as an operator; or
    (B) Unusual and compelling urgency will not permit a delay 
resulting from competitive solicitation; or
    (ii) Results of the competition conducted under paragraphs (d)(1) 
or (2) of this section were determined to be inadequate.
    (e) Entities must prepare written documentation explaining the 
determination concerning the nature of the competitive process to be 
followed in selecting a one-stop operator.


Sec.  678.610  How is sole source selection of one-stop operators 
accomplished?

    (a) As set forth in Sec.  678.605(d)(3), under certain conditions, 
sole source procurement is an allowable method of procurement.
    (b) In the event that sole source procurement is determined 
necessary and reasonable, in accordance with Sec.  678.605(d)(3), 
written documentation must be prepared and maintained concerning the 
entire process of making such a selection.
    (c) Such sole source procurement must include appropriate conflict 
of interest policies and procedures. These policies and procedures must 
conform to the specifications in Sec.  679.430 of this chapter for 
demonstrating internal controls and preventing conflict of interest.
    (d) A Local Board can be selected as a one-stop operator through 
sole source procurement only with agreement of the chief elected 
official in the local area and the Governor. The Local Board must 
establish sufficient conflict of interest policies and procedures and 
they must be approved by the Governor.


Sec.  678.615  Can an entity serving as one-stop operator compete to be 
a one-stop operator under the procurement requirements of this subpart?

    (a) Local Boards can compete for and be selected as one-stop 
operators, as long as appropriate firewalls and conflict of interest 
policies and procedures are in place. These policies and procedures 
must conform to the specifications in Sec.  679.430 of this chapter for 
demonstrating internal controls and preventing conflict of interest.
    (b) State and local agencies can compete for and be selected as 
one-stop operators by the Local Board, as long as appropriate firewalls 
and conflict of interest policies and procedures are in place. These 
policies and procedures must conform to the specifications in Sec.  
679.430 of this chapter for demonstrating internal controls and 
preventing conflict of interest.
    (c) In the case of single State areas where the State Board serves 
as the Local Board, the State agency is eligible to compete for and be 
selected as operator as long as appropriate firewalls and conflict of 
interest policies are in place and followed for the competition. These 
policies and procedures must conform to the specifications in Sec.  
679.430 of this chapter for demonstrating internal controls and 
preventing conflict of interest.


Sec.  678.620  What is the one-stop operator's role?

    (a) At a minimum, the one-stop operator must coordinate the service 
delivery of required one-stop partners and service providers. Local 
Boards may establish additional roles of one-stop operator, including, 
but not limited to: Coordinating service providers within the center 
and across the one-stop system, being the primary provider of services 
within the center, providing some of the services within the center, or 
coordinating service delivery in a multi-center area. The competition 
for a

[[Page 20644]]

one-stop operator must clearly articulate the role of the one-stop 
operator.
    (b) A one-stop operator may not perform the following functions: 
convene system stakeholders to assist in the development of the local 
plan; prepare and submit local plans (as required under sec. 107 of 
WIOA); be responsible for oversight of itself; manage or significantly 
participate in the competitive selection process for one-stop 
operators; select or terminate one-stop operators, career services, and 
youth providers; negotiate local performance accountability measures; 
and develop and submit budget for activities of the Local Board in the 
local area. An entity serving as a one-stop operator may perform some 
or all of these functions if it also serves in another capacity, if it 
has established sufficient firewalls and conflict of interest policies. 
The policies must conform to the specifications in Sec.  679.430 of 
this chapter for demonstrating internal controls and preventing 
conflict of interest.


Sec.  678.625  Can a one-stop operator also be a service provider?

    Yes, but there must be appropriate firewalls in place in regards to 
the competition, and subsequent oversight, monitoring, and evaluation 
of performance of the service provider. The operator cannot develop, 
manage or conduct the competition of a service provider in which it 
intends to compete. In cases where an operator is also a service 
provider, there must be firewalls and internal controls within the 
operator-service provider entity, as well as specific policies and 
procedures at the Local Board level regarding oversight, monitoring, 
and evaluation of performance of the service provider. The firewalls 
must conform to the specifications in Sec.  679.430 of this chapter for 
demonstrating internal controls and preventing conflict of interest.


Sec.  678.630  Can State merit staff still work in a one-stop where the 
operator is not a governmental entity?

    Yes. State merit staff can continue to perform functions and 
activities in the one-stop career center. The Local Board and one-stop 
operator must establish a system for management of merit staff in 
accordance with State policies and procedures. Continued use of State 
merit staff may be included in the competition for and final contract 
with the one-stop operator.


Sec.  678.635  What is the effective date of the provisions of this 
subpart?

    (a) No later than June 30, 2017, one-stop operators selected under 
the competitive process described in this subpart must be in place and 
operating the one-stop.
    (b) By June 30, 2016, every Local Board must demonstrate it is 
taking steps to prepare for competition of its one-stop operator. This 
demonstration may include, but is not limited to, market research, 
requests for information, and conducting a cost and price analysis.

Subpart E--One-Stop Operating Costs


Sec.  678.700  What are one-stop infrastructure costs?

    (a) Infrastructure costs of one-stop centers are nonpersonnel costs 
that are necessary for the general operation of the one-stop center, 
including:
    (1) Rental of the facilities;
    (2) Utilities and maintenance;
    (3) Equipment (including assessment-related products and assistive 
technology for individuals with disabilities); and
    (4) Technology to facilitate access to the one-stop center, 
including technology used for the center's planning and outreach 
activities.
    (b) Local Boards may consider common identifier costs as costs of 
one-stop infrastructure.
    (c) Each entity that carries out a program or activities in a local 
one-stop center, described in Sec. Sec.  678.400 through 678.410, must 
use a portion of the funds available for the program and activities to 
maintain the one-stop delivery system, including payment of the 
infrastructure costs of one-stop centers. These payments must be in 
accordance with this subpart; Federal cost principles, which require 
that all costs must be allowable, reasonable, necessary, and allocable 
to the program; and all other applicable legal requirements.


Sec.  678.705  What guidance must the Governor issue regarding one-stop 
infrastructure funding?

    (a) The Governor, after consultation with chief elected officials, 
the State Board, and Local Boards, and consistent with guidance and 
policies provided by the State Board, must develop and issue guidance 
for use by local areas, specifically:
    (1) Guidelines for State-administered one-stop partner programs for 
determining such programs' contributions to a one-stop delivery system, 
based on such programs' proportionate use of such system consistent 
with Office of Management and Budget Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards in 2 CFR part 200, including determining funding for the costs 
of infrastructure; and
    (2) Guidance to assist Local Boards, chief elected officials, and 
one-stop partners in local areas in determining equitable and stable 
methods of funding the costs of infrastructure at one-stop centers 
based on proportionate benefits received, and consistent with Federal 
cost principles.
    (b) The guidance must include:
    (1) The appropriate roles of the one-stop partner programs in 
identifying one-stop infrastructure costs;
    (2) Approaches to facilitate equitable and efficient cost 
allocation that results in a reasonable cost allocation methodology 
where infrastructure costs are charged to each partner in proportion to 
relative benefits received, consistent with Federal cost principles; 
and
    (3) The timelines regarding notification to the Governor for not 
reaching local agreement and triggering the State-funded infrastructure 
mechanism described in Sec.  678.730, and timelines for a one-stop 
partner to submit an appeal in the State-funded infrastructure 
mechanism.


Sec.  678.710  How are infrastructure costs funded?

    Infrastructure costs are funded either through the local funding 
mechanism described in Sec.  678.715 or through the State funding 
mechanism described in Sec.  678.730.


Sec.  678.715  How are one-stop infrastructure costs funded in the 
local funding mechanism?

    (a) In the local funding mechanism, the Local Board, chief elected 
officials, and one-stop partners agree to amounts and methods of 
calculating amounts each partner will contribute for one-stop 
infrastructure funding, include the infrastructure funding terms in the 
MOU, and sign the MOU. The local one-stop funding mechanism must meet 
all of the following requirements:
    (1) The infrastructure costs are funded through cash and fairly 
evaluated in-kind partner contributions and include any funding from 
philanthropic organizations or other private entities, or through other 
alternative financing options, to provide a stable and equitable 
funding stream for ongoing one-stop delivery system operations;
    (2) Contributions must be negotiated between one-stop partners, 
chief elected officials, and the Local Board and the amount to be 
contributed must be included in the MOU;
    (3) The one-stop partner program's proportionate share of funding 
must be calculated in accordance with the

[[Page 20645]]

Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards in 2 CFR part 200 based upon a 
reasonable cost allocation methodology whereby infrastructure costs are 
charged to each partner in proportion to relative benefits received, 
and must be allowable, reasonable, necessary, and allocable;
    (4) Partner shares must be periodically reviewed and reconciled 
against actual costs incurred, and adjusted to ensure that actual costs 
charged to any one-stop partners are proportionate and equitable to the 
benefit received by the one-stop partners and their respective programs 
or activities.
    (b) In developing the section of the MOU on one-stop infrastructure 
funding fully described in Sec.  678.755, the Local Board and chief 
elected officials will:
    (1) Ensure that the one-stop partners adhere to the guidance 
identified in Sec.  678.705 on one-stop delivery system infrastructure 
costs.
    (2) Work with one-stop partners to achieve consensus and informally 
mediate any possible conflicts or disagreements among one-stop 
partners.
    (3) Provide technical assistance to new one-stop partners and local 
grant recipients to ensure that those entities are informed and 
knowledgeable of the elements contained in the MOU and the one-stop 
infrastructure costs arrangement.
    (c) The MOU may include an interim infrastructure funding 
agreement, including as much detail as the Local Board has negotiated 
with one-stop partners, if all other parts of the MOU have been 
negotiated, in order to allow the partner programs to operate in the 
one-stop centers. The interim infrastructure agreement must be 
finalized within 6 months of when the MOU is signed. If the 
infrastructure interim infrastructure agreement is not finalized within 
that timeframe, the Local Board must notify the Governor, as described 
in Sec.  678.725.


Sec.  678.720  What funds are used to pay for infrastructure costs in 
the local one-stop infrastructure funding mechanism?

    (a) In the local one-stop infrastructure funding mechanism, one-
stop partner programs can determine what funds they will use to fund 
infrastructure costs. The use of these funds must be in accordance with 
the requirements in this subpart, and with the relevant partner's 
authorizing statutes and regulations, including, for example, 
prohibitions against supplanting non-Federal resources, statutory 
limitations on administrative costs, and all other applicable legal 
requirements. In the case of partners administering adult education and 
literacy programs authorized by title II of WIOA or the Carl D. Perkins 
Career and Technical Education Act of 2006, these funds may include 
Federal funds that are available for State administration of adult 
education and literacy programs authorized by title II of WIOA or for 
State administration of post-secondary level programs and activities 
under the Perkins Act, and non-Federal funds that the partners 
contribute to meet these programs' matching or maintenance of effort 
requirements. These funds also may include local administrative funds 
available to local entities or consortia of local entities that have 
been delegated authority to serve as one-stop local partners by a State 
eligible agency as permitted by Sec.  678.415(b) and (e).
    (b) There are no specific caps on the amount or percent of overall 
funding a one-stop partner may contribute to fund infrastructure costs 
under the local one-stop funding mechanism, except that contributions 
for administrative costs may not exceed the amount available for 
administrative costs under the authorizing statute of the partner 
program. However, amounts contributed for infrastructure costs must be 
allowable and based on proportionate use by or benefit to the partner 
program, taking into account the total cost of the one-stop 
infrastructure as well as alternate financing options, and must be 
consistent with 2 CFR chapter II, including the Federal cost 
principles.


Sec.  678.725  What happens if consensus on infrastructure funding is 
not reached at the local level between the Local Board, chief elected 
officials, and one-stop partners?

    If, after July 1, 2016, and each subsequent July 1, the Local 
Board, chief elected officials, and one-stop partners do not reach 
consensus on methods of sufficiently funding local infrastructure 
through the local infrastructure cost funding mechanism, and include 
that consensus agreement in the signed MOU, then the Local Board must 
notify the Governor and the Governor must administer funding through 
the State one-stop funding mechanism, as described in Sec.  678.730. 
(WIOA sec. 121(h)(2))


Sec.  678.730  What is the State one-stop infrastructure funding 
mechanism?

    (a) In the State one-stop infrastructure funding mechanism, the 
Governor, after consultation with the chief elected officials, Local 
Boards, and the State Board, determines one-stop partner contributions, 
based upon a methodology where infrastructure costs are charged to each 
partner in proportion to relative benefits received and consistent with 
the partner program's authorizing laws and regulations, 2 CFR chapter 
II, including the Federal cost principles, and other applicable legal 
requirements described in Sec.  678.735(a).
    (b) The State Board develops an allocation formula to allocate 
funds to local areas to support the infrastructure costs for local area 
one-stop centers for all local areas that did not use the local funding 
mechanism, and the Governor uses that formula to allocate the funds. 
This is described in detail in Sec.  678.745.


Sec.  678.735  How are partner contributions determined in the State 
one-stop funding mechanism?

    (a) In the State one-stop funding mechanism, the Governor, after 
consultation with State and Local Boards and chief elected officials, 
will determine the amount each partner must contribute to assist in 
paying the infrastructure costs of one-stop centers. The Governor must 
calculate amounts based on the proportionate use of the one-stop 
centers by each partner, consistent with chapter II of title 2, Code of 
Federal Regulations (or any corresponding similar regulation or 
ruling), taking into account the costs of administration of the one-
stop delivery system for purposes not related to one-stop centers for 
each partner such as costs associated with maintaining the Local Board, 
or information technology systems. The Governor will also take into 
account the statutory requirements for each partner program, all other 
applicable legal requirements, and the partner program's ability to 
fulfill such requirements.
    (b) In certain situations, the Governor does not determine the 
infrastructure cost contributions for one-stop partner programs.
    (1) The Governor will not determine the contribution amounts for 
infrastructure funds for Native American grantees described in 20 CFR 
part 684. (WIOA sec. 121(h)(2)(D)(iii).) The appropriate portion of 
funds to be provided by Native American grantees to pay for one-stop 
infrastructure must be determined as part of the development of the MOU 
described in Sec.  678.500 and specified in that MOU.
    (2) In a State in which the State constitution or a State statute 
places policy-making authority that is independent of the authority of 
the Governor in an entity or official with respect to the funds 
provided for adult education and literacy activities, post-secondary 
career and technical education activities, or vocational rehabilitation 
services, the chief officer

[[Page 20646]]

of that entity or the official must determine the contribution amounts 
for infrastructure funds in consultation with the Governor. (WIOA sec. 
121(h)(2)(C)(ii).)
    (c) Limitations. Per WIOA sec. 122(h)(2)(D), the amount established 
by the Governor under paragraph (a) of this section may not exceed the 
following caps:
    (1) WIOA formula programs and employment service. The portion of 
funds required to be contributed under the WIOA youth, adult, or 
dislocated worker programs, or under the Wagner- Peyser Act (29 U.S.C. 
49 et seq.) must not exceed 3 percent of the amount of Federal funds 
provided to carry out that program in the State for a program year.
    (2) Other one-stop partners. The portion of funds required to be 
contributed must not exceed 1.5 percent of the amount of Federal funds 
provided to carry out that education program or employment and training 
program in the State for a fiscal year. For purposes of Carl D. Perkins 
Career and Technical Education Act of 2006, the cap on contributions is 
determined based on the funds made available for State administration 
of post-secondary level programs and activities.
    (3) Vocational rehabilitation. Within a State, the entity or 
entities administering the programs described in WIOA sec. 
121(b)(1)(B)(iv) the allotment is based on the one State allotment, 
even in instances where that allotment is shared between two State 
agencies, and will not be required to provide from that program a 
cumulative portion that exceeds--
    (i) 0.75 percent of the amount of Federal funds provided to carry 
out such program in the State for Fiscal Year 2016;
    (ii) 1.0 percent of the amount provided to carry out such program 
in the State for Fiscal Year 2017;
    (iii) 1.25 percent of the amount provided to carry out such program 
in the State for Fiscal Year 2018; and
    (iv) 1.5 percent of the amount provided to carry out such program 
in the State for Fiscal Year 2019 and following years.
    (4) Federal direct spending programs. For local areas that have not 
reached a one-stop infrastructure funding agreement by consensus, an 
entity administering a program funded with direct spending as defined 
in sec. 250(c)(8) of the Balanced Budget and Emergency Deficit Control 
Act of 1985, as in effect on February 15, 2014 (2 U.S.C. 900(c)(8)), 
must not be required to provide more for infrastructure costs than the 
amount that the Governor determined (as described in Sec.  678.735(a)).
    (d) If the above limitations result in funding less than each 
partner's proportionate share and contribute to inadequate funding of 
the allocation amount determined under Sec.  678.745(b), the Governor 
may direct the Local Board, chief elected officials, and one-stop 
partners to reenter negotiations to reduce the infrastructure costs to 
reflect the amount of funds that are available for such costs, discuss 
proportionate share of each one-stop partner, or to identify 
alternative sources of financing for one-stop infrastructure funding, 
but, in any event, a partner will only be required to pay an amount 
that is consistent with the proportionate benefit received by the 
partner, the program's authorizing laws and regulations, the Federal 
cost principles, and other applicable legal requirements.
    (1) The Local Board, chief elected officials, and one-stop 
partners, after renegotiation, may come to agreement and sign an MOU 
and proceed under the local one-stop funding mechanism.
    (2) If after renegotiation, agreement amongst partners still cannot 
be reached or alternate financing identified, the Governor may adjust 
the specified allocation, in accordance with the amounts available and 
the limitations described in Sec.  678.735(c).


Sec.  678.740  What funds are used to pay for infrastructure costs in 
the State one-stop infrastructure funding mechanism?

    (a) In the State one-stop infrastructure funding mechanism, 
infrastructure costs for WIOA title I programs, including Native 
American Programs described in 20 CFR part 684, can be paid using 
program funds, administrative funds, or both. Infrastructure costs for 
the Senior Community Service Employment Program under title V of the 
Older Americans Act (42 U.S.C. 3056 et seq.) can also be paid using 
program funds, administrative funds, or both. (WIOA sec. 
121(h)(2)(D)(i)(II).)
    (b) In the State one-stop infrastructure funding mechanism, 
infrastructure costs for other required one-stop partner programs 
(listed in Sec. Sec.  678.400 through 678.410) are limited to the 
program's administrative funds, as appropriate. (WIOA sec. 
121(h)(2)(D)(i)(I).)
    (c) In the State one-stop infrastructure funding mechanism, 
infrastructure costs for the adult education program authorized by 
title II of WIOA must be paid from the funds that are available for 
State administration or from non-Federal funds that the partner 
contributes to meet the program's matching or maintenance of effort 
requirement. Infrastructure costs for title II of WIOA may also be paid 
from funds available for local administration of programs and 
activities to eligible providers or consortia of eligible providers 
delegated responsibilities to act as a local one-stop partner pursuant 
to Sec.  678.415(b).
    (d) In the State one-stop infrastructure funding mechanism, 
infrastructure costs for the Carl D. Perkins Career and Technical 
Education Act of 2006 must be paid from the Federal funds that are 
available for State administration of post-secondary level programs and 
activities under the Perkins Act, or from non-Federal funds that the 
partner contributes to meet the program's matching or maintenance of 
effort requirement. Infrastructure costs for the Carl D. Perkins Career 
and Technical Education Act of 2006 may also be paid from funds 
available for local administration of post-secondary level programs and 
activities to eligible recipients or consortia of eligible recipients 
delegated responsibilities to act as a local one-stop partner pursuant 
to Sec.  678.415(e).


Sec.  678.745  How is the allocation formula used by the Governor 
determined in the State one-stop funding mechanism?

    (a) The State Board must develop an allocation formula to be used 
by the Governor to allocate funds to the local areas that did not 
successfully use the local funding mechanism. The allocation formula 
must take into account the number of one-stop centers in a local area, 
the population served by such centers, the services provided by such 
centers, and other factors relating to the performance of such centers 
that the State Board determines are appropriate and that are consistent 
with Federal cost principles. (WIOA sec. 121(h)(3)(B).)
    (b) Using the funds contributed by the one-stop partners described 
in Sec.  678.735, the Governor will then use this formula to allocate 
funds to the local areas that did not use the local funding mechanism 
to fund one-stop center infrastructure costs, so long as that funding 
distribution is consistent with Federal cost principles for each of the 
affected one-stop partners.


Sec.  678.750  When and how can a one-stop partner appeal a one-stop 
infrastructure amount designated by the State under the State 
infrastructure funding mechanism?

    (a) The Governor must establish a process, described under sec. 
121(h)(2)(E) of WIOA, for a one-stop partner administering a program 
described in Sec. Sec.  678.400 through 678.410 to appeal the 
Governor's determination regarding the one-stop partner's portion of 
funds to be provided for one-stop

[[Page 20647]]

infrastructure costs. This appeal process must be described in the 
Unified State Plan. (WIOA secs. 121(h)(2)(E) and 102(b)(2)(D)(i)(IV).)
    (b) The appeal may be made on the ground that the Governor's 
determination is inconsistent with proportionate share requirements in 
Sec.  678.735(a), the cost contribution limitations in Sec.  
678.735(b), or the cost contribution caps in Sec.  678.735(c).
    (c) The process must ensure prompt resolution of the appeal in 
order to ensure the funds are distributed in a timely manner, 
consistent with the requirements of Sec.  683.630 of this chapter.
    (d) The one-stop partner must submit an appeal in accordance with 
State's deadlines for appeals specified in the guidance issued under 
Sec.  678.705(b)(3), or if the State has not set a deadline, within 21 
days from the Governor's determination.


Sec.  678.755  What are the required elements regarding infrastructure 
funding that must be included in the one-stop Memorandum of 
Understanding?

    The MOU, fully described in Sec.  678.500, must contain the 
following information whether the local areas use either the local one-
stop or the State one-stop infrastructure funding method:
    (a) The period of time in which this infrastructure funding 
agreement is effective. This may be a different time period than the 
duration of the MOU.
    (b) Identification of an infrastructure and shared services budget 
that will be periodically reconciled against actual costs incurred and 
adjusted accordingly to ensure that it reflects a cost allocation 
methodology that demonstrates how infrastructure costs are charged to 
each partner in proportion to relative benefits received, and that 
complies with chapter II of title 2 of the Code of Federal Regulations 
(or any corresponding similar regulation or ruling).
    (c) Identification of all one-stop partners, chief elected 
officials, and Local Board participating in the infrastructure funding 
arrangement.
    (d) Steps the Local Board, chief elected officials, and one-stop 
partners used to reach consensus or an assurance that the local area 
followed the guidance for the State one-stop infrastructure funding 
process.
    (e) Description of the process to be used between partners to 
resolve issues during the MOU duration period when consensus cannot be 
reached.
    (f) Description of the periodic modification and review process to 
ensure equitable benefit among one-stop partners.


Sec.  678.760  How do one-stop partners jointly fund other shared costs 
under the Memorandum of Understanding?

    (a) In addition to jointly funding infrastructure costs, one-stop 
partners listed in Sec. Sec.  678.400 through 678.410 must use a 
portion of funds made available under their programs' authorizing 
Federal law (or fairly evaluated in-kind contributions) to pay the 
additional costs relating to the operation of the one-stop delivery 
system, which must include applicable career services.
    (b) Additionally, one-stop partners may jointly fund shared 
services to the extent consistent with their programs' Federal 
authorizing statutes and other applicable legal requirements. Shared 
services' costs may include the costs of shared services that are 
authorized for and may be commonly provided through the one-stop 
partner programs to any individual, such as initial intake, assessment 
of needs, appraisal of basic skills, identification of appropriate 
services to meet such needs, referrals to other one-stop partners, and 
business services. Shared operating costs may also include shared costs 
of the Local Board's functions.
    (c) These shared costs must be allocated according to the 
proportion of benefit received by each of the partners, consistent with 
the Federal law authorizing the partner's program, and consistent with 
all other applicable legal requirements, including Federal cost 
principles in chapter II of title 2 of the Code of Federal Regulations 
(or any corresponding similar regulation or ruling) requiring that 
costs are reasonable, necessary, and allocable.
    (d) Any shared costs agreed upon by the one-stop partners must be 
included in the MOU.

Subpart F--One-Stop Certification


Sec.  678.800  How are one-stop centers and one-stop delivery systems 
certified for effectiveness, physical and programmatic accessibility, 
and continuous improvement?

    (a) The State Board, in consultation with chief elected officials 
and Local Boards, must establish objective criteria and procedures for 
Local Boards to use when certifying one-stop centers.
    (1) The State Board must review and update the criteria every 2 
years as part of the review and modification of State Plans pursuant to 
Sec.  676.135 of this chapter.
    (2) The criteria must be consistent with the Governor's and State 
Board's guidelines, guidance and policies on infrastructure funding 
decisions, described in Sec.  678.705. The criteria must evaluate the 
one-stop centers and one-stop delivery system for effectiveness, 
including customer satisfaction, physical and programmatic 
accessibility, and continuous improvement.
    (3) When the Local Board is the one-stop operator as described in 
Sec.  679.410 of this chapter, the State Board must certify the one-
stop center.
    (b) Evaluations of effectiveness must include how well the one-stop 
center integrates available services for participants and businesses, 
meets the workforce development needs of participants and the 
employment needs of local employers, operates in a cost-efficient 
manner, coordinates services among the one-stop partner programs, and 
provides maximum access to partner program services even outside 
regular business hours. These evaluations must take into account 
feedback from one-stop customers. They must also include evaluations of 
how well the one-stop center ensures equal opportunity for individuals 
with disabilities to participate in or benefit from one-stop center 
services. These evaluations must include criteria evaluating how well 
the centers and delivery systems take actions to comply with the 
disability-related regulations implementing WIOA sec. 188, set forth at 
29 CFR part 37. Such actions include, but are not limited to:
    (1) Providing reasonable accommodations for individuals with 
disabilities;
    (2) Making reasonable modifications to policies, practices, and 
procedures where necessary to avoid discrimination against persons with 
disabilities;
    (3) Administering programs in the most integrated setting 
appropriate;
    (4) Communicating with persons with disabilities as effectively as 
with others; and
    (5) Providing appropriate auxiliary aids and services, including 
assistive technology devices and services, where necessary to afford 
individuals with disabilities an equal opportunity to participate in, 
and enjoy the benefits of, the program or activity.
    (c) Evaluations of continuous improvement must include how well the 
one-stop center supports the achievement of the negotiated local levels 
of performance for the indicators of performance for the local area 
described in sec. 116(b)(2) of WIOA and 20 CFR part 677. Other 
continuous improvement factors may include a regular process for 
identifying and responding to technical assistance needs, a regular 
system of continuing professional staff development, and having systems 
in place to capture and respond to specific customer feedback.

[[Page 20648]]

    (d) Local Boards must assess at least once every 3 years the 
effectiveness, physical and programmatic accessibility, and continuous 
improvement of one-stop centers and the one-stop delivery systems using 
the criteria and procedures developed by the State Board. The Local 
Board may establish additional criteria, or set higher standards for 
service coordination, than those set by the State criteria. Local 
Boards must review and update the criteria every 2 years as part of the 
Local Plan update process described in Sec.  676.580 of this chapter. 
Local Boards must certify one-stop centers in order to be eligible to 
receive infrastructure funds in the State infrastructure funding 
mechanism described in Sec.  678.730.
    (e) All one-stop centers must comply with applicable physical 
accessibility requirements, as set forth in 29 CFR part 37.

Subpart G--Common Identifier


Sec.  678.900  What is the common identifier to be used by each one-
stop delivery system?

    (a) The common one-stop delivery system identifier is ``American 
Job Center.''
    (b) As of July 1, 2016, each one-stop delivery system must include 
the ``American Job Center'' identifier or ``a proud partner of the 
American Job Center network'' on all products, programs, activities, 
services, facilities, and related property and materials used in the 
one-stop system.
    (c) One-stop partners, States or local areas may use additional 
identifiers on their products, programs, activities, services, 
facilities, and related property and materials.

Department of Education

34 CFR Chapters III and IV

    For the reasons stated in the preamble, the Department of Education 
proposes to amend 34 CFR chapters III and IV as follows:

PART 361--STATE VOCATIONAL REHABILITATION SERVICES PROGRAM

0
4. The authority citation for part 361 continues to read as follows:

    Authority: 29 U.S.C. 709(c), unless otherwise noted.

0
5. Add subpart D of part 361 to read as follows:
Subpart D--Unified and Combined State Plans Under Title I of the 
Workforce Innovation and Opportunity Act
Sec.
361.100 What is the purpose of the Unified and Combined State Plans?
361.105 What are the general requirements for the Unified State 
Plan?
361.110 What are the program-specific requirements in the Unified 
State Plan for the adult, dislocated worker, and youth workforce 
investment activities in Workforce Innovation and Opportunity Act 
title I?
361.115 What are the program-specific requirements in the Unified 
State Plan for the Adult Education and Family Literacy Act program 
in Workforce Innovation and Opportunity Act title II?
361.120 What are the program-specific requirements in the Unified 
State Plan for Wagner-Peyser Act Employment Service programs in 
title III of the Workforce Innovation and Opportunity Act?
361.125 What are the program-specific requirements in the Unified 
State Plan for the State Vocational Rehabilitation program in 
Workforce Innovation and Opportunity Act title IV?
361.130 What is the submission and approval process of the Unified 
State Plan?
361.135 What are the requirements for modification of the Unified 
State Plan?
361.140 What are the general requirements for submitting a Combined 
State Plan?
361.143 What is the submission and approval process of the Combined 
State Plan?
361.145 What are the requirements for modifications of the Combined 
State Plan?

Subpart D--Unified and Combined State Plans Under Title I of the 
Workforce Innovation and Opportunity Act


Sec.  361.100  What is the purpose of the Unified and Combined State 
Plans?

    (a) The Unified and Combined State Plans provide the framework for 
States to outline a strategic vision of, and goals for, how their 
workforce development systems will achieve the purposes of Workforce 
Innovation and Opportunity Act (WIOA).
    (b) The Unified and Combined State Plans serve as 4-year action 
plans to develop, align, and integrate the State's systems and provide 
a platform to achieve the State's vision and strategic and operational 
goals. A Unified or Combined State Plan is intended to:
    (1) Align, in strategic coordination, the six core programs 
required in the Unified State Plan pursuant to Sec.  361.105(b), and 
additional optional programs that may be part of the Combined State 
Plan pursuant to Sec.  361.140;
    (2) Direct investments in economic, education, and workforce 
training programs to focus on providing relevant education and training 
to ensure that individuals, including youth and individuals with 
barriers to employment, have the skills to compete in the job market 
and that employers have a ready supply of skilled workers;
    (3) Apply strategies for job-driven training consistently across 
Federal programs, and;
    (4) Enable economic, education, and workforce partners to build a 
skilled workforce through innovation in, and alignment of, employment, 
training, and education programs.


Sec.  361.105  What are the general requirements for the Unified State 
Plan?

    (a) The Unified State Plan must be submitted in accordance with 
Sec.  361.130 and joint planning guidelines issued by the Secretary of 
Labor and the Secretary of Education.
    (b) The Governor of each State must submit, in accordance with 
Sec.  361.130, a Unified or Combined State Plan to the Secretary of 
Labor to be eligible to receive funding for the workforce development 
system's six core programs:
    (1) The adult, dislocated worker, and youth programs authorized 
under subtitle B of title I of WIOA and administered by the U.S. 
Department of Labor;
    (2) The Adult Education and Family Literacy Act (AEFLA) program 
authorized under title II of WIOA and administered by the U.S. 
Department of Education;
    (3) The Wagner-Peyser Act Employment Services programs amended by 
title III of WIOA and administered by the U.S. Department of Labor; and
    (4) The State Vocational Rehabilitation program amended by title IV 
of WIOA and administered by the U.S. Department of Education.
    (c) The Unified State Plan must outline the State's 4-year strategy 
for the core programs described in paragraph (b) of this section and 
meet the requirements of sec. 102(b) of WIOA, as explained in the joint 
planning guidance issued by the Secretary of Labor and the Secretary of 
Education.
    (d) The Unified State Plan must include strategic and operational 
planning elements to facilitate the development of an aligned, 
coordinated, and comprehensive workforce development system. The 
Unified State Plan must include:
    (1) Strategic planning elements that describe the State's strategic 
vision and goals for preparing an educated and skilled workforce under 
sec. 102(b)(1) of WIOA. The strategic planning elements must be 
informed by and include an analysis of the State's economic conditions 
and employer and workforce needs, including education and skill needs.

[[Page 20649]]

    (2) Strategies for aligning the core programs and optional 
programs, as well as other resources available to the State, to achieve 
the strategic vision and goals in accordance with sec. 102(b)(1)(E) of 
WIOA.
    (3) Operational planning elements in accordance with sec. 102(b)(2) 
of WIOA that support the strategies for aligning the core programs and 
other resources available to the State to achieve the State's vision 
and goals and a description of how the State Workforce Development 
Board will implement its functions, in accordance with sec. 101(d) of 
WIOA. Operational planning elements must include:
    (i) A description of how the State strategy will be implemented by 
each core program's lead State agency;
    (ii) State operating systems, including data systems, and policies 
that will support the implementation of the State's strategy identified 
in paragraph (d)(1) of this section;
    (iii) Program-specific requirements for the core programs required 
by WIOA sec. 102(b)(2)(D);
    (iv) Assurances required by sec. 102(b)(2)(E) of WIOA and others 
deemed necessary by the Secretaries of Labor and Education under sec. 
102(b)(2)(E)(x) of WIOA; and
    (v) Any additional operational planning requirements imposed by the 
Secretary of Labor or the Secretary of Education under sec. 
102(b)(2)(C)(viii) of WIOA.


Sec.  361.110  What are the program-specific requirements in the 
Unified State Plan for the adult, dislocated worker, and youth 
workforce investment activities in Workforce Innovation and Opportunity 
Act title I?

    The program-specific requirements for the adult, dislocated worker, 
and youth workforce investment activities that must be included in the 
Unified State Plan are described in sec. 102(b)(2)(D) of WIOA. 
Additional planning requirements may be required by the Secretary of 
Labor or the Secretary of Education in accordance with joint planning 
guidelines issued by the Secretary of Labor and the Secretary of 
Education.


Sec.  361.115  What are the program-specific requirements in the 
Unified State Plan for the Adult Education and Family Literacy Act 
program in Workforce Innovation and Opportunity Act title II?

    The program-specific requirements for the AEFLA program in title II 
that must be included in the Unified State Plan are described in secs. 
102(b)(2)(D)(ii) and 102(b)(2)(C) of WIOA.
    (a) With regard to the description required in sec. 
102(b)(2)(D)(ii)(I) of WIOA pertaining to content standards, the 
Unified State Plan must describe how the eligible agency will, by July 
1, 2016, align its content standards for adult education with State-
adopted challenging academic content standards under the Elementary and 
Secondary Education Act of 1965, as amended.
    (b) With regard to the description required in sec. 
102(b)(2)(C)(iv) of WIOA pertaining to the methods and factors the 
State will use to distribute funds under the core programs, for title 
II of WIOA, the Unified State Plan must include--
    (1) How the eligible agency will award multi-year grants on a 
competitive basis to eligible providers in the State; and
    (2) How the eligible agency will provide direct and equitable 
access to funds using the same grant or contract announcement and 
application procedure.
    (c) With regard to the description required under sec. 
102(b)(2)(C)(v)(I) of WIOA pertaining to the integration of workforce 
and education data on core programs, unemployment insurance programs, 
and education through post-secondary education, for title II of WIOA, 
the Unified State Plan must include how the State will ensure 
interoperability of data systems in the reporting on core indicators of 
performance and performance reports required to be submitted by the 
State.


Sec.  361.120  What are the program-specific requirements in the 
Unified State Plan for Wagner-Peyser Act Employment Service programs in 
title III of the Workforce Innovation and Opportunity Act?

    Wagner-Peyser Act Employment Services programs amended by title III 
are subject to requirements in sec. 102(b) of WIOA and any additional 
requirements imposed by the Secretary of Labor under sec. 
102(b)(2)(C)(viii) of WIOA, in accordance with joint planning 
guidelines issued by the Secretary of Labor and the Secretary of 
Education.


Sec.  361.125  What are the program-specific requirements in the 
Unified State Plan for the State Vocational Rehabilitation program in 
Workforce Innovation and Opportunity Act title IV?

    The program specific requirements for the vocational rehabilitation 
services portion of the Unified or Combined State Plan are set forth in 
sec. 101(a) of the Rehabilitation Act of 1973, as amended. All 
submission requirements of the Vocational Rehabilitation Services 
portion of the Unified or Combined State Plan are in addition to the 
jointly developed strategic and operational content requirements 
prescribed by secs. 102(b) and 103 of WIOA.


Sec.  361.130  What is the submission and approval process of the 
Unified State Plan?

    (a) The Unified State Plan described in Sec.  361.105 must be 
submitted in accordance with planning guidelines issued jointly by the 
Secretaries of Labor and Education which explain the submission and 
approval process in WIOA sec. 102(c).
    (b) A State must submit its Unified State Plan to the Secretary of 
Labor pursuant to a process identified by the Secretary.
    (1) The initial Unified State Plan must be submitted no later than 
120 days prior to the commencement of the second full program year of 
WIOA.
    (2) The subsequent Unified State Plan must be submitted no later 
than 120 days prior to the end of the 4-year period described in 
paragraph (b)(1) of this section.
    (3) For purposes of paragraph (b) of this section, ``program year'' 
means July 1 through June 30 of any year.
    (c) The State must provide an opportunity for public comment on and 
input into the development of the Unified State Plan prior to its 
submission.
    (1) The opportunity for public comment must include an opportunity 
for comment by representatives of Local Boards and chief elected 
officials, businesses, representatives of labor organizations, 
community-based organizations, adult education providers, institutions 
of higher education, other stakeholders with an interest in the 
services provided by the six core programs, and the general public, 
including individuals with disabilities.
    (2) Consistent with the ``Sunshine Provision'' of WIOA in sec. 
101(g), the State Board must make information regarding the Unified 
State Plan available to the public through electronic means and 
regularly occurring open meetings in accordance with State law. The 
Unified State Plan must describe the State's process and timeline for 
ensuring a meaningful opportunity for public comment.
    (d) Upon receipt of the Unified State Plan from the State, the 
Secretary of Labor will ensure that the entire Unified State Plan is 
submitted to the Secretary of Education pursuant to a process developed 
by the Secretaries.
    (e) The Unified State Plan is subject to the approval of both the 
Secretary of Labor and the Secretary of Education.
    (f) Before the Secretary of Labor and the Secretary of Education 
approve the Unified State Plan, the vocational

[[Page 20650]]

rehabilitation portion of the Unified State Plan described in WIOA sec. 
102(b)(2)(D)(iii) must be approved by the Commissioner of the 
Rehabilitation Services Administration.
    (g) The Secretary of Labor and the Secretary of Education will 
review and approve the Unified State Plan within 90 days of receipt by 
the appropriate Secretary, unless the Secretary of Labor or the 
Secretary of Education determines in writing within that period that:
    (1) The plan is inconsistent with a core program's requirements;
    (2) The Unified State Plan is inconsistent with any requirement of 
sec. 102 of WIOA; or
    (3) The plan is incomplete or otherwise insufficient to determine 
whether it is consistent with a core program's requirements or other 
requirements of WIOA.
    (h) If neither the Secretary of Labor nor the Secretary of 
Education makes the written determination described in paragraph (g) of 
this section within 90 days of the receipt by the Secretaries, the 
Unified State Plan will be considered approved.


Sec.  361.135  What are the requirements for modification of the 
Unified State Plan?

    (a) In addition to the required modification review set forth in 
paragraph (b) of this section, a Governor may submit a modification of 
its Unified State Plan at any time during the 4-year period of the 
plan.
    (b) Modifications are required, at a minimum:
    (1) At the end of the first 2-year period of any 4-year State Plan, 
wherein the State Board must review the Unified State Plan, and the 
Governor must submit modifications to the plan to reflect changes in 
labor market and economic conditions or other factors affecting the 
implementation of the Unified State Plan;
    (2) When changes in Federal or State law or policy substantially 
affect the strategies, goals, and priorities upon which the Unified 
State Plan is based;
    (3) When there are changes in the statewide vision, strategies, 
policies, State adjusted levels of performance, the methodology used to 
determine local allocation of funds, reorganizations which change the 
working relationship with system employees, changes in organizational 
responsibilities, changes to the membership structure of the State 
Board or alternative entity, and similar substantial changes to the 
State's workforce investment system.
    (c) Modifications to the Unified State Plan are subject to the same 
public review and comment requirements in Sec.  361.130(c) that apply 
to the development of the original Unified State Plan.
    (d) Unified State Plan modifications must be approved by the 
Secretary of Labor and the Secretary of Education, based on the 
approval standards applicable to the original Unified State Plan under 
Sec.  361.130. This approval must come after the approval of the 
Commissioner of the Rehabilitation Services Administration for 
modification of any portion of the plan described in sec. 
102(b)(2)(D)(iii) of WIOA.


Sec.  361.140  What are the general requirements for submitting a 
Combined State Plan?

    (a) A State may choose to develop and submit a 4-year Combined 
State Plan in lieu of the Unified State Plan described in Sec.  
361.105.
    (b) A State that submits a Combined State Plan covering an activity 
or program described in paragraph (d) of this section that is approved 
under WIOA sec. 103(c) or determined complete under the law relating to 
the program will not be required to submit any other plan or 
application in order to receive Federal funds to carry out the core 
programs or the program or activities described under paragraph (d) of 
this section that are covered by the Combined State Plan.
    (c) If a State develops a Combined State Plan, it must be submitted 
in accordance with the process described in Sec.  361.143.
    (d) If a State chooses to submit a Combined State Plan, the Plan 
must include the six core programs and one or more of the optional 
programs and activities described in sec. 103(a)(2) of WIOA. The 
optional programs and activities that may be included in the Combined 
State Plan are:
    (1) Career and technical education programs authorized under the 
Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 
2301 et seq.);
    (2) Temporary Assistance for Needy Families or TANF, authorized 
under part A of title IV of the Social Security Act (42 U.S.C. 601 et 
seq.);
    (3) Employment and training programs authorized under sec. 6(d)(4) 
of the Food and Nutrition Act of 2008 (7 U.S.C. 2015(d)(4));
    (4) Work programs authorized under sec. 6(o) of the Food and 
Nutrition Act of 2008 (7 U.S.C. 2015(o));
    (5) Trade adjustment assistance activities under chapter 2 of title 
II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.);
    (6) Services for veterans authorized under chapter 41 of title 38, 
United States Code;
    (7) Programs authorized under State unemployment compensation laws 
(in accordance with applicable Federal law);
    (8) Senior Community Service Employment Programs under title V of 
the Older Americans Act of 1956 (42 U.S.C. 3056 et seq.);
    (9) Employment and training activities carried out by the 
Department of Housing and Urban Development;
    (10) Employment and training activities carried out under the 
Community Services Block Grant Act (42 U.S.C. 9901 et seq.); and
    (11) Reintegration of offenders programs authorized under sec. 212 
of the Second Chance Act of 2007 (42 U.S.C. 17532).
    (e) A Combined State Plan must contain:
    (1) For the core programs, the information required by sec. 102(b) 
of WIOA and Sec.  361.105, as explained in the joint planning guidance 
issued by the Secretaries;
    (2) For the optional programs, except as described in paragraph (h) 
of this section, the information required by the law authorizing and 
governing that program to be submitted to the appropriate Secretary, 
any other applicable legal requirements, and any common planning 
requirements described in sec. 102(b) of WIOA, as explained in the 
joint planning guidance issued by the Secretaries;
    (3) A description of joint planning methods across all programs 
included in the Combined State Plan; and
    (4) An assurance that all of the entities responsible for planning 
or administering the programs described in the Combined State Plan have 
had a meaningful opportunity to review and comment on all portions of 
the Plan.
    (f) Each optional program included in the Combined State Plan 
remains subject to the applicable program-specific requirements of the 
Federal law and regulations, and any other applicable legal or program 
requirements, governing the implementation and operation of that 
program.
    (g) For purposes of Sec. Sec.  361.140 through 361.145 the term 
``appropriate Secretary'' means the head of the Federal agency who 
exercises either plan or application approval authority for the program 
or activity under the Federal law authorizing the program or activity 
or, if there are no planning or application requirements, who exercises 
administrative authority over the program or activity under that 
Federal law.
    (h) States that include employment and training activities carried 
out under

[[Page 20651]]

the Community Services Block Grant (CSBG) Act (42 U.S.C. 9901 et seq.) 
under a Combined State Plan would submit all other required elements of 
a complete CSBG State Plan directly to the Federal agency that 
administers the program, according to the requirements of Federal law 
and regulations.


Sec.  361.143  What is the submission and approval process of the 
Combined State Plan?

    (a) For purposes of Sec.  361.140(a), if a State chooses to develop 
a Combined State Plan it must submit the Combined State Plan in 
accordance with the requirements described below and the joint planning 
guidelines, which will further explain the submission and approval 
procedures for the Combined State Plan, issued by the Secretaries.
    (b) The State must submit to the Secretaries of Labor and Education 
and to the Secretary of the agency with responsibility for approving 
the program's plan or determining it complete under the law governing 
the program, as part of its Combined State Plan, any plan, application, 
form, or any other similar document that is required as a condition for 
the approval of Federal funding under the applicable program or 
activity. Such submission must occur in accordance with a process 
identified by the relevant Secretaries in paragraph (a) of this 
section.
    (c) The Combined State Plan will be approved or disapproved in 
accordance with the requirements of sec. 103(c) of WIOA.
    (1) The portion of the Combined State Plan covering programs 
administered by the Departments of Labor and Education must be 
reviewed, and approved or disapproved, by the appropriate Secretary 
within 90 days beginning on the day the plan is received by the 
appropriate Secretary from the State, except as provided in paragraph 
(d) of this section.
    (2) If an appropriate Secretary other than the Secretary of Labor 
or the Secretary of Education has authority to approve or determine 
complete a portion of the Combined State Plan for a program or activity 
described in Sec.  361.140(d), that portion of the plan must be 
reviewed, and approved, disapproved, or have a determination of 
completeness, by the appropriate Secretary within 120 days beginning on 
the day the plan is received by the appropriate Secretary from the 
State except as provided in paragraph (e) of this section.
    (d) The review and determination of approval or disapproval, or 
determination of completeness, of the relevant portion of the Combined 
State Plan must occur within 90 days for all Department of Labor and 
Education programs included in the State Plan and within 120 days for 
the programs administered by other Federal Agencies unless the 
appropriate Secretary determines in writing within that period that:
    (1) The Plan is inconsistent with the requirements of the six core 
programs or the Federal laws authorizing or applicable to the program 
or activity involved, including the criteria for approval of a plan or 
application, or determining the plan's completeness, if any, under such 
law;
    (2) The portion of the Plan describing the six core programs or the 
program or activity described in paragraph (a) of this section involved 
does not satisfy the criteria as provided in sec. 102 or 103 of WIOA, 
as applicable; or
    (3) The Plan is incomplete, or otherwise insufficient to determine 
whether it is consistent with a core program's requirements, other 
requirements of WIOA, or the Federal laws authorizing, or applicable 
to, the program or activity described in Sec.  361.140(d), including 
the criteria for approval of a plan or application, if any, under such 
law.
    (e) If the Secretary of Labor, the Secretary of Education, or the 
appropriate Secretary does not make the written determination described 
in paragraph (d) of this section within the relevant period of time 
after submission of the Plan, that portion of the Combined State Plan 
over which the Secretary has jurisdiction will be considered approved.
    (f) Special rule. In paragraphs (d)(1) and (3) of this section, the 
term ``criteria for approval of a plan or application,'' with respect 
to a State or a core program or a program under the Carl D. Perkins 
Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.), 
includes a requirement for agreement between the State and the 
appropriate Secretaries regarding State performance measures or State 
performance accountability measures, as the case may be, including 
levels of performance.


Sec.  361.145  What are the requirements for modifications of the 
Combined State Plan?

    (a) For the core program portions of the Combined State Plan, 
modifications are required at the end of the first 2-year period of any 
4-year Combined State Plan. The State Board must review the Combined 
State Plan, and the Governor must submit a modification of the Combined 
State Plan to reflect changes in labor market and economic conditions 
or in other factors affecting the implementation of the Combined State 
Plan.
    (b) In addition to the required modification review described in 
paragraph (a) of this section, a State may submit a modification of its 
Combined State Plan at any time during the 4-year period of the plan.
    (c) For any programs and activities described in Sec.  361.140(d) 
that are included in a State's Combined State Plan, the State--
    (1) May decide if the modification requirements under WIOA sec. 
102(c)(3) that apply to the core programs will apply to the optional 
programs or activities described in Sec.  361.140(d) that are included 
in the Combined State Plan or may comply with the procedures and 
requirements applicable to only the particular optional program or 
activity; and
    (2) Must submit, in accordance with the procedure described in 
Sec.  361.143, any other modification, amendment, or revision required 
by the Federal law authorizing, or applicable to, the program or 
activity described in Sec.  361.140(d). If the underlying programmatic 
requirements change for Federal laws authorizing such programs, a State 
must either modify its Combined State Plan or submit a separate plan to 
the appropriate Federal agency in accordance with the new Federal law 
authorizing the optional program or activity and other legal 
requirements applicable to such program or activity. A State also may 
amend its Combined State Plan to add an optional program or activity 
described in Sec.  361.140(d).
    (d) Modifications of the Combined State Plan are subject to the 
same public review and comment requirements that apply to the 
development of the original Combined State Plan as described in Sec.  
361.130(c) except that, if the modification, amendment, or revision 
affects the administration of a particular optional program and has no 
impact on the Combined State Plan as a whole or the integration and 
administration of the core and optional programs at the State level, a 
State may comply instead with the procedures and requirements 
applicable to the particular optional program.
    (e) Modifications for the core program portions of the Combined 
State Plan must be approved by the Secretary of Labor and the Secretary 
of Education, based on the approval standards applicable to the 
original Combined State Plan under Sec.  361.143. This approval must 
come after the approval of the Commissioner of the Rehabilitation 
Services Administration for modification of any portion of the

[[Page 20652]]

Combined State Plan described in sec. 102(b)(2)(D)(iii) of WIOA.
    (f) Modifications for the portions of the Combined State Plan for 
any optional program or activity described in Sec.  361.140(d) must be 
submitted for approval by only the appropriate Secretary, based on the 
approval standards applicable to the original Combined State Plan under 
Sec.  361.143, if the State elects, or in accordance with the 
procedures and requirements applicable to the particular optional 
program if the modification, amendment, or revision affects the 
administration of only that particular optional program and has no 
impact on the Combined State Plan as a whole or the integration and 
administration of the core and optional programs at the State level.
0
 6. Revise subpart E of part 361 to read as follows:
Subpart E--Performance Accountability Under Title I of the Workforce 
Innovation and Opportunity Act
Sec.
361.150 What definitions apply to Workforce Innovation and 
Opportunity Act performance measurement and reporting requirements?
361.155 What are the primary indicators of performance under the 
Workforce Innovation and Opportunity Act?
361.160 What information is required for State performance reports?
361.165 May a State require additional indicators of performance?
361.170 How are State adjusted levels of performance for primary 
indicators established?
361.175 What responsibility do States have to use quarterly wage 
record information for performance accountability?
361.180 What State actions are subject to a financial sanction under 
Workforce Innovation and Opportunity Act?
361.185 When are sanctions applied for failure to report?
361.190 When are sanctions applied for failure to achieve adjusted 
levels of performance?
361.195 What should States expect when a sanction is applied to the 
Governor's Reserve Allotment?
361.200 What other administrative actions will be applied to States' 
performance requirements?
361.205 What performance indicators apply to local areas?
361.210 How are local performance levels established?
361.215 Under what circumstances are local areas eligible for State 
Incentive Grants?
361.220 Under what circumstances may a corrective action or sanction 
be applied to local areas for poor performance?
361.225 Under what circumstances may local areas appeal a 
reorganization plan?
361.230 What information is required for the eligible training 
provider performance reports?
361.235 What are the reporting requirements for individual records 
for core Workforce Innovation and Opportunity Act title I, III, and 
IV programs?
361.240 What are the requirements for data validation of State 
annual performance reports?

Subpart E--Performance Accountability Under Title I of the 
Workforce Innovation and Opportunity Act


Sec.  361.150  What definitions apply to Workforce Innovation and 
Opportunity Act performance measurement and reporting requirements?

    (a) Participant. A reportable individual who has received staff-
assisted services after satisfying all applicable programmatic 
requirements for the provision of services, such as eligibility 
determination.
    (1) For the Vocational Rehabilitation (VR) program, a Participant 
is an individual who has an approved and signed Individualized Plan for 
Employment (IPE) and has begun to receive services.
    (2) The following individuals are not Participants:
    (i) Individuals who have not completed at least 12 contact hours in 
the Adult Education and Family Literacy Act (AEFLA) program;
    (ii) Individuals who only use the self-service system; and
    (iii) Individuals who only receive information services or 
activities.
    (3) Programs must include participants in their performance 
calculations.
    (b) Reportable individual. An individual who has taken action that 
demonstrates an intent to use program services and who meets specific 
reporting criteria of the core program, including:
    (1) Individuals who provide identifying information;
    (2) Individuals who only use the self-service system; and
    (3) Individuals who only receive information on services or 
activities.
    (c) Exit. As defined for the purpose of performance calculations, 
exit is the point after which an individual who has received services 
through any program meets the following criteria:
    (1) For the adult, dislocated worker, and youth programs under 
Workforce Innovation and Opportunity Act (WIOA) title I, the AEFLA 
program under WIOA title II, and the Employment Services authorized by 
the Wagner-Peyser Act as amended by WIOA title III, exit date is the 
last date of service:
    (i) The exit date cannot be determined until 90 days of no services 
has elapsed. At that point the exit date is applied retroactively to 
the last date of service.
    (A) Ninety days of no service does not include self-service or 
information-only activities or follow-up services and
    (B) There are no future services planned, excluding follow-up 
services.
    (ii) [Reserved]
    (2)(i) For the VR program as amended by WIOA title IV:
    (A) The participant's record of service is closed in accordance 
with Sec.  361.56 because the participant has achieved an employment 
outcome; or
    (B) The participant's service record is closed because the 
individual has not achieved an employment outcome or the individual has 
been determined ineligible after receiving services in accordance with 
Sec.  361.43.
    (ii) Notwithstanding any other provision of this section, a 
participant will not be considered as meeting the definition of exit 
from the Vocational Rehabilitation program if the individual's service 
record is closed because the individual has achieved a supported 
employment outcome in an integrated setting but not in competitive 
integrated employment.


Sec.  361.155  What are the primary indicators of performance under the 
Workforce Innovation and Opportunity Act?

    (a) All States submitting either a Unified or Combined State Plan 
under Sec. Sec.  361.130 and 361.143, must propose expected levels of 
performance for each of the primary indicators of performance for the 
adult, dislocated worker, and youth programs under title I of WIOA, the 
AEFLA program under title II of WIOA, the Wagner-Peyser Act as amended 
by title III of WIOA, and the VR program as amended by WIOA.
    (1) The six primary indicators for performance are:
    (i) The percentage of participants, who are in unsubsidized 
employment during the second quarter after exit from the program;
    (ii) The percentage of participants, who are in unsubsidized 
employment during the fourth quarter after exit from the program;
    (iii) Median earnings of participants, who are in unsubsidized 
employment during the second quarter after exit from the program;
    (iv) The percentage of participants who obtained a recognized post-
secondary credential or a secondary school diploma, or its recognized 
equivalent during participation in or within 1 year after exit from the 
program. A participant who has obtained a secondary school diploma or 
its recognized equivalent is only included in this measure if the

[[Page 20653]]

participant is also employed or is enrolled in an education or training 
program leading to a recognized post-secondary credential within 1 year 
from program exit;
    (v) The percentage of participants who during a program year, are 
in an education or training program that leads to a recognized post-
secondary credential or employment and who are achieving measurable 
skill gains, defined as documented academic, technical, occupational or 
other forms of progress, towards such a credential or employment.
    (vi) Effectiveness in serving employers, based on indicators 
developed as required by sec. 116(b)(2)(A)(iv) of WIOA.
    (2) [Reserved]
    (b) The indicators in paragraphs (a)(1)(i) through (vi) of this 
section apply to the adult, dislocated worker, AEFLA and VR programs.
    (c) The indicators in paragraphs (a)(1)(i) through (iii) and (vi) 
of this section apply to the Employment Services.
    (d) For the youth program under title I of WIOA, the indicators 
are:
    (1) Percentage of participants who are in education or training 
activities, or in unsubsidized employment, during the second quarter 
after exit from the program;
    (2) Percentage of participants in education or training activities, 
or in unsubsidized employment, during the fourth quarter after exit 
from the program;
    (3) Median earnings of participants who are in unsubsidized 
employment during the second quarter after exit from the program;
    (4) The percentage of participants who obtained a recognized post-
secondary credential or a secondary school diploma, or its recognized 
equivalent, during participation or up to 1 year after exit. A 
participant who has obtained a secondary school diploma or its 
recognized equivalent is only included in this measure if the 
participant is also employed or is enrolled in an education or training 
program leading to a recognized post-secondary credential within 1 year 
from program exit;
    (5) The percentage of participants who during a program year, are 
in an education or training program that leads to a recognized post-
secondary credential or employment and who are achieving measurable 
skill gains, defined as documented academic, technical, occupational or 
other forms of progress towards such a credential or employment;
    (6) Effectiveness in serving employers, based on indicators 
developed as required by sec. 116(b)(2)(iv) of WIOA.


Sec.  361.160  What information is required for State performance 
reports?

    (a) Section 116(d)(2) of WIOA requires States to submit a State 
performance report. The State performance report must be submitted 
annually using a template the Departments will disseminate and must 
provide, at a minimum, information on the actual performance levels 
achieved consistent with Sec.  361.175 with respect to:
    (1) The total number of participants served, and the total number 
of participants who exited each of the core programs identified in sec. 
116(b)(3)(A)(ii) of WIOA, including disaggregated counts of those who 
participated in and exited a core program, by:
    (i) Individuals with barriers to employment as defined in WIOA sec. 
3(24); and
    (ii) Co-enrollment in any of the programs in WIOA sec 
116(b)(3)(A)(ii).
    (2) Information on the performance levels achieved for the primary 
indicators for all of the core programs identified in Sec.  361.155 
including disaggregated levels for:
    (i) Individuals with barriers to employment as defined in WIOA sec. 
3(24);
    (ii) Age;
    (iii) Sex; and
    (iv) Race and ethnicity.
    (3) The total number of participants and exiters who received 
career and training services for the most recent program year and the 
three preceding program years, as applicable to the program;
    (4) Information on the performance levels achieved for the primary 
indicators consistent with Sec.  361.155 for career and training 
services for the most recent program year and the 3 preceding program 
years, as applicable to the program;
    (5) The percentage of participants in a program who obtained 
unsubsidized employment related to the training received (often 
referred to as training-related employment) through WIOA title I-B 
programs;
    (6) The amount of funds spent on each type of career and training 
service for the most recent program year and the 3 preceding program 
years, as applicable to the program;
    (7) The average cost per participant for those participants who 
received career and training services, respectively, during the most 
recent program year and the 3 preceding program years for, as 
applicable to the program;
    (8) The percentage of a State's annual allotment under WIOA sec. 
132(b) that the State spent on administrative costs; and
    (9) information that facilitates comparisons of programs with 
programs in other States.
    (10) For WIOA title I programs, a State performance narrative, 
which, for States in which a local area is implementing a pay-for-
performance contracting strategy, at a minimum provides:
    (i) A description of pay-for-performance contract strategies being 
used for programs;
    (ii) The performance of service providers entering into contracts 
for such strategies, measured against the levels of performance 
specified in the contracts for such strategies; and
    (iii) An evaluation of the design of the programs and performance 
strategies and, when available, the satisfaction of employers and 
participants who received services under such strategies.
    (b) The disaggregation of data for the State performance report 
must be done in compliance with WIOA sec. 116(d)(6)(C).
    (c) The State performance reports must include a mechanism of 
electronic access to the State's local area and ETP performance 
reports.
    (d) States must comply with these requirements from sec. 116 of 
WIOA as explained in joint guidance issued by the Departments of 
Education and Labor, which may include information on reportable 
individuals as determined by the Secretaries.


Sec.  361.165  May a State require additional indicators of 
performance?

    States may identify additional indicators of performance for the 
six core programs. These indicators must be included in the Unified or 
Combined State Plan.


Sec.  361.170  How are State adjusted levels of performance for primary 
indicators established?

    (a) A State must submit in the State Plan expected levels of 
performance on the primary indicators for each core program as required 
by sec. 116(b)(iv) of WIOA as explained in joint guidance issued by the 
Secretaries of Education and Labor.
    (1) The initial State Plan submitted under WIOA must contain 
expected levels of performance for the first 2 years of the State Plan 
period.
    (2) States must submit expected levels of performance for the third 
and fourth year of the State Plan before the third program year 
consistent with Sec. Sec.  361.135 and 361.145.
    (b) The State must reach agreement on levels of performance with 
the

[[Page 20654]]

Secretaries of Education and Labor for each of the core programs based 
on the following factors:
    (1) How the levels of performance compare with State adjusted 
levels of performance established for other States;
    (2) The application of an objective statistical model established 
by the Secretaries of Education and Labor, subject to paragraph (d) of 
this section;
    (3) How the levels promote continuous improvement in performance 
based on the primary indicators and ensure optimal return on investment 
of Federal funds; and
    (4) The extent to which the levels assist the State in meeting the 
performance goals established by the Secretaries of Education and Labor 
for the core programs in accordance with the Government Performance and 
Results Act of 1993, and its amendments.
    (c) An objective statistical adjustment model will be developed and 
disseminated by the Secretaries. The model will be based on:
    (1) Differences among States in actual economic conditions, 
including unemployment rates and job losses or gains in particular 
industries; and
    (2) The characteristics of participants, including:
    (i) Indicators of poor work history;
    (ii) Lack of work experience;
    (iii) Lack of educational or occupational skills attainment;
    (iv) Dislocation from high-wage and high-benefit employment;
    (v) Low levels of literacy;
    (vi) Low levels of English proficiency;
    (vii) Disability status;
    (viii) Homelessness;
    (ix) Ex-offender status; and
    (x) Welfare dependency.
    (d) The objective statistical adjustment model developed under 
paragraph (c) of this section will be:
    (1) Applied to the core programs' primary indicators upon 
availability of data which is necessary to populate the model and apply 
it to the programs;
    (2) Subject to paragraph (d)(1) of this section, used before the 
beginning of a program year in order to establish State performance 
targets for the upcoming program year; and
    (3) Subject to paragraph (d)(1) of this section, used to revise 
performance levels at the end of a program year based on actual 
circumstances, consistent with sec. 116(b)(3)(vii) of WIOA.
    (e) States must comply with these requirements from sec. 116 of 
WIOA as explained in joint guidance issued by the Departments of 
Education and Labor.


Sec.  361.175  What responsibility do States have to use quarterly wage 
record information for performance accountability?

    (a) States must, consistent with State laws, use quarterly wage 
record information in measuring the progress on State adjusted levels 
of performance for the primary indicators outlined in Sec.  361.155 and 
local performance indicators identified in Sec.  361.205. The use of 
social security numbers from participants and such other information as 
is necessary to measure the progress of those participants through 
quarterly wage record information is authorized.
    (b) ``Quarterly wage record information'' means intrastate and 
interstate wages paid to an individual, the social security number (or 
numbers, if more than one) of the individual and the name, address, 
State, and the Federal employer identification number of the employer 
paying the wages to the individual.
    (c) The Governor may designate a State agency [or appropriate State 
entity] to assist in carrying out the performance reporting 
requirements for WIOA core programs and eligible training providers. 
The Governor or such agency [or appropriate State entity] is 
responsible for:
    (1) Facilitating data matches;
    (2) Data quality reliability, protection against disaggregation 
that would violate privacy.


Sec.  361.180  What State actions are subject to a financial sanction 
under Workforce Innovation and Opportunity Act?

    The following failures by a State are subject to financial sanction 
under WIOA sec. 116(d):
    (a) The failure by a State to submit the State annual performance 
report required under WIOA sec. 116(d)(2); or
    (b) The failure by a State to meet adjusted levels of performance 
for the primary indicators of performance in accordance with sec. 
116(f) of WIOA.


Sec.  361.185  When are sanctions applied for failure to report?

    (a) Sanctions will be applied when a State fails to submit the 
State annual performance reports required under sec. 116(d)(2) of WIOA. 
It is a failure to report if the State either:
    (1) Does not submit a State annual performance report by the date 
for timely submission set in performance reporting guidance; or
    (2) Submits a State annual performance report by the date for 
timely submission, but the report is incomplete.
    (b) Sanctions will not be assessed if the reporting failure is due 
to exceptional circumstances outside of the State's control. 
Exceptional circumstances may include, but are not limited to:
    (1) Natural disasters;
    (2) Unexpected personnel transitions; and
    (3) Unexpected technology related impacts.
    (c) In the event that a State may not be able to submit a complete 
and accurate performance report by the deadline for timely reporting:
    (1) The State must notify the Secretary of Labor or Secretary of 
Education as soon as possible of a potential impact on the ability to 
submit their State annual performance reports by no later than 30 days 
prior to the established deadline in order to not be considered failing 
to report.
    (2) In circumstances where unexpected events occur within the 30-
day period before the deadline for submission of the State annual 
performance reports, the Secretary of Labor and Secretary of Education 
will review requests for extending the reporting deadline in accordance 
with the Departments' procedures explained in guidance on reporting 
timelines.


Sec.  361.190  When are sanctions applied for failure to achieve 
adjusted levels of performance?

    (a) States' negotiated levels of performance will be adjusted 
through the application of the statistical adjustment model established 
under Sec.  361.170 to account for actual conditions experienced during 
a program year and characteristics of participants, annually at the 
close of each program year.
    (b) States that fail to meet adjusted levels of performance for the 
primary indicators of performance outlined in Sec.  361.155 for any 
year will receive technical assistance, including assistance in the 
development of a performance improvement plan provided by the Secretary 
of Labor or Secretary of Education.
    (c) State failure to meet adjusted levels of performance will be 
determined through three criteria:
    (1) Overall State program scores, based on the percent achieved by 
a program on each of the six primary indicators compared to the 
adjusted goal for each primary indicator. The average of the percentage 
of the adjusted goal achieved for each primary indicator will 
constitute the overall program score for the State;
    (2) Overall State indicator scores, based on the percent achieved 
by each program on each of the individual primary indicators compared 
to the adjusted goal. The average of the

[[Page 20655]]

percentage of the adjusted goal achieved for each of the six core 
programs' will constitute an overall indicator score for the State; and
    (3) Individual indicator scores, based on the percent achieved by 
each program on each of the individual primary indicators compared to 
the adjusted goals.
    (d) A performance failure occurs when:
    (1) Any overall State program score or overall State indicator 
score falls below 90 percent for the program year; or
    (2) Any of the States' individual indicator scores fall below 50 
percent for the program year.
    (e) Sanctions based on performance failure will be applied to 
States if, for 2 consecutive years, the State fails to meet 90 percent 
of the overall State program score, 90 percent of the overall State 
indicator score, or 50 percent on any individual indicator score for 
the same program or indicator.


Sec.  361.195  What should States expect when a sanction is applied to 
the Governor's Reserve Allotment?

    (a) The Secretary of Labor and the Secretary of Education will 
reduce the Governor's Reserve Allotment by 5 percent of the maximum 
available amount for the immediately succeeding program year if:
    (1) The State fails to submit the State annual performance reports 
as required under WIOA sec. 116(d)(2), as defined in Sec.  361.185; or
    (2) The State fails to meet State adjusted levels of performance 
for the same primary performance indicator(s) under either Sec.  
361.190(d)(1) or (2) for the second consecutive year as defined in 
Sec.  361.190.
    (b) If the State fails under paragraphs (a)(1) and (2) of this 
section in the same program year, the Secretary of Labor and the 
Secretary of Education will reduce the Governor's Reserve Allotment by 
10 percent of the maximum available amount for the immediately 
succeeding program year.
    (c) If a State's Governor's Reserve Allotment is reduced:
    (1) The reduced amount will not be returned to the State in the 
event that the State later improves performance or submits its annual 
performance report; and
    (2) The Governor's reserve will continue to be set at the reduced 
level in each subsequent year until the Secretary of Labor or the 
Secretary of Education, dependent upon the impacted program, determines 
that the State met the State adjusted levels of performance for the 
applicable primary performance indicators and has submitted all of the 
required performance reports.
    (d) A State may request review of a sanction the U.S. Department of 
Labor imposes in accordance with the provisions of Sec.  683.800 of 
this chapter.


Sec.  361.200  What other administrative actions will be applied to 
States' performance requirements?

    (a) In addition to sanctions for failure to report or failure to 
meet adjusted levels of performance, States will be subject to 
administrative actions in the case of poor performance.
    (b) States' performance achievement on the individual primary 
indicators will be assessed in addition to the overall program score 
and overall indicator score. Based on this assessment, as clarified and 
explained in guidance, for performance on any individual primary 
indicator, the Secretary of Labor or the Secretary of Education will 
require the State to establish a performance risk plan to address 
continuous improvement on the individual primary indicator.


Sec.  361.205  What performance indicators apply to local areas?

    (a) Each local workforce investment area in a State under title I 
of WIOA is subject to the same primary indicators of performance for 
the core programs for WIOA title I under Sec.  361.155(a)(1) and (d) 
that apply to the State.
    (b) In addition to the indicators described in paragraph (a) of 
this section, under Sec.  361.165, the Governor may apply additional 
indicators of performance to local areas in the State.
    (c) States must annually make local area performance reports 
available to the public using a template that the Departments will 
disseminate in guidance, including by electronic means. The State must 
provide electronic access to the public local area performance report 
in its annual State performance report.
    (d) The local area performance report must provide information on 
the actual performance levels for the local area based on quarterly 
wage records consistent with the requirements for States under Sec.  
361.175.
    (e) The local area performance report must include:
    (1) Performance levels achieved by the local area for the 
indicators for the adult, dislocated worker, and youth programs under 
title I of WIOA in Sec.  361.155(a)(1) and (3);
    (2) Performance levels achieved by the local area for the adult, 
dislocated worker, and youth programs under title I of WIOA in Sec.  
361.160(a);
    (3) The percentage of a local area's allotment under WIOA sec. 
128(b) and sec. 133(b) that the local area spent on administrative 
costs; and
    (4) Other information that facilitates comparisons of programs with 
programs in other local areas (or planning regions if the local area is 
part of a planning region).
    (f) States must comply with any requirements from sec. 116(d)(3) of 
WIOA as explained in guidance, including the use of the performance 
reporting template, issued by the Department of Labor.


Sec.  361.210  How are local performance levels established?

    (a) The objective statistical adjustment model required under sec. 
116(b)(3)(A)(viii) of WIOA and described in the Sec.  361.170 must be:
    (1) Used to establish local performance targets for the upcoming 
program year, and
    (2) Used to revise performance levels at the end of a program year 
based on actual circumstances, consistent with WIOA sec. 116(c)(3).
    (b) The Governor, Local Board, and chief elected official must 
reach agreement on local targets and levels based on a negotiations 
process before the start of a program year with the use of the 
objective statistical model described in paragraph (a) of this section. 
The negotiations will include a discussion of circumstances not 
accounted for in the model and will take into account the extent to 
which the levels promote continuous improvement. The objective 
statistical model will be applied at the end of the program year based 
on actual conditions experienced.
    (c) The negotiations process described in paragraph (b) of this 
section must be developed by the Governor and disseminated to all Local 
Boards and chief elected officials.
    (d) The Local Boards may apply performance measures to service 
providers that differ from the performance measures that apply to the 
local area. These performance measures should be established after 
considering:
    (1) The established local performance levels,
    (2) The services provided by each provider; and
    (3) The populations the service providers are intended to serve.


Sec.  361.215  Under what circumstances are local areas eligible for 
State Incentive Grants?

    (a) The Governor is not required to award local incentive funds. 
The Governor may use non-Federal funds to create incentives for Local 
Boards to implement pay-for-performance contract

[[Page 20656]]

strategies for the delivery of training services described in WIOA sec. 
134(c)(3) or activities described in WIOA sec. 129(c)(2) in the local 
areas served by the Local Boards.
    (b) Pay-for-performance contract strategies must be implemented in 
accordance with Sec. Sec.  683.500 through 683.530 of this chapter and 
Sec.  361.160.


Sec.  361.220  Under what circumstances may a corrective action or 
sanction be applied to local areas for poor performance?

    (a) If a local area fails to meet the levels of performance agreed 
to under Sec.  361.210 for the primary indicators of performance in the 
adult, dislocated worker, and youth programs authorized under WIOA 
title I in any program year, technical assistance must be provided by 
the Governor or, upon the Governor's request, by the Secretary of 
Labor.
    (1) A State must establish the threshold for failure in meeting 
levels of performance for a local area before negotiating the adjusted 
levels of performance for the local area.
    (2) The technical assistance may include:
    (i) Assistance in the development of a performance improvement 
plan,
    (ii) The development of a modified local or regional plan; or
    (iii) Other actions designed to assist the local area in improving 
performance.
    (b) If a local area fails to meet the levels of performance agreed 
to under Sec.  361.210 for the primary indicators of performance for 
the adult, dislocated worker, and youth programs authorized under WIOA 
title I for a third consecutive program year, the Governor must take 
corrective actions. The corrective actions must include the development 
of a reorganization plan under which the Governor:
    (1) Requires the appointment and certification of a new Local 
Board, consistent with the criteria established under Sec.  679.350 of 
this chapter;
    (2) Prohibits the use of eligible providers and one-stop partners 
that have been identified as achieving poor levels of performance; or
    (3) Takes such other significant actions as the Governor determines 
are appropriate.


Sec.  361.225  Under what circumstances may local areas appeal a 
reorganization plan?

    (a) The Local Board and chief elected official for a local area 
that is subject to a reorganization plan under WIOA sec. 116(g)(2)(A) 
may appeal to the Governor to rescind or revise the reorganization plan 
not later than 30 days after receiving notice of the reorganization 
plan. The Governor must make a final decision within 30 days after 
receipt of the appeal.
    (b) The Local Board and chief elected official may appeal the final 
decision of the Governor to the Secretary of Labor not later than 30 
days after receiving the decision from the Governor. Any appeal of the 
Governor's final decision must be:
    (1) Appealed jointly by the Local Board and chief elected official 
to the Secretary under Sec.  683.650 of this chapter; and
    (2) Must be submitted by certified mail, return receipt requested, 
to the Secretary, U.S. Department of Labor, 200 Constitution Ave. NW., 
Washington DC 20210, Attention: ASET. A copy of the appeal must be 
simultaneously provided to the Governor.
    (c) Upon receipt of the joint appeal from the Local Board and chief 
elected official, the Secretary must make a final decision within 30 
days. In making this determination the Secretary may consider any 
comments submitted by the Governor in response to the appeals.
    (d) The decision by the Governor to impose a reorganization plan 
becomes effective at the time it is issued and remains effective unless 
the Secretary of Labor rescinds or revises the reorganization plan 
under WIOA sec. 116(g)(2)(B)(ii).


Sec.  361.230  What information is required for the eligible training 
provider performance reports?

    (a) States are required to make available, and publish, annually 
using a template the Departments will disseminate including through 
electronic means, the eligible training provider performance reports 
for eligible training providers who provide services under sec. 122 of 
WIOA that are described in Sec. Sec.  680.400 through 680.530 of this 
chapter. These reports at a minimum must include, consistent with Sec.  
361.175 and with respect to each program of study that is eligible to 
receive funds under WIOA:
    (1) The total number of participants who received training services 
under the adult and dislocated worker programs authorized under WIOA 
title I for the most recent year and the 3 preceding program years, 
including:
    (i) The number of participants under the adult and dislocated 
worker programs disaggregated by barriers to employment;
    (ii) The number of participants under the adult and dislocated 
worker programs disaggregated by race, ethnicity, sex, and age;
    (iii) The number of participants under the adult and dislocated 
worker programs disaggregated by the type of training entity for the 
most recent program year and the 3 preceding program years;
    (2) The total number of participants who exit a program of study or 
its equivalent, including disaggregate counts by the type of training 
entity during the most recent program year and the 3 preceding program 
years;
    (3) The average cost-per-participant for participants who received 
training services for the most recent program year and the 3 preceding 
program years disaggregated by type of training entity;
    (4) The total number of individuals exiting from the program of 
study (or the equivalent); and
    (5) The levels of performance achieved for the primary indicators 
of performance identified in Sec. Sec.  361.155(a)(1)(i) through (iv) 
with respect to all individuals in a program of study (or the 
equivalent).
    (b) Registered apprenticeship programs are not required to submit 
performance information. See Sec.  680.470 of this chapter. If a 
registered apprenticeship program voluntarily submits performance 
information to a State, the State must include this information in the 
report.
    (c) The State must provide electronic access to the public eligible 
training provider performance report in its annual State performance 
report.
    (d) States must comply with any requirements from sec. 116(d)(4) of 
WIOA as explained in guidance issued by the Department of Labor.
    (e) The Governor may designate one or more State agencies such as a 
State education agency or State educational authority to assist in 
overseeing eligible training provider performance and facilitating the 
production and dissemination of eligible training provider performance 
reports. These agencies may be the same agencies that are designated as 
responsible for administering the eligible training providers list as 
provided under Sec.  680.500 of this chapter. The Governor or such 
agencies, or authorities, is responsible for:
    (1) Facilitating data matches between ETP records and UI wage data 
in order to produce the report;
    (2) The creation and dissemination of the reports as described in 
paragraphs (a) through (d) of this section;
    (3) Coordinating the dissemination of the performance reports with 
the eligible training provider list and the information required to 
accompany the list, as provided in Sec.  680.500 of this chapter.

[[Page 20657]]

Sec.  361.235  What are the reporting requirements for individual 
records for core Workforce Innovation and Opportunity Act title I, III, 
and IV programs?

    (a) On a quarterly basis, each State must submit to the Secretary 
of Labor or Secretary of Education, as appropriate, individual records 
that include demographic information, information on services received, 
and information on resulting outcomes, as appropriate, for each 
reportable individual in a core program administered by the Secretary 
of Labor or Education. Such records submitted to the Department of 
Labor must be submitted in one record that is integrated across all 
core Department of Labor programs.
    (b) For individual records submitted to the Secretary of Labor, 
records must be integrated across all core programs administered by the 
Secretary of Labor in one single file.
    (c) States must comply with any other requirements from sec. 
116(d)(2) of WIOA as explained in guidance issued by the Department of 
Labor.


Sec.  361.240  What are the requirements for data validation of State 
annual performance reports?

    (a) States must establish procedures, consistent with guidelines 
issued by the Secretary of Education or Secretary of Labor, to submit 
complete annual performance reports that contain information that is 
valid and reliable.
    (b) If a State fails to meet standards in paragraph (a) of this 
section as determined by the Secretary of Labor or Secretary of 
Education, the appropriate Secretary will provide technical assistance 
and may require the State to develop and implement corrective actions, 
which may require the State to provide training for its subrecipients.
    (c) The Secretary of Labor and the Secretary of Education will 
provide training and technical assistance to States in order to 
implement this section.
0
7. Add subpart F to part 361 to read as follows:
Subpart F--Description of the One-Stop System Under Title I of the 
Workforce Innovation and Opportunity Act
Sec.
361.300 What is the one-stop delivery system?
361.305 What is a comprehensive one-stop center and what must be 
provided there?
361.310 What is an affiliated site and what must be provided there?
361.315 Can a stand-alone Wagner-Peyser employment service office be 
designated as an affiliated one-stop site?
361.320 Are there any requirements for networks of eligible one-stop 
partners or specialized centers?
361.400 Who are the required one-stop partners?
361.405 Is Temporary Assistance for Needy Families a required one-
stop partner?
361.410 What other entities may serve as one-stop partners?
361.415 What entity serves as the one-stop partner for a particular 
program in the local area?
361.420 What are the roles and responsibilities of the required one-
stop partners?
361.425 What are the applicable career services that must be 
provided through the one-stop delivery system by required one-stop 
partners?
361.430 What are career services?
361.435 What are the business services provided through the one-stop 
delivery system, and how are they provided?
361.440 When may a fee be charged for the business services in this 
subpart?
361.500 What is the Memorandum of Understanding for the one-stop 
delivery system and what must be included in the Memorandum of 
Understanding?
361.505 Is there a single Memorandum of Understanding for the local 
area, or must there be separate Memoranda of Understanding between 
the Local Board and each partner?
361.510 How should the Memorandum of Understanding be negotiated?
361.600 Who may operate one-stop centers?
361.605 How is the one-stop operator selected?
361.610 How is sole source selection of one-stop operators 
accomplished?
361.615 Can an entity serving as one-stop operator compete to be a 
one-stop operator under the procurement requirements of this 
subpart?
361.620 What is the one-stop operator's role?
361.625 Can a one-stop operator also be a service provider?
361.630 Can State merit staff still work in a one-stop where the 
operator is not a governmental entity?
361.635 What is the effective date of the provisions of this 
subpart?
361.700 What are one-stop infrastructure costs?
361.705 What guidance must the Governor issue regarding one-stop 
infrastructure funding?
361.710 How are infrastructure costs funded?
361.715 How are one-stop infrastructure costs funded in the local 
funding mechanism?
361.720 What funds are used to pay for infrastructure costs in the 
local one-stop infrastructure funding mechanism?
361.725 What happens if consensus on infrastructure funding is not 
reached at the local level between the Local Board, chief elected 
officials, and one-stop partners?
361.730 What is the State one-stop infrastructure funding mechanism?
361.735 How are partner contributions determined in the State one-
stop funding mechanism?
361.740 What funds are used to pay for infrastructure costs in the 
State one-stop infrastructure funding mechanism?
361.745 How is the allocation formula used by the Governor 
determined in the State one-stop funding mechanism?
361.750 When and how can a one-stop partner appeal a one-stop 
infrastructure amount designated by the State under the State 
infrastructure funding mechanism?
361.755 What are the required elements regarding infrastructure 
funding that must be included in the one-stop Memorandum of 
Understanding?
361.760 How do one-stop partners jointly fund other shared costs 
under the Memorandum of Understanding?
361.800 How are one-stop centers and one-stop delivery systems 
certified for effectiveness, physical and programmatic 
accessibility, and continuous improvement?
361.900 What is the common identifier to be used by each one-stop 
delivery system?

Subpart F--Description of the One-Stop System Under Title I of the 
Workforce Innovation and Opportunity Act


Sec.  361.300  What is the one-stop delivery system?

    (a) The one-stop delivery system brings together workforce 
development, educational, and other human resource services in a 
seamless customer-focused service delivery network that enhances access 
to the programs' services and improves long-term employment outcomes 
for individuals receiving assistance. One-stop partners administer 
separately funded programs as a set of integrated streamlined services 
to customers.
    (b) Title I of the Workforce Innovation and Opportunity Act (WIOA) 
assigns responsibilities at the local, State, and Federal level to 
ensure the creation and maintenance of a one-stop delivery system that 
enhances the range and quality of education and workforce development 
services that business and individual customers can access.
    (c) The system must include at least one comprehensive physical 
center in each local area as described in Sec.  361.305.
    (d) The system may also have additional arrangements to supplement 
the comprehensive center. These arrangements include:
    (1) An affiliated site or a network of affiliated sites, where one 
or more partners make programs, services, and activities available, as 
described in Sec.  361.310;
    (2) A network of eligible one-stop partners, as described in 
Sec. Sec.  361.400 through 361.410, through which each partner provides 
one or more of the programs, services, and activities that are linked, 
physically or

[[Page 20658]]

technologically, to an affiliated site or access point that assures 
customers are provided information on the availability of career 
services, as well as other program services and activities, regardless 
of where they initially enter the workforce system in the local area; 
and
    (3) Specialized centers that address specific needs, including 
those of dislocated workers, youth, or key industry sectors, or 
clusters.
    (e) Required one-stop partner programs must provide access to 
programs, services, and activities through electronic means if 
applicable and practicable. This is in addition to providing access to 
services through the mandatory comprehensive physical one-stop center 
and any affiliated sites or specialized centers. The provision of 
programs and services by electronic methods such as Web sites, 
telephones, or other means must improve the efficiency, coordination, 
and quality of one-stop partner services. Electronic delivery must not 
replace access to such services at a comprehensive one-stop center or 
be a substitute to making services available at an affiliated site if 
the partner is participating in an affiliated site. Electronic delivery 
systems must be in compliance with the nondiscrimination and equal 
opportunity provisions of WIOA in sec. 188 and its implementing 
regulations at 29 CFR part 37.
    (f) The design of the local area's one-stop delivery system must be 
described in the Memorandum of Understanding (MOU) executed with the 
one-stop partners, described in Sec.  361.500.


Sec.  361.305  What is a comprehensive one-stop center and what must be 
provided there?

    (a) A comprehensive one-stop center is a physical location where 
jobseeker and employer customers can access the programs, services, and 
activities of all required one-stop partners. A comprehensive one-stop 
center must have at least one title I staff person physically present.
    (b) The comprehensive one-stop center must provide:
    (1) Career services, described in Sec.  361.430;
    (2) Access to training services described in of this chapter;
    (3) Access to any employment and training activities carried out 
under sec. 134(d) of WIOA;
    (4) Access to programs and activities carried out by one-stop 
partners listed in Sec. Sec.  361.400 through 361.410, including 
Wagner-Peyser employment services; and
    (5) Workforce and labor market information.
    (c) Customers must have access to these programs, services, and 
activities during regular business days at a comprehensive one-stop 
center. The Local Board may establish other service hours at other 
times to accommodate the schedules of individuals who work on regular 
business days. The State Board will evaluate the hours of access to 
service as part of the evaluation of effectiveness in the one-stop 
certification process described in Sec.  361.800(b).
    (d) ``Access'' to programs and services means having either: 
Program staff physically present at the location; having partner 
program staff physically present at the one-stop appropriately trained 
to provide information to customers about the programs, services, and 
activities available through partner programs; or providing direct 
linkage through technology to program staff who can provide meaningful 
information or services.
    (1) A ``direct linkage'' means providing direct connection at the 
one-stop, within a reasonable time, by phone or through a real-time 
Web-based communication to a program staff member who can provide 
program information or services to the customer.
    (2) A ``direct linkage'' does not include providing a phone number 
or computer Web site that can be used at an individual's home; 
providing information, pamphlets, or materials; or making arrangements 
for the customer to receive services at a later time or on a different 
day.
    (e) All comprehensive one-stop centers must be physically and 
programmatically accessible to individuals with disabilities, as 
described in Sec.  361.800.


Sec.  361.310  What is an affiliated site and what must be provided 
there?

    (a) An affiliated site, or affiliate one-stop center, is a site 
that makes available to jobseeker and employer customers one or more of 
the one-stop partners' programs, services, and activities. An 
affiliated site does not need to provide access to every required one-
stop partner program. The frequency of program staff's physical 
presence in the affiliated site will be determined at the local level. 
Affiliated sites are access points in addition to the Comprehensive 
one-stop center(s) in each local area. If used by local areas as a part 
of the service delivery strategy, affiliate sites should be implemented 
in a manner that supplements and enhances customer access to services.
    (b) As described in Sec.  361.315, Wagner-Peyser employment 
services cannot be a stand-alone affiliated site.
    (c) States, in conjunction with the Local Workforce Development 
Boards, must examine lease agreements and property holdings throughout 
the one-stop delivery system in order to use property in an efficient 
and effective way. Where necessary and appropriate, States and Local 
Boards must take expeditious steps to align lease expiration dates with 
efforts to consolidate one-stop operations into service points where 
Wagner-Peyser employment services are collocated as soon as reasonably 
possible. These steps must be included in the State Plan.
    (d) All affiliated sites must be physically and programmatically 
accessible to individuals with disabilities, as described in Sec.  
361.800.


Sec.  361.315  Can a stand-alone Wagner-Peyser employment service 
office be designated as an affiliated one-stop site?

    (a) Separate stand-alone Wagner-Peyser employment services offices 
are not permitted under WIOA, as also described in.
    (b) If Wagner-Peyser employment services are provided at an 
affiliated site, there must be at least one other partner in the 
affiliated site with staff physically present more than 50 percent of 
the time the center is open. Additionally, the other partner must not 
be the partner administering local veterans' employment 
representatives, disabled veterans' outreach program specialists, or 
unemployment compensation programs. If Wagner-Peyser employment 
services and any of these three programs are provided at an affiliated 
site, an additional partner must have staff present in the center more 
than 50 percent of the time the center is open.


Sec.  361.320  Are there any requirements for networks of eligible one-
stop partners or specialized centers?

    Any network of one-stop partners or specialized centers must be 
connected to, such as having processes in place to make referrals to, 
the comprehensive and any appropriate affiliate one-stop centers. 
Wagner-Peyser employment services cannot stand alone in a specialized 
center. Just as described in Sec.  361.315 for an affiliated site, a 
specialized center must include other programs besides Wagner-Peyser 
employment services, local veterans' employment representatives, 
disabled veterans' outreach program specialists, and unemployment 
compensation.

[[Page 20659]]

Sec.  361.400  Who are the required one-stop partners?

    (a) Section 121(b)(1)(B) of WIOA identifies the entities that are 
required partners in the local one-stop systems.
    (b) The required partners are the entities responsible for 
administering the following programs and activities in the local area:
    (1) Programs authorized under title I of WIOA, including:
    (i) Adults;
    (ii) Dislocated workers;
    (iii) Youth;
    (iv) Job Corps;
    (v) YouthBuild;
    (vi) Native American programs; and
    (vii) Migrant and seasonal farmworker programs;
    (2) Employment services authorized under the Wagner-Peyser Act (29 
U.S.C. 49 et seq.);
    (3) Adult education and literacy activities authorized under title 
II of WIOA;
    (4) The Vocational Rehabilitation program authorized under title I 
of the Rehabilitation Act of 1973 (29 U.S.C. 720 et seq.);
    (5) The Senior Community Service Employment Program authorized 
under title V of the Older Americans Act of 1965 (42 U.S.C. 3056 et 
seq.);
    (6) Career and technical education programs at the post-secondary 
level authorized under the Carl D. Perkins Career and Technical 
Education Act of 2006 (20 U.S.C. 2301 et seq.);
    (7) Trade Adjustment Assistance activities authorized under chapter 
2 of title II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.);
    (8) Jobs for Veterans State Grants programs authorized under 
chapter 41 of title 38, U.S.C.;
    (9) Employment and training activities carried out under the 
Community Services Block Grant (42 U.S.C. 9901 et seq.);
    (10) Employment and training activities carried out by the 
Department of Housing and Urban Development;
    (11) Programs authorized under State unemployment compensation laws 
(in accordance with applicable Federal law);
    (12) Programs authorized under sec. 212 of the Second Chance Act of 
2007 (42 U.S.C. 17532); and
    (13) Temporary Assistance for Needy Families (TANF) authorized 
under part A of title IV of the Social Security Act (42 U.S.C. 601 et 
seq.), unless exempted by the Governor under Sec.  361.405(b).


Sec.  361.405  Is Temporary Assistance for Needy Families a required 
one-stop partner?

    (a) Yes, TANF, authorized under part A of title IV of the Social 
Security Act (42 U.S.C. 601 et seq.), is a required partner. (WIOA sec. 
121(b)(1)(B)(xiii)).
    (b) The Governor may determine that TANF will not be a required 
partner in the State, or within some specific local areas in the State. 
In this instance, the Governor must notify the Secretaries of the U.S. 
Departments of Labor and Health and Human Services in writing of this 
determination.
    (c) In States, or local areas within a State, where the Governor 
has determined that TANF is not required to be a partner, local TANF 
programs may still opt to be a one-stop partner, or to work in 
collaboration with the one-stop center.


Sec.  361.410  What other entities may serve as one-stop partners?

    (a) Other entities that carry out a workforce development program, 
including Federal, State, or local programs and programs in the private 
sector, may serve as additional partners in the one-stop system if the 
Local Board and chief elected official(s) approve the entity's 
participation.
    (b) Additional partners may include:
    (1) Employment and training programs administered by the Social 
Security Administration, including the Ticket to Work and Self-
Sufficiency Program established under sec. 1148 of the Social Security 
Act (42 U.S.C. 1320b-19);
    (2) Employment and training programs carried out by the Small 
Business Administration;
    (3) Supplemental Nutrition Assistance Program (SNAP) employment and 
training programs, authorized under secs. 6(d)(4) and 6(o) of the Food 
and Nutrition Act of 2008 (7 U.S.C. 2015(d)(4));
    (4) Client Assistance Program authorized under sec. 112 of the 
Rehabilitation Act of 1973 (29 U.S.C. 732);
    (5) Programs authorized under the National and Community Service 
Act of 1990 (42 U.S.C. 12501 et seq.); and
    (6) Other appropriate Federal, State or local programs, including 
employment, education, and training programs provided by public 
libraries or in the private sector.


Sec.  361.415  What entity serves as the one-stop partner for a 
particular program in the local area?

    (a) The entity that carries out the program and activities listed 
in Sec.  361.400 or Sec.  361.405, and therefore serves as the one-stop 
partner, is the grant recipient, administrative entity, or organization 
responsible for administering the funds of the specified program in the 
local area. The term ``entity'' does not include the service providers 
that contract with, or are subrecipients of, the local administrative 
entity. For programs that do not include local administrative entities, 
the responsible State agency should be the partner. Specific entities 
for particular programs are identified in paragraph (b) of this 
section. If a program or activity listed in Sec.  361.400 is not 
carried out in a local area, the requirements relating to a required 
one-stop partner are not applicable to such program or activity in that 
local one-stop system.
    (b) For title II of WIOA, the entity that carries out the program 
for the purposes of paragraph (a) of this section is the sole entity or 
agency in the State or outlying area responsible for administering or 
supervising policy for adult education and literacy activities in the 
State or outlying area. The State eligible entity may delegate its 
responsibilities under paragraph (a) of this section to one or more 
eligible providers or consortium of eligible providers.
    (c) For the Vocational Rehabilitation program, authorized under 
title I of the Rehabilitation Act, the entity that carries out the 
program for the purposes of paragraph (a) of this section is the 
designated State agencies or designated State units specified under 
sec. 101(a)(2) of the Rehabilitation Act that is primarily concerned 
with vocational rehabilitation, or vocational and other rehabilitation, 
of individuals with disabilities.
    (d) Under WIOA, the national programs, including Job Corps, the 
Native American program, YouthBuild, and Migrant and Seasonal 
Farmworker programs are required one-stop partners. The entity for the 
Native American program and Migrant and Seasonal Farmworker programs is 
the grantee of those respective programs. The entity for Job Corps is 
the Job Corps center.
    (e) For the Carl D. Perkins Career and Technical Education Act of 
2006, the entity that carries out the program for the purposes of 
paragraph (a) of this section is the State eligible agency. The State 
eligible agency may delegate its responsibilities under paragraph (a) 
of this section to one or more State agencies, eligible recipients at 
the post-secondary level, or consortia of eligible recipients at the 
post-secondary level.


Sec.  361.420  What are the roles and responsibilities of the required 
one-stop partners?

    Each required partner must:
    (a) Provide access to its programs or activities through the one-
stop delivery system, in addition to any other

[[Page 20660]]

appropriate locations; (WIOA sec. 121(b)(1)(A)(i).)
    (b) Use a portion of funds made available to the partner's program, 
to the extent consistent with the Federal law authorizing the partner's 
program and with Federal cost principles in 2 CFR parts 200 and 3474 
(requiring, among other things, that costs are allowable, reasonable, 
necessary, and allocable), to:
    (1) Provide applicable career services; and
    (2) Work collaboratively with the State and Local Boards to 
establish and maintain the one-stop delivery system. This includes 
jointly funding the one-stop infrastructure through partner 
contributions that are based upon:
    (i) A reasonable cost allocation methodology by which 
infrastructure costs are charged to each partner in proportion to the 
relative benefits;
    (ii) Federal cost principles; and
    (iii) Any local administrative cost requirements in the Federal law 
authorizing the partner's program. (This is further described in Sec.  
361.700). (WIOA sec. 121(b)(1)(A)(ii).)
    (c) Enter into an MOU with the Local Board relating to the 
operation of the one-stop system that meets the requirements of Sec.  
361.500(d);
    (d) Participate in the operation of the one-stop system consistent 
with the terms of the MOU, requirements of authorizing laws, the 
Federal cost principles, and all other applicable legal requirements; 
(WIOA sec. 121(b)(1)(A)(iv)) and
    (e) Provide representation on the State and Local Workforce 
Development Boards as required and participate in Board committees as 
needed. (WIOA secs. 101(b)(iii) and 107(b)(2)(C) and (D))


Sec.  361.425  What are the applicable career services that must be 
provided through the one-stop delivery system by required one-stop 
partners?

    (a) The applicable career services to be delivered by required one-
stop partners are those services listed in Sec.  361.430 that are 
authorized to be provided under each partner's program.
    (b) One-stop centers provide services to individual customers based 
on individual needs, including the seamless delivery of multiple 
services to individual customers. There is no required sequence of 
services. (WIOA sec. 121(e)(1)(A).)


Sec.  361.430  What are career services?

    Career services, as identified in sec. 134(c)(2) of WIOA, consist 
of three types:
    (a) Basic career services must be made available and, at a minimum, 
must include the following services, as consistent with allowable 
program activities and Federal cost principles:
    (1) Determinations of whether the individual is eligible to receive 
assistance from the adult, dislocated worker, or youth programs;
    (2) Outreach, intake (including worker profiling), and orientation 
to information and other services available through the one-stop 
delivery system;
    (3) Initial assessment of skill levels including literacy, 
numeracy, and English language proficiency, as well as aptitudes, 
abilities (including skills gaps), and supportive services needs;
    (4) Labor exchange services, including--
    (i) Job search and placement assistance, and, when needed by an 
individual, career counseling, including--
    (A) Provision of information on in-demand industry sectors and 
occupations (as defined in sec. 3(23) of WIOA); and,
    (B) Provision of information on nontraditional employment; and
    (ii) Appropriate recruitment and other business services on behalf 
of employers, including information and referrals to specialized 
business services other than those traditionally offered through the 
one-stop delivery system;
    (5) Provision of referrals to and coordination of activities with 
other programs and services, including programs and services within the 
one-stop delivery system and, when appropriate, other workforce 
development programs;
    (6) Provision of workforce and labor market employment statistics 
information, including the provision of accurate information relating 
to local, regional, and national labor market areas, including--
    (i) Job vacancy listings in labor market areas;
    (ii) Information on job skills necessary to obtain the vacant jobs 
listed; and
    (iii) Information relating to local occupations in demand and the 
earnings, skill requirements, and opportunities for advancement for 
those jobs;
    (7) Provision of performance information and program cost 
information on eligible providers of training services by program and 
type of providers;
    (8) Provision of information, in usable and understandable formats 
and languages, about how the local area is performing on local 
performance accountability measures, as well as any additional 
performance information relating to the area's one-stop delivery 
system;
    (9) Provision of information, in usable and understandable formats 
and languages, relating to the availability of supportive services or 
assistance, and appropriate referrals to those services and assistance, 
including: Child care; child support; medical or child health 
assistance available through the State's Medicaid program and 
Children's Health Insurance Program; benefits under SNAP; assistance 
through the earned income tax credit; and assistance under a State 
program for Temporary Assistance for Needy Families, and other 
supportive services and transportation provided through that program;
    (10) Provision of information and assistance regarding filing 
claims for unemployment compensation, by which the one-stop must 
provide meaningful assistance to individuals seeking assistance in 
filing a claim for unemployment compensation.
    (i) ``Meaningful assistance'' means:
    (A) Providing assistance on-site using staff who are well-trained 
in unemployment compensation claims filing and the rights and 
responsibilities of claimants, or
    (B) Providing assistance by phone or via other technology, as long 
as the assistance is provided by trained and available staff and within 
a reasonable time.
    (ii) The costs associated in providing this assistance may be paid 
for by the State's unemployment insurance program, or the WIOA adult or 
dislocated worker programs, or some combination thereof.
    (11) Assistance in establishing eligibility for programs of 
financial aid assistance for training and education programs not 
provided under WIOA.
    (b) Individualized career services must be made available if 
determined to be appropriate in order for an individual to obtain or 
retain employment. These services include the following services, as 
consistent with program requirements and Federal cost principles:
    (1) Comprehensive and specialized assessments of the skill levels 
and service needs of adults and dislocated workers, which may include--
    (i) Diagnostic testing and use of other assessment tools; and
    (ii) In-depth interviewing and evaluation to identify employment 
barriers and appropriate employment goals;
    (2) Development of an individual employment plan, to identify the 
employment goals, appropriate achievement objectives, and appropriate 
combination of services for the participant to achieve his or her

[[Page 20661]]

employment goals, including the list of, and information about, the 
eligible training providers (as described in);
    (3) Group counseling;
    (4) Individual counseling;
    (5) Career planning;
    (6) Short-term pre-vocational services including development of 
learning skills, communication skills, interviewing skills, 
punctuality, personal maintenance skills, and professional conduct 
services to prepare individuals for unsubsidized employment or 
training;
    (7) Internships and work experiences that are linked to careers (as 
described in);
    (8) Workforce preparation activities;
    (9) Financial literacy services as described in sec. 129(b)(2)(D) 
of WIOA and Sec.  681.500 of this chapter;
    (10) Out-of-area job search assistance and relocation assistance; 
and
    (11) English language acquisition and integrated education and 
training programs.
    (c) Follow-up services must be provided, as appropriate, including: 
Counseling regarding the workplace, for participants in adult or 
dislocated worker workforce investment activities who are placed in 
unsubsidized employment, for up to 12 months after the first day of 
employment.


Sec.  361.435  What are the business services provided through the one-
stop delivery system, and how are they provided?

    (a) Certain career services must be made available to local 
businesses, specifically labor exchange activities and labor market 
information described in Sec.  361.430(a)(4)(ii) and (a)(6). Local 
areas must establish and develop relationships and networks with large 
and small employers and their intermediaries. (WIOA sec. 
134(c)(1)(A)(iv)). Local areas also must develop, convene, or implement 
industry or sector partnerships. (WIOA sec. 134(c)(1)(A)(v)).
    (b) Customized business services may be provided to employers, 
employer associations, or other such organizations (WIOA sec. 
134(d)(1)(A)(ii)). These services are tailored for specific employers 
and may include:
    (1) Customized screening and referral of qualified participants in 
training services to employers;
    (2) Customized services to employers, employer associations, or 
other such organizations, on employment-related issues;
    (3) Customized recruitment events and related services for 
employers including targeted job fairs;
    (4) Human resource consultation services, including but not limited 
to assistance with:
    (i) Writing/reviewing job descriptions and employee handbooks;
    (ii) Developing performance evaluation and personnel policies;
    (iii) Creating orientation sessions for new workers;
    (iv) Honing job interview techniques for efficiency and compliance;
    (v) Analyzing employee turnover; or
    (vi) Explaining labor laws to help employers comply with wage/hour 
and safety/health regulations;
    (5) Customized labor market information for specific employers, 
sectors, industries or clusters; and
    (6) Other similar customized services.
    (c) Local areas may also provide other business services and 
strategies that meet the workforce investment needs of area employers, 
in accordance with partner programs' statutory requirements and 
consistent with Federal cost principles. These business services may be 
provided through effective business intermediaries working in 
conjunction with the Local Board, or through the use of economic 
development, philanthropic, and other public and private resources in a 
manner determined appropriate by the Local Board and in cooperation 
with the State. Allowable activities, consistent with each partner's 
authorized activities, include, but are not limited to:
    (1) Developing and implementing industry sector strategies 
(including strategies involving industry partnerships, regional skills 
alliances, industry skill panels, and sectoral skills partnerships);
    (2) Customized assistance or referral for assistance in the 
development of a registered apprenticeship program;
    (3) Developing and delivering innovative workforce investment 
services and strategies for area employers, which may include career 
pathways, skills upgrading, skill standard development and 
certification for recognized post-secondary credential or other 
employer use, and other effective initiatives for meeting the workforce 
investment needs of area employers and workers;
    (4) Assistance to area employers in managing reductions in force in 
coordination with rapid response activities and with strategies for the 
aversion of layoffs, which may include strategies such as early 
identification of firms at risk of layoffs, use of feasibility studies 
to assess the needs of and options for at-risk firms, and the delivery 
of employment and training activities to address risk factors;
    (5) The marketing of business services to appropriate area 
employers, including small and mid-sized employers; and
    (6) Assisting employers with accessing local, State, and Federal 
tax credits.
    (d) All business services and strategies must be reflected in the 
local plan, described in Sec.  679.560(b)(3) of this chapter.


Sec.  361.440  When may a fee be charged for the business services in 
this subpart?

    (a) There is no requirement that a fee-for-service be charged to 
employers.
    (b) No fee may be charged for services provided in Sec.  
361.435(a).
    (c) A fee may be charged for services provided under Sec.  
361.435(b) and (c). Services provided under Sec.  361.435(c) may be 
provided through effective business intermediaries working in 
conjunction with the Local Board and may also be provided on a fee-for-
service basis or through the leveraging of economic development, 
philanthropic, and other public and private resources in a manner 
determined appropriate by the Local Board. The Local Workforce 
Development Board may examine the services provided compared with the 
assets and resources available within the local one-stop delivery 
system and through its partners to determine an appropriate cost 
structure for services, if any.


Sec.  361.500  What is the Memorandum of Understanding for the one-stop 
delivery system and what must be included in the Memorandum of 
Understanding?

    (a) The MOU is the product of local discussion and negotiation, and 
is an agreement developed and executed between the Local Board, with 
the agreement of the chief elected official and the one-stop partners, 
relating to the operation of the one-stop delivery system in the local 
area. Two or more local areas in a region may develop a single joint 
MOU, if they are in a region that has submitted a regional plan under 
sec. 106 of WIOA.
    (b) The MOU must include:
    (1) A description of services to be provided through the one-stop 
delivery system, including the manner in which the services will be 
coordinated and delivered through the system;
    (2) A final plan, or an interim plan if needed, on how the costs of 
the services and the operating costs of the system will be funded, 
including:
    (i) Funding of infrastructure costs of one-stop centers in 
accordance with Sec. Sec.  361.700 through 361.755; and
    (ii) Funding of the shared services and operating costs of the one-
stop delivery system described in Sec.  361.760;

[[Page 20662]]

    (3) Methods for referring individuals between the one-stop 
operators and partners for appropriate services and activities;
    (4) Methods to ensure that the needs of workers, youth, and 
individuals with barriers to employment, including individuals with 
disabilities, are addressed in providing access to services, including 
access to technology and materials that are available through the one-
stop delivery system;
    (5) The duration of the MOU and procedures for amending it; and
    (6) Assurances that each MOU will be reviewed, and if substantial 
changes have occurred, renewed, not less than once every 3-year period 
to ensure appropriate funding and delivery of services.
    (c) The MOU may contain any other provisions agreed to by the 
parties that are consistent with WIOA title I, the authorizing statutes 
and regulations of one-stop partner programs, and the WIOA regulations. 
(WIOA sec. 121(c).)
    (d) When fully executed, the MOU must contain the signatures of the 
Local Board, one-stop partners, the chief elected official(s), and the 
time period in which the agreement is effective. The MOU must be 
updated not less than every 3 years to reflect any changes in the 
signatory official of the Board, one-stop partners, and chief elected 
officials, or one-stop infrastructure funding.
    (e) If a one-stop partner appeal to the State regarding 
infrastructure costs, using the process described in Sec.  361.750, 
results in a change to the one-stop partner's infrastructure cost 
contributions, the MOU must be updated to reflect the final one-stop 
partner infrastructure cost contributions.


Sec.  361.505  Is there a single Memorandum of Understanding for the 
local area, or must there be separate Memoranda of Understanding 
between the Local Board and each partner?

    (a) A single ``umbrella'' MOU may be developed that addresses the 
issues relating to the local one-stop delivery system for the Local 
Board, chief elected official and all partners. Alternatively, the 
Local Board (with agreement of chief elected official) may enter into 
separate agreements between each partner or groups of partners.
    (b) Under either approach, the requirements described in Sec.  
361.500 apply. Since funds are generally appropriated annually, the 
Local Board may negotiate financial agreements with each partner 
annually to update funding of services and operating costs of the 
system under the MOU.


Sec.  361.510  How should the Memorandum of Understanding be 
negotiated?

    (a) WIOA emphasizes full and effective partnerships between Local 
Boards, chief elected officials, and one-stop partners. Local Boards 
and partners must enter into good-faith negotiations. Local Boards, 
chief elected officials, and one-stop partners may also request 
assistance from a State agency responsible for administering the 
partner program, the Governor, State Board, or other appropriate 
parties on other aspects of the MOU.
    (b) Local Boards and one-stop partners must establish, in the MOU, 
a final plan for how the Local Board and programs will fund the 
infrastructure costs of the one-stop centers. If a final plan regarding 
infrastructure costs is not complete when other sections of the MOU are 
ready, an interim infrastructure cost plan may be included instead, as 
described in Sec.  361.715(c). Once the final infrastructure cost plan 
is approved, the Local Board and one-stop partners must amend the MOU 
to include the final plan for funding infrastructure costs of the one-
stop centers, including a description of the funding mechanism 
established by the Governor relevant to the local area. Infrastructure 
cost funding is described in detail in subpart E of this part. (WIOA 
sec. 121(h)(2).)
    (c) The Local Board must report to the State Board, Governor, and 
relevant State agency when MOU negotiations with one-stop partners have 
reached an impasse.
    (1) The Local Board and partners must document the negotiations and 
efforts that have taken place in the MOU. The State Board, one-stop 
partner programs, and the Governor may consult with the appropriate 
Federal agencies to address impasse situations related to issues other 
than infrastructure funding after attempting to address the impasse. 
Impasses related to infrastructure cost funding must be resolved using 
the State infrastructure cost funding mechanism described in Sec.  
361.730.
    (2) The Local Board must report failure to execute an MOU with a 
required partner to the Governor, State Board, and the State agency 
responsible for administering the partner's program. Additionally, if 
the State cannot assist the Local Board in resolving the impasse, the 
Governor or the State Board must report the failure to the Secretary of 
Labor and to the head of any other Federal agency with responsibility 
for oversight of a partner's program.


Sec.  361.600  Who may operate one-stop centers?

    (a) One-stop operators may be a single entity (public, private, or 
nonprofit) or a consortium of entities. If the consortium of entities 
is one of one-stop partners, it must include a minimum of three of the 
one-stop partners described in Sec.  361.400.
    (b) The one-stop operator may operate one or more one-stop centers. 
There may be more than one one-stop operator in a local area.
    (c) The types of entities that may be a one-stop operator include:
    (1) An institution of higher education;
    (2) An Employment Service State agency established under the 
Wagner-Peyser Act;
    (3) A community-based organization, nonprofit organization, or 
workforce intermediary;
    (4) A private for-profit entity;
    (5) A government agency;
    (6) A Local Board, with the approval of the chief local elected 
official and the Governor; or
    (7) Another interested organization or entity, which is capable of 
carrying out the duties of the one-stop operator. Examples may include 
a local chamber of commerce or other business organization, or a labor 
organization.
    (d) Elementary schools and secondary schools are not eligible as 
one-stop operators, except that a nontraditional public secondary 
school such as a night school, adult school, or an area career and 
technical education school may be selected.
    (e) The State and Local Boards must ensure that, in carrying out 
WIOA programs and activities, one-stop operators:
    (1) Disclose any potential conflicts of interest arising from the 
relationships of the operators with particular training service 
providers or other service providers (further discussed in);
    (2) Do not establish practices that create disincentives to 
providing services to individuals with barriers to employment who may 
require longer-term career and training services; and
    (3) Comply with Federal regulations and procurement policies 
relating to the calculation and use of profits, including those at, the 
Uniform Guidance at 2 CFR chapter II, and other applicable regulations 
and policies.


Sec.  361.605  How is the one-stop operator selected?

    (a) Consistent with paragraphs (b) and (c) of this section, the 
Local Board must select the one-stop operator through a competitive 
process, as required by sec. 121(d)(2)(A) of WIOA, at least once every 
4 years. A State may require, or

[[Page 20663]]

a Local Board may choose to implement, a competitive selection process 
more than once every 4 years.
    (b) In instances in which a State is conducting the competitive 
process described in paragraph (a) of this section, the State must 
follow the same policies and procedures it uses for procurement with 
non-Federal funds.
    (c) All other non-Federal entities, including subrecipients of a 
State (such as local areas), must use a competitive process based on 
the principles of competitive procurement in the Uniform Administrative 
Guidance set out at 2 CFR 200.318 through 200.326.
    (d) Entities described in paragraph (c) of this section must first 
determine the nature of the process to be used to comply with sec. 
121(d)(2)(A) of WIOA. The acceptable processes are:
    (1) Procurement by sealed bids;
    (2) Procurement by competitive proposals; or
    (3) Procurement by sole source, permitted only if:
    (i) Analysis of market conditions and other factors lead to a 
determination that it is necessary to use sole-source procurement 
because:
    (A) There is only one entity that could serve as an operator; or
    (B) Unusual and compelling urgency will not permit a delay 
resulting from competitive solicitation; or
    (ii) Results of the competition conducted under paragraphs (d)(1) 
or (2) of this section were determined to be inadequate.
    (e) Entities must prepare written documentation explaining the 
determination concerning the nature of the competitive process to be 
followed in selecting a one-stop operator.


Sec.  361.610  How is sole source selection of one-stop operators 
accomplished?

    (a) As set forth in Sec.  361.605(d)(3), under certain conditions, 
sole source procurement is an allowable method of procurement.
    (b) In the event that sole source procurement is determined 
necessary and reasonable, in accordance with Sec.  361.605(d)(3) of 
this section, written documentation must be prepared and maintained 
concerning the entire process of making such a selection.
    (c) Such sole source procurement must include appropriate conflict 
of interest policies and procedures. These policies and procedures must 
conform to the specifications in for demonstrating internal controls 
and preventing conflict of interest.
    (d) A Local Board can be selected as a one-stop operator through 
sole source procurement only with agreement of the chief elected 
official in the local area and the Governor. The Local Board must 
establish sufficient conflict of interest policies and procedures and 
they must be approved by the Governor.


Sec.  361.615  Can an entity serving as one-stop operator compete to be 
a one-stop operator under the procurement requirements of this subpart?

    (a) Local Boards can compete for and be selected as one-stop 
operators, as long as appropriate firewalls and conflict of interest 
policies and procedures are in place. These policies and procedures 
must conform to the specifications in for demonstrating internal 
controls and preventing conflict of interest.
    (b) State and local agencies can compete for and be selected as 
one-stop operators by the Local Board, as long as appropriate firewalls 
and conflict of interest policies and procedures are in place. These 
policies and procedures must conform to the specifications in for 
demonstrating internal controls and preventing conflict of interest.
    (c) In the case of single State areas where the State Board serves 
as the Local Board, the State agency is eligible to compete for and be 
selected as operator as long as appropriate firewalls and conflict of 
interest policies are in place and followed for the competition. These 
policies and procedures must conform to the specifications in for 
demonstrating internal controls and preventing conflict of interest.


Sec.  361.620  What is the one-stop operator's role?

    (a) At a minimum, the one-stop operator must coordinate the service 
delivery of required one-stop partners and service providers. Local 
Boards may establish additional roles of one-stop operator, including, 
but not limited to: Coordinating service providers within the center 
and across the one-stop system, being the primary provider of services 
within the center, providing some of the services within the center, or 
coordinating service delivery in a multi-center area. The competition 
for a one-stop operator must clearly articulate the role of the one-
stop operator.
    (b) A one-stop operator may not perform the following functions: 
Convene system stakeholders to assist in the development of the local 
plan; prepare and submit local plans (as required under sec. 107 of 
WIOA); be responsible for oversight of itself; manage or significantly 
participate in the competitive selection process for one-stop 
operators; select or terminate one-stop operators, career services, and 
youth providers; negotiate local performance accountability measures; 
and develop and submit budget for activities of the Local Board in the 
local area. An entity serving as a one-stop operator may perform some 
or all of these functions if it also serves in another capacity, if it 
has established sufficient firewalls and conflict of interest policies. 
The policies must conform to the specifications in for demonstrating 
internal controls and preventing conflict of interest.


Sec.  361.625  Can a one-stop operator also be a service provider?

    Yes, but there must be appropriate firewalls in place in regards to 
the competition, and subsequent oversight, monitoring, and evaluation 
of performance of the service provider. The operator cannot develop, 
manage or conduct the competition of a service provider in which it 
intends to compete. In cases where an operator is also a service 
provider, there must be firewalls and internal controls within the 
operator-service provider entity, as well as specific policies and 
procedures at the Local Board level regarding oversight, monitoring, 
and evaluation of performance of the service provider. The firewalls 
must conform to the specifications in for demonstrating internal 
controls and preventing conflict of interest.


Sec.  361.630  Can State merit staff still work in a one-stop where the 
operator is not a governmental entity?

    Yes. State merit staff can continue to perform functions and 
activities in the one-stop career center. The Local Board and one-stop 
operator must establish a system for management of merit staff in 
accordance with State policies and procedures. Continued use of State 
merit staff may be included in the competition for and final contract 
with the one-stop operator.


Sec.  361.635  What is the effective date of the provisions of this 
subpart?

    (a) No later than June 30, 2017, one-stop operators selected under 
the competitive process described in this subpart must be in place and 
operating the one-stop.
    (b) By June 30, 2016, every Local Board must demonstrate it is 
taking steps to prepare for competition of its one-stop operator. This 
demonstration may include, but is not limited to, market research, 
requests for information, and conducting a cost and price analysis.


Sec.  361.700  What are one-stop infrastructure costs?

    (a) Infrastructure costs of one-stop centers are nonpersonnel costs 
that are

[[Page 20664]]

necessary for the general operation of the one-stop center, including:
    (1) Rental of the facilities;
    (2) Utilities and maintenance;
    (3) Equipment (including assessment-related products and assistive 
technology for individuals with disabilities); and
    (4) Technology to facilitate access to the one-stop center, 
including technology used for the center's planning and outreach 
activities.
    (b) Local Boards may consider common identifier costs as costs of 
one-stop infrastructure.
    (c) Each entity that carries out a program or activities in a local 
one-stop center, described in Sec. Sec.  361.400 through 361.410, must 
use a portion of the funds available for the program and activities to 
maintain the one-stop delivery system, including payment of the 
infrastructure costs of one-stop centers. These payments must be in 
accordance with this subpart; Federal cost principles, which require 
that all costs must be allowable, reasonable, necessary, and allocable 
to the program; and all other applicable legal requirements.


Sec.  361.705  What guidance must the Governor issue regarding one-stop 
infrastructure funding?

    (a) The Governor, after consultation with chief elected officials, 
the State Board, and Local Boards, and consistent with guidance and 
policies provided by the State Board, must develop and issue guidance 
for use by local areas, specifically:
    (1) Guidelines for State-administered one-stop partner programs for 
determining such programs' contributions to a one-stop delivery system, 
based on such programs' proportionate use of such system consistent 
with Office of Management and Budget Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards in 2 CFR part 200, including determining funding for the costs 
of infrastructure; and
    (2) Guidance to assist Local Boards, chief elected officials, and 
one-stop partners in local areas in determining equitable and stable 
methods of funding the costs of infrastructure at one-stop centers 
based on proportionate benefits received, and consistent with Federal 
cost principles.
    (b) The guidance must include:
    (1) The appropriate roles of the one-stop partner programs in 
identifying one-stop infrastructure costs;
    (2) Approaches to facilitate equitable and efficient cost 
allocation that results in a reasonable cost allocation methodology 
where infrastructure costs are charged to each partner in proportion to 
relative benefits received, consistent with Federal cost principles; 
and
    (3) The timelines regarding notification to the Governor for not 
reaching local agreement and triggering the State-funded infrastructure 
mechanism described in Sec.  361.730, and timelines for a one-stop 
partner to submit an appeal in the State-funded infrastructure 
mechanism.


Sec.  361.710  How are infrastructure costs funded?

    Infrastructure costs are funded either through the local funding 
mechanism described in Sec.  361.715 or through the State funding 
mechanism described in Sec.  361.730.


Sec.  361.715  How are one-stop infrastructure costs funded in the 
local funding mechanism?

    (a) In the local funding mechanism, the Local Board, chief elected 
officials, and one-stop partners agree to amounts and methods of 
calculating amounts each partner will contribute for one-stop 
infrastructure funding, include the infrastructure funding terms in the 
MOU, and sign the MOU. The local one-stop funding mechanism must meet 
all of the following requirements:
    (1) The infrastructure costs are funded through cash and fairly 
evaluated in-kind partner contributions and include any funding from 
philanthropic organizations or other private entities, or through other 
alternative financing options, to provide a stable and equitable 
funding stream for ongoing one-stop delivery system operations;
    (2) Contributions must be negotiated between one-stop partners, 
chief elected officials, and the Local Board and the amount to be 
contributed must be included in the MOU;
    (3) The one-stop partner program's proportionate share of funding 
must be calculated in accordance with the Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards in 2 CFR part 200 based upon a reasonable cost allocation 
methodology whereby infrastructure costs are charged to each partner in 
proportion to relative benefits received, and must be allowable, 
reasonable, necessary, and allocable;
    (4) Partner shares must be periodically reviewed and reconciled 
against actual costs incurred, and adjusted to ensure that actual costs 
charged to any one-stop partners are proportionate and equitable to the 
benefit received by the one-stop partners and their respective programs 
or activities.
    (b) In developing the section of the MOU on one-stop infrastructure 
funding fully described in Sec.  361.755, the Local Board and chief 
elected officials will:
    (1) Ensure that the one-stop partners adhere to the guidance 
identified in Sec.  361.705 on one-stop delivery system infrastructure 
costs.
    (2) Work with one-stop partners to achieve consensus and informally 
mediate any possible conflicts or disagreements among one-stop 
partners.
    (3) Provide technical assistance to new one-stop partners and local 
grant recipients to ensure that those entities are informed and 
knowledgeable of the elements contained in the MOU and the one-stop 
infrastructure costs arrangement.
    (c) The MOU may include an interim infrastructure funding 
agreement, including as much detail as the Local Board has negotiated 
with one-stop partners, if all other parts of the MOU have been 
negotiated, in order to allow the partner programs to operate in the 
one-stop centers. The interim infrastructure agreement must be 
finalized within 6 months of when the MOU is signed. If the 
infrastructure interim infrastructure agreement is not finalized within 
that timeframe, the Local Board must notify the Governor, as described 
in Sec.  361.725.


Sec.  361.720  What funds are used to pay for infrastructure costs in 
the local one-stop infrastructure funding mechanism?

    (a) In the local one-stop infrastructure funding mechanism, one-
stop partner programs can determine what funds they will use to fund 
infrastructure costs. The use of these funds must be in accordance with 
the requirements in this subpart, and with the relevant partner's 
authorizing statutes and regulations, including, for example, 
prohibitions against supplanting non-Federal resources, statutory 
limitations on administrative costs, and all other applicable legal 
requirements. In the case of partners administering adult education and 
literacy programs authorized by title II of WIOA or the Carl D. Perkins 
Career and Technical Education Act of 2006, these funds may include 
Federal funds that are available for State administration of adult 
education and literacy programs authorized by title II of WIOA or for 
State administration of post-secondary level programs and activities 
under the Perkins Act, and non-Federal funds that the partners 
contribute to meet these programs' matching or maintenance of effort 
requirements. These funds also may include local administrative funds 
available to local entities or consortia of local entities that have 
been delegated

[[Page 20665]]

authority to serve as one-stop local partners by a State eligible 
agency as permitted by Sec.  361.415(b) and (e).
    (b) There are no specific caps on the amount or percent of overall 
funding a one-stop partner may contribute to fund infrastructure costs 
under the local one-stop funding mechanism, except that contributions 
for administrative costs may not exceed the amount available for 
administrative costs under the authorizing statute of the partner 
program. However, amounts contributed for infrastructure costs must be 
allowable and based on proportionate use by or benefit to the partner 
program, taking into account the total cost of the one-stop 
infrastructure as well as alternate financing options, and must be 
consistent with 2 CFR chapter II, including the Federal cost 
principles.


Sec.  361.725  What happens if consensus on infrastructure funding is 
not reached at the local level between the Local Board, chief elected 
officials, and one-stop partners?

    If, after July 1, 2016, and each subsequent July 1, the Local 
Board, chief elected officials, and one-stop partners do not reach 
consensus on methods of sufficiently funding local infrastructure 
through the local infrastructure cost funding mechanism, and include 
that consensus agreement in the signed MOU, then the Local Board must 
notify the Governor and the Governor must administer funding through 
the State one-stop funding mechanism, as described in Sec.  361.730. 
(WIOA sec. 121(h)(2))


Sec.  361.730  What is the State one-stop infrastructure funding 
mechanism?

    (a) In the State one-stop infrastructure funding mechanism, the 
Governor, after consultation with the chief elected officials, Local 
Boards, and the State Board, determines one-stop partner contributions, 
based upon a methodology where infrastructure costs are charged to each 
partner in proportion to relative benefits received and consistent with 
the partner program's authorizing laws and regulations, 2 CFR chapter 
II, including the Federal cost principles, and other applicable legal 
requirements described in Sec.  361.735(a).
    (b) The State Board develops an allocation formula to allocate 
funds to local areas to support the infrastructure costs for local area 
one-stop centers for all local areas that did not use the local funding 
mechanism, and the Governor uses that formula to allocate the funds. 
This is described in detail in Sec.  361.745.


Sec.  361.735  How are partner contributions determined in the State 
one-stop funding mechanism?

    (a) In the State one-stop funding mechanism, the Governor, after 
consultation with State and Local Boards and chief elected officials, 
will determine the amount each partner must contribute to assist in 
paying the infrastructure costs of one-stop centers. The Governor must 
calculate amounts based on the proportionate use of the one-stop 
centers by each partner, consistent with chapter II of title 2, Code of 
Federal Regulations (or any corresponding similar regulation or 
ruling), taking into account the costs of administration of the one-
stop delivery system for purposes not related to one-stop centers for 
each partner such as costs associated with maintaining the Local Board, 
or information technology systems. The Governor will also take into 
account the statutory requirements for each partner program, all other 
applicable legal requirements, and the partner program's ability to 
fulfill such requirements.
    (b) In certain situations, the Governor does not determine the 
infrastructure cost contributions for one-stop partner programs.
    (1) The Governor will not determine the contribution amounts for 
infrastructure funds for Native American grantees described in. (WIOA 
sec. 121(h)(2)(D)(iii).) The appropriate portion of funds to be 
provided by Native American grantees to pay for one-stop infrastructure 
must be determined as part of the development of the MOU described in 
Sec.  361.500 and specified in that MOU.
    (2) In a State in which the State constitution or a State statute 
places policy-making authority that is independent of the authority of 
the Governor in an entity or official with respect to the funds 
provided for adult education and literacy activities, post-secondary 
career and technical education activities, or vocational rehabilitation 
services, the chief officer of that entity or the official must 
determine the contribution amounts for infrastructure funds in 
consultation with the Governor. (WIOA sec. 121(h)(2)(C)(ii).)
    (c) Limitations. Per WIOA sec. 122(h)(2)(D), the amount established 
by the Governor under paragraph (a) of this section may not exceed the 
following caps:
    (1) WIOA formula programs and employment service. The portion of 
funds required to be contributed under the WIOA youth, adult, or 
dislocated worker programs, or under the Wagner- Peyser Act (29 U.S.C. 
49 et seq.) must not exceed 3 percent of the amount of Federal funds 
provided to carry out that program in the State for a program year.
    (2) Other one-stop partners. The portion of funds required to be 
contributed must not exceed 1.5 percent of the amount of Federal funds 
provided to carry out that education program or employment and training 
program in the State for a fiscal year. For purposes of Carl D. Perkins 
Career and Technical Education Act of 2006, the cap on contributions is 
determined based on the funds made available for State administration 
of post-secondary level programs and activities.
    (3) Vocational rehabilitation. Within a State, the entity or 
entities administering the programs described in WIOA sec. 
121(b)(1)(B)(iv) the allotment is based on the one State allotment, 
even in instances where that allotment is shared between two State 
agencies, and will not be required to provide from that program a 
cumulative portion that exceeds--
    (i) 0.75 percent of the amount of Federal funds provided to carry 
out such program in the State for Fiscal Year 2016;
    (ii) 1.0 percent of the amount provided to carry out such program 
in the State for Fiscal Year 2017;
    (iii) 1.25 percent of the amount provided to carry out such program 
in the State for Fiscal Year 2018; and
    (iv) 1.5 percent of the amount provided to carry out such program 
in the State for Fiscal Year 2019 and following years.
    (4) Federal direct spending programs. For local areas that have not 
reached a one-stop infrastructure funding agreement by consensus, an 
entity administering a program funded with direct spending as defined 
in sec. 250(c)(8) of the Balanced Budget and Emergency Deficit Control 
Act of 1985, as in effect on February 15, 2014 (2 U.S.C. 900(c)(8)), 
must not be required to provide more for infrastructure costs than the 
amount that the Governor determined (as described in Sec.  361.735(a)).
    (d) If the above limitations result in funding less than each 
partner's proportionate share and contribute to inadequate funding of 
the allocation amount determined under Sec.  361.745(b), the Governor 
may direct the Local Board, chief elected officials, and one-stop 
partners to reenter negotiations to reduce the infrastructure costs to 
reflect the amount of funds that are available for such costs, discuss 
proportionate share of each one-stop partner, or to identify 
alternative sources of financing for one-stop infrastructure funding, 
but, in any event, a partner will only be

[[Page 20666]]

required to pay an amount that is consistent with the proportionate 
benefit received by the partner, the program's authorizing laws and 
regulations, the Federal cost principles, and other applicable legal 
requirements.
    (1) The Local Board, chief elected officials, and one-stop 
partners, after renegotiation, may come to agreement and sign an MOU 
and proceed under the local one-stop funding mechanism.
    (2) If after renegotiation, agreement amongst partners still cannot 
be reached or alternate financing identified, the Governor may adjust 
the specified allocation, in accordance with the amounts available and 
the limitations described in Sec.  361.735(c).


Sec.  361.740  What funds are used to pay for infrastructure costs in 
the State one-stop infrastructure funding mechanism?

    (a) In the State one-stop infrastructure funding mechanism, 
infrastructure costs for WIOA title I programs, including Native 
American Programs described in, can be paid using program funds, 
administrative funds, or both. Infrastructure costs for the Senior 
Community Service Employment Program under title V of the Older 
Americans Act (42 U.S.C. 3056 et seq.) can also be paid using program 
funds, administrative funds, or both. (WIOA sec. 121(h)(2)(D)(i)(II).)
    (b) In the State one-stop infrastructure funding mechanism, 
infrastructure costs for other required one-stop partner programs 
(listed in Sec. Sec.  361.400 through 361.410) are limited to the 
program's administrative funds, as appropriate. (WIOA sec. 
121(h)(2)(D)(i)(I).)
    (c) In the State one-stop infrastructure funding mechanism, 
infrastructure costs for the adult education program authorized by 
title II of WIOA must be paid from the funds that are available for 
State administration or from non-Federal funds that the partner 
contributes to meet the program's matching or maintenance of effort 
requirement. Infrastructure costs for title II of WIOA may also be paid 
from funds available for local administration of programs and 
activities to eligible providers or consortia of eligible providers 
delegated responsibilities to act as a local one-stop partner pursuant 
to Sec.  361.415(b).
    (d) In the State one-stop infrastructure funding mechanism, 
infrastructure costs for the Carl D. Perkins Career and Technical 
Education Act of 2006 must be paid from the Federal funds that are 
available for State administration of post-secondary level programs and 
activities under the Perkins Act, or from non-Federal funds that the 
partner contributes to meet the program's matching or maintenance of 
effort requirement. Infrastructure costs for the Carl D. Perkins Career 
and Technical Education Act of 2006 may also be paid from funds 
available for local administration of post-secondary level programs and 
activities to eligible recipients or consortia of eligible recipients 
delegated responsibilities to act as a local one-stop partner pursuant 
to Sec.  361.415(e).


Sec.  361.745  How is the allocation formula used by the Governor 
determined in the State one-stop funding mechanism?

    (a) The State Board must develop an allocation formula to be used 
by the Governor to allocate funds to the local areas that did not 
successfully use the local funding mechanism. The allocation formula 
must take into account the number of one-stop centers in a local area, 
the population served by such centers, the services provided by such 
centers, and other factors relating to the performance of such centers 
that the State Board determines are appropriate and that are consistent 
with Federal cost principles. (WIOA 121(h)(3)(B))
    (b) Using the funds contributed by the one-stop partners described 
in Sec.  361.735, the Governor will then use this formula to allocate 
funds to the local areas that did not use the local funding mechanism 
to fund one-stop center infrastructure costs, so long as that funding 
distribution is consistent with Federal cost principles for each of the 
affected one-stop partners.


Sec.  361.750  When and how can a one-stop partner appeal a one-stop 
infrastructure amount designated by the State under the State 
infrastructure funding mechanism?

    (a) The Governor must establish a process, described under sec. 
121(h)(2)(E) of WIOA, for a one-stop partner administering a program 
described in Sec. Sec.  361.400 through 361.410 to appeal the 
Governor's determination regarding the one-stop partner's portion of 
funds to be provided for one-stop infrastructure costs. This appeal 
process must be described in the Unified State Plan. (WIOA secs. 
121(h)(2)(E) and 102(b)(2)(D)(i)(IV).)
    (b) The appeal may be made on the ground that the Governor's 
determination is inconsistent with proportionate share requirements in 
Sec.  361.735(a), the cost contribution limitations in Sec.  
361.735(b), or the cost contribution caps in Sec.  361.735(c).
    (c) The process must ensure prompt resolution of the appeal in 
order to ensure the funds are distributed in a timely manner, 
consistent with the requirements of.
    (d) The one-stop partner must submit an appeal in accordance with 
State's deadlines for appeals specified in the guidance issued under 
Sec.  361.705(b)(3), or if the State has not set a deadline, within 21 
days from the Governor's determination.


Sec.  361.755  What are the required elements regarding infrastructure 
funding that must be included in the one-stop Memorandum of 
Understanding?

    The MOU, fully described in Sec.  361.500, must contain the 
following information whether the local areas use either the local one-
stop or the State one-stop infrastructure funding method:
    (a) The period of time in which this infrastructure funding 
agreement is effective. This may be a different time period than the 
duration of the MOU.
    (b) Identification of an infrastructure and shared services budget 
that will be periodically reconciled against actual costs incurred and 
adjusted accordingly to ensure that it reflects a cost allocation 
methodology that demonstrates how infrastructure costs are charged to 
each partner in proportion to relative benefits received, and that 
complies with chapter II of title 2 of the Code of Federal Regulations 
(or any corresponding similar regulation or ruling).
    (c) Identification of all one-stop partners, chief elected 
officials, and Local Board participating in the infrastructure funding 
arrangement.
    (d) Steps the Local Board, chief elected officials, and one-stop 
partners used to reach consensus or an assurance that the local area 
followed the guidance for the State one-stop infrastructure funding 
process.
    (e) Description of the process to be used between partners to 
resolve issues during the MOU duration period when consensus cannot be 
reached.
    (f) Description of the periodic modification and review process to 
ensure equitable benefit among one-stop partners.


Sec.  361.760  How do one-stop partners jointly fund other shared costs 
under the Memorandum of Understanding?

    (a) In addition to jointly funding infrastructure costs, one-stop 
partners listed in Sec. Sec.  361.400 through 361.410 must use a 
portion of funds made available under their programs' authorizing 
Federal law (or fairly evaluated in-kind contributions) to pay the 
additional costs relating to the operation of the one-stop delivery 
system, which must include applicable career services.
    (b) Additionally, one-stop partners may jointly fund shared 
services to the extent consistent with their programs'

[[Page 20667]]

Federal authorizing statutes and other applicable legal requirements. 
Shared services' costs may include the costs of shared services that 
are authorized for and may be commonly provided through the one-stop 
partner programs to any individual, such as initial intake, assessment 
of needs, appraisal of basic skills, identification of appropriate 
services to meet such needs, referrals to other one-stop partners, and 
business services. Shared operating costs may also include shared costs 
of the Local Board's functions.
    (c) These shared costs must be allocated according to the 
proportion of benefit received by each of the partners, consistent with 
the Federal law authorizing the partner's program, and consistent with 
all other applicable legal requirements, including Federal cost 
principles in chapter II of title 2 of the Code of Federal Regulations 
(or any corresponding similar regulation or ruling) requiring that 
costs are reasonable, necessary, and allocable.
    (d) Any shared costs agreed upon by the one-stop partners must be 
included in the MOU.


Sec.  361.800  How are one-stop centers and one-stop delivery systems 
certified for effectiveness, physical and programmatic accessibility, 
and continuous improvement?

    (a) The State Board, in consultation with chief elected officials 
and Local Boards, must establish objective criteria and procedures for 
Local Boards to use when certifying one-stop centers.
    (1) The State Board must review and update the criteria every 2 
years as part of the review and modification of State Plans pursuant to 
Sec.  361.135.
    (2) The criteria must be consistent with the Governor's and State 
Board's guidelines, guidance and policies on infrastructure funding 
decisions, described in Sec.  361.705. The criteria must evaluate the 
one-stop centers and one-stop delivery system for effectiveness, 
including customer satisfaction, physical and programmatic 
accessibility, and continuous improvement.
    (3) When the Local Board is the one-stop operator as described in, 
the State Board must certify the one-stop center.
    (b) Evaluations of effectiveness must include how well the one-stop 
center integrates available services for participants and businesses, 
meets the workforce development needs of participants and the 
employment needs of local employers, operates in a cost-efficient 
manner, coordinates services among the one-stop partner programs, and 
provides maximum access to partner program services even outside 
regular business hours. These evaluations must take into account 
feedback from one-stop customers. They must also include evaluations of 
how well the one-stop center ensures equal opportunity for individuals 
with disabilities to participate in or benefit from one-stop center 
services. These evaluations must include criteria evaluating how well 
the centers and delivery systems take actions to comply with the 
disability-related regulations implementing WIOA sec. 188, set forth at 
29 CFR part 37. Such actions include, but are not limited to:
    (1) Providing reasonable accommodations for individuals with 
disabilities;
    (2) Making reasonable modifications to policies, practices, and 
procedures where necessary to avoid discrimination against persons with 
disabilities;
    (3) Administering programs in the most integrated setting 
appropriate;
    (4) Communicating with persons with disabilities as effectively as 
with others; and
    (5) Providing appropriate auxiliary aids and services, including 
assistive technology devices and services, where necessary to afford 
individuals with disabilities an equal opportunity to participate in, 
and enjoy the benefits of, the program or activity.
    (c) Evaluations of continuous improvement must include how well the 
one-stop center supports the achievement of the negotiated local levels 
of performance for the indicators of performance for the local area 
described in sec. 116(b)(2) of WIOA and. Other continuous improvement 
factors may include a regular process for identifying and responding to 
technical assistance needs, a regular system of continuing professional 
staff development, and having systems in place to capture and respond 
to specific customer feedback.
    (d) Local Boards must assess at least once every 3 years the 
effectiveness, physical and programmatic accessibility, and continuous 
improvement of one-stop centers and the one-stop delivery systems using 
the criteria and procedures developed by the State Board. The Local 
Board may establish additional criteria, or set higher standards for 
service coordination, than those set by the State criteria. Local 
Boards must review and update the criteria every 2 years as part of the 
Local Plan update process described in Sec.  361.580. Local Boards must 
certify one-stop centers in order to be eligible to receive 
infrastructure funds in the State infrastructure funding mechanism 
described in Sec.  361.730.
    (e) All one-stop centers must comply with applicable physical 
accessibility requirements, as set forth.


Sec.  361.900  What is the common identifier to be used by each one-
stop delivery system?

    (a) The common one-stop delivery system identifier is ``American 
Job Center.''
    (b) As of July 1, 2016, each one-stop delivery system must include 
the ``American Job Center'' identifier or ``a proud partner of the 
American Job Center network'' on all products, programs, activities, 
services, facilities, and related property and materials used in the 
one-stop system.
    (c) One-stop partners, States or local areas may use additional 
identifiers on their products, programs, activities, services, 
facilities, and related property and materials.

PART 463--ADULT EDUCATION AND FAMILY LITERACY ACT

0
8. The authority citation for part 463 continues to read as follows:

    Authority: 29 U.S.C. 102 and 103, unless otherwise noted.

0
9. Add subpart H to part 463, as added elsewhere in this issue of the 
Federal Register, to read as follows:
Subpart H--Unified and Combined State Plans Under Title I of the 
Workforce Innovation and Opportunity Act
Sec.
463.100 What is the purpose of the Unified and Combined State Plans?
463.105 What are the general requirements for the Unified State 
Plan?
463.110 What are the program-specific requirements in the Unified 
State Plan for the adult, dislocated worker, and youth workforce 
investment activities in Workforce Innovation and Opportunity Act 
title I?
463.115 What are the program-specific requirements in the Unified 
State Plan for the Adult Education and Family Literacy Act program 
in Workforce Innovation and Opportunity Act title II?
463.120 What are the program-specific requirements in the Unified 
State Plan for Wagner-Peyser Act Employment Service programs in 
title III of the Workforce Innovation and Opportunity Act?
463.125 What are the program-specific requirements in the Unified 
State Plan for the State Vocational Rehabilitation program in 
Workforce Innovation and Opportunity Act title IV?
463.130 What is the submission and approval process of the Unified 
State Plan?
463.135 What are the requirements for modification of the Unified 
State Plan?
463.140 What are the general requirements for submitting a Combined 
State Plan?
463.143 What is the submission and approval process of the Combined 
State Plan?

[[Page 20668]]

463.145 What are the requirements for modifications of the Combined 
State Plan?

Subpart H--Unified and Combined State Plans Under Title I of the 
Workforce Innovation and Opportunity Act


Sec.  463.100  What is the purpose of the Unified and Combined State 
Plans?

    (a) The Unified and Combined State Plans provide the framework for 
States to outline a strategic vision of, and goals for, how their 
workforce development systems will achieve the purposes of Workforce 
Innovation and Opportunity Act (WIOA).
    (b) The Unified and Combined State Plans serve as 4-year action 
plans to develop, align, and integrate the State's systems and provide 
a platform to achieve the State's vision and strategic and operational 
goals. A Unified or Combined State Plan is intended to:
    (1) Align, in strategic coordination, the six core programs 
required in the Unified State Plan pursuant to Sec.  463.105(b), and 
additional optional programs that may be part of the Combined State 
Plan pursuant to Sec.  463.140;
    (2) Direct investments in economic, education, and workforce 
training programs to focus on providing relevant education and training 
to ensure that individuals, including youth and individuals with 
barriers to employment, have the skills to compete in the job market 
and that employers have a ready supply of skilled workers;
    (3) Apply strategies for job-driven training consistently across 
Federal programs, and;
    (4) Enable economic, education, and workforce partners to build a 
skilled workforce through innovation in, and alignment of, employment, 
training, and education programs.


Sec.  463.105  What are the general requirements for the Unified State 
Plan?

    (a) The Unified State Plan must be submitted in accordance with 
Sec.  463.130 and joint planning guidelines issued by the Secretary of 
Labor and the Secretary of Education.
    (b) The Governor of each State must submit, in accordance with 
Sec.  463.130, a Unified or Combined State Plan to the Secretary of 
Labor to be eligible to receive funding for the workforce development 
system's six core programs:
    (1) The adult, dislocated worker, and youth programs authorized 
under subtitle B of title I of WIOA and administered by the U.S. 
Department of Labor;
    (2) The Adult Education and Family Literacy Act (AEFLA) program 
authorized under title II of WIOA and administered by the U.S. 
Department of Education;
    (3) The Wagner-Peyser Act Employment Services programs amended by 
title III of WIOA and administered by the U.S. Department of Labor; and
    (4) The State Vocational Rehabilitation program amended by title IV 
of WIOA and administered by the U.S. Department of Education.
    (c) The Unified State Plan must outline the State's 4-year strategy 
for the core programs described in paragraph (b) of this section and 
meet the requirements of sec. 102(b) of WIOA, as explained in the joint 
planning guidance issued by the Secretary of Labor and the Secretary of 
Education.
    (d) The Unified State Plan must include strategic and operational 
planning elements to facilitate the development of an aligned, 
coordinated, and comprehensive workforce development system. The 
Unified State Plan must include:
    (1) Strategic planning elements that describe the State's strategic 
vision and goals for preparing an educated and skilled workforce under 
sec. 102(b)(1) of WIOA. The strategic planning elements must be 
informed by and include an analysis of the State's economic conditions 
and employer and workforce needs, including education and skill needs.
    (2) Strategies for aligning the core programs and optional 
programs, as well as other resources available to the State, to achieve 
the strategic vision and goals in accordance with sec. 102(b)(1)(E) of 
WIOA.
    (3) Operational planning elements in accordance with sec. 102(b)(2) 
of WIOA that support the strategies for aligning the core programs and 
other resources available to the State to achieve the State's vision 
and goals and a description of how the State Workforce Development 
Board will implement its functions, in accordance with sec. 101(d) of 
WIOA. Operational planning elements must include:
    (i) A description of how the State strategy will be implemented by 
each core program's lead State agency;
    (ii) State operating systems, including data systems, and policies 
that will support the implementation of the State's strategy identified 
in paragraph (d)(1) of this section;
    (iii) Program-specific requirements for the core programs required 
by WIOA sec. 102(b)(2)(D);
    (iv) Assurances required by sec. 102(b)(2)(E) of WIOA and others 
deemed necessary by the Secretaries of Labor and Education under sec. 
102(b)(2)(E)(x) of WIOA; and
    (v) Any additional operational planning requirements imposed by the 
Secretary of Labor or the Secretary of Education under sec. 
102(b)(2)(C)(viii) of WIOA.


Sec.  463.110  What are the program-specific requirements in the 
Unified State Plan for the adult, dislocated worker, and youth 
workforce investment activities in Workforce Innovation and Opportunity 
Act title I?

    The program-specific requirements for the adult, dislocated worker, 
and youth workforce investment activities that must be included in the 
Unified State Plan are described in sec. 102(b)(2)(D) of WIOA. 
Additional planning requirements may be required by the Secretary of 
Labor or the Secretary of Education in accordance with joint planning 
guidelines issued by the Secretary of Labor and the Secretary of 
Education.


Sec.  463.115  What are the program-specific requirements in the 
Unified State Plan for the Adult Education and Family Literacy Act 
program in Workforce Innovation and Opportunity Act title II?

    The program-specific requirements for the AEFLA program in title II 
that must be included in the Unified State Plan are described in secs. 
102(b)(2)(D)(ii) and 102(b)(2)(C) of WIOA.
    (a) With regard to the description required in sec. 
102(b)(2)(D)(ii)(I) of WIOA pertaining to content standards, the 
Unified State Plan must describe how the eligible agency will, by July 
1, 2016, align its content standards for adult education with State-
adopted challenging academic content standards under the Elementary and 
Secondary Education Act of 1965, as amended.
    (b) With regard to the description required in sec. 
102(b)(2)(C)(iv) of WIOA pertaining to the methods and factors the 
State will use to distribute funds under the core programs, for title 
II of WIOA, the Unified State Plan must include--
    (1) How the eligible agency will award multi-year grants on a 
competitive basis to eligible providers in the State; and
    (2) How the eligible agency will provide direct and equitable 
access to funds using the same grant or contract announcement and 
application procedure.
    (c) With regard to the description required under sec. 
102(b)(2)(C)(v)(I) of WIOA pertaining to the integration of workforce 
and education data on core programs, unemployment insurance programs, 
and education through post-

[[Page 20669]]

secondary education, for title II of WIOA, the Unified State Plan must 
include how the State will ensure interoperability of data systems in 
the reporting on core indicators of performance and performance reports 
required to be submitted by the State.


Sec.  463.120  What are the program-specific requirements in the 
Unified State Plan for Wagner-Peyser Act Employment Service programs in 
title III of the Workforce Innovation and Opportunity Act?

    Wagner-Peyser Act Employment Services programs amended by title III 
are subject to requirements in sec. 102(b) of WIOA and any additional 
requirements imposed by the Secretary of Labor under sec. 
102(b)(2)(C)(viii) of WIOA, in accordance with joint planning 
guidelines issued by the Secretary of Labor and the Secretary of 
Education.


Sec.  463.125  What are the program-specific requirements in the 
Unified State Plan for the State Vocational Rehabilitation program in 
Workforce Innovation and Opportunity Act title IV?

    The program specific requirements for the vocational rehabilitation 
services portion of the Unified or Combined State Plan are set forth in 
sec. 101(a) of the Rehabilitation Act of 1973, as amended. All 
submission requirements of the Vocational Rehabilitation Services 
portion of the Unified or Combined State Plan are in addition to the 
jointly developed strategic and operational content requirements 
prescribed by secs. 102(b) and 103 of WIOA.


Sec.  463.130  What is the submission and approval process of the 
Unified State Plan?

    (a) The Unified State Plan described in Sec.  463.105 must be 
submitted in accordance with planning guidelines issued jointly by the 
Secretaries of Labor and Education which explain the submission and 
approval process in WIOA sec. 102(c).
    (b) A State must submit its Unified State Plan to the Secretary of 
Labor pursuant to a process identified by the Secretary.
    (1) The initial Unified State Plan must be submitted no later than 
120 days prior to the commencement of the second full program year of 
WIOA.
    (2) The subsequent Unified State Plan must be submitted no later 
than 120 days prior to the end of the 4-year period described in 
paragraph (b)(1) of this section.
    (3) For purposes of paragraph (b) of this section, ``program year'' 
means July 1 through June 30 of any year.
    (c) The State must provide an opportunity for public comment on and 
input into the development of the Unified State Plan prior to its 
submission.
    (1) The opportunity for public comment must include an opportunity 
for comment by representatives of Local Boards and chief elected 
officials, businesses, representatives of labor organizations, 
community-based organizations, adult education providers, institutions 
of higher education, other stakeholders with an interest in the 
services provided by the six core programs, and the general public, 
including individuals with disabilities.
    (2) Consistent with the ``Sunshine Provision'' of WIOA in sec. 
101(g), the State Board must make information regarding the Unified 
State Plan available to the public through electronic means and 
regularly occurring open meetings in accordance with State law. The 
Unified State Plan must describe the State's process and timeline for 
ensuring a meaningful opportunity for public comment.
    (d) Upon receipt of the Unified State Plan from the State, the 
Secretary of Labor will ensure that the entire Unified State Plan is 
submitted to the Secretary of Education pursuant to a process developed 
by the Secretaries.
    (e) The Unified State Plan is subject to the approval of both the 
Secretary of Labor and the Secretary of Education.
    (f) Before the Secretary of Labor and the Secretary of Education 
approve the Unified State Plan, the vocational rehabilitation portion 
of the Unified State Plan described in WIOA sec. 102(b)(2)(D)(iii) must 
be approved by the Commissioner of the Rehabilitation Services 
Administration.
    (g) The Secretary of Labor and the Secretary of Education will 
review and approve the Unified State Plan within 90 days of receipt by 
the appropriate Secretary, unless the Secretary of Labor or the 
Secretary of Education determines in writing within that period that:
    (1) The plan is inconsistent with a core program's requirements;
    (2) The Unified State Plan is inconsistent with any requirement of 
sec. 102 of WIOA; or
    (3) The plan is incomplete or otherwise insufficient to determine 
whether it is consistent with a core program's requirements or other 
requirements of WIOA.
    (h) If neither the Secretary of Labor nor the Secretary of 
Education makes the written determination described in paragraph (g) of 
this section within 90 days of the receipt by the Secretaries, the 
Unified State Plan will be considered approved.


Sec.  463.135  What are the requirements for modification of the 
Unified State Plan?

    (a) In addition to the required modification review set forth in 
paragraph (b) of this section, a Governor may submit a modification of 
its Unified State Plan at any time during the 4-year period of the 
plan.
    (b) Modifications are required, at a minimum:
    (1) At the end of the first 2-year period of any 4-year State Plan, 
wherein the State Board must review the Unified State Plan, and the 
Governor must submit modifications to the plan to reflect changes in 
labor market and economic conditions or other factors affecting the 
implementation of the Unified State Plan;
    (2) When changes in Federal or State law or policy substantially 
affect the strategies, goals, and priorities upon which the Unified 
State Plan is based;
    (3) When there are changes in the statewide vision, strategies, 
policies, State adjusted levels of performance, the methodology used to 
determine local allocation of funds, reorganizations which change the 
working relationship with system employees, changes in organizational 
responsibilities, changes to the membership structure of the State 
Board or alternative entity, and similar substantial changes to the 
State's workforce investment system.
    (c) Modifications to the Unified State Plan are subject to the same 
public review and comment requirements in Sec.  463.130(c) that apply 
to the development of the original Unified State Plan.
    (d) Unified State Plan modifications must be approved by the 
Secretary of Labor and the Secretary of Education, based on the 
approval standards applicable to the original Unified State Plan under 
Sec.  463.130. This approval must come after the approval of the 
Commissioner of the Rehabilitation Services Administration for 
modification of any portion of the plan described in sec. 
102(b)(2)(D)(iii) of WIOA.


Sec.  463.140  What are the general requirements for submitting a 
Combined State Plan?

    (a) A State may choose to develop and submit a 4-year Combined 
State Plan in lieu of the Unified State Plan described in Sec.  
463.105.
    (b) A State that submits a Combined State Plan covering an activity 
or program described in paragraph (d) of this section that is approved 
under WIOA sec. 103(c) or determined complete under the law relating to 
the program will not be required to submit any other plan or 
application in order to

[[Page 20670]]

receive Federal funds to carry out the core programs or the program or 
activities described under paragraph (d) of this section that are 
covered by the Combined State Plan.
    (c) If a State develops a Combined State Plan, it must be submitted 
in accordance with the process described in Sec.  463.143.
    (d) If a State chooses to submit a Combined State Plan, the Plan 
must include the six core programs and one or more of the optional 
programs and activities described in sec. 103(a)(2) of WIOA. The 
optional programs and activities that may be included in the Combined 
State Plan are:
    (1) Career and technical education programs authorized under the 
Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 
2301 et seq.);
    (2) Temporary Assistance for Needy Families or TANF, authorized 
under part A of title IV of the Social Security Act (42 U.S.C. 601 et 
seq.);
    (3) Employment and training programs authorized under sec. 6(d)(4) 
of the Food and Nutrition Act of 2008 (7 U.S.C. 2015(d)(4));
    (4) Work programs authorized under sec. 6(o) of the Food and 
Nutrition Act of 2008 (7 U.S.C. 2015(o));
    (5) Trade adjustment assistance activities under chapter 2 of title 
II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.);
    (6) Services for veterans authorized under chapter 41 of title 38, 
United States Code;
    (7) Programs authorized under State unemployment compensation laws 
(in accordance with applicable Federal law);
    (8) Senior Community Service Employment Programs under title V of 
the Older Americans Act of 1956 (42 U.S.C. 3056 et seq.);
    (9) Employment and training activities carried out by the 
Department of Housing and Urban Development;
    (10) Employment and training activities carried out under the 
Community Services Block Grant Act (42 U.S.C. 9901 et seq.); and
    (11) Reintegration of offenders programs authorized under sec. 212 
of the Second Chance Act of 2007 (42 U.S.C. 17532).
    (e) A Combined State Plan must contain:
    (1) For the core programs, the information required by sec. 102(b) 
of WIOA and Sec.  463.105, as explained in the joint planning guidance 
issued by the Secretaries;
    (2) For the optional programs, except as described in paragraph (h) 
of this section, the information required by the law authorizing and 
governing that program to be submitted to the appropriate Secretary, 
any other applicable legal requirements, and any common planning 
requirements described in sec. 102(b) of WIOA, as explained in the 
joint planning guidance issued by the Secretaries;
    (3) A description of joint planning methods across all programs 
included in the Combined State Plan; and
    (4) An assurance that all of the entities responsible for planning 
or administering the programs described in the Combined State Plan have 
had a meaningful opportunity to review and comment on all portions of 
the Plan.
    (f) Each optional program included in the Combined State Plan 
remains subject to the applicable program-specific requirements of the 
Federal law and regulations, and any other applicable legal or program 
requirements, governing the implementation and operation of that 
program.
    (g) For purposes of Sec. Sec.  463.140 through 463.145 the term 
``appropriate Secretary'' means the head of the Federal agency who 
exercises either plan or application approval authority for the program 
or activity under the Federal law authorizing the program or activity 
or, if there are no planning or application requirements, who exercises 
administrative authority over the program or activity under that 
Federal law.
    (h) States that include employment and training activities carried 
out under the Community Services Block Grant (CSBG) Act (42 U.S.C. 9901 
et seq.) under a Combined State Plan would submit all other required 
elements of a complete CSBG State Plan directly to the Federal agency 
that administers the program, according to the requirements of Federal 
law and regulations.


Sec.  463.143  What is the submission and approval process of the 
Combined State Plan?

    (a) For purposes of Sec.  463.140(a), if a State chooses to develop 
a Combined State Plan it must submit the Combined State Plan in 
accordance with the requirements described below and the joint planning 
guidelines, which will further explain the submission and approval 
procedures for the Combined State Plan, issued by the Secretaries.
    (b) The State must submit to the Secretaries of Labor and Education 
and to the Secretary of the agency with responsibility for approving 
the program's plan or determining it complete under the law governing 
the program, as part of its Combined State Plan, any plan, application, 
form, or any other similar document that is required as a condition for 
the approval of Federal funding under the applicable program or 
activity. Such submission must occur in accordance with a process 
identified by the relevant Secretaries in paragraph (a) of this 
section.
    (c) The Combined State Plan will be approved or disapproved in 
accordance with the requirements of sec. 103(c) of WIOA.
    (1) The portion of the Combined State Plan covering programs 
administered by the Departments of Labor and Education must be 
reviewed, and approved or disapproved, by the appropriate Secretary 
within 90 days beginning on the day the plan is received by the 
appropriate Secretary from the State, except as provided in paragraph 
(d) of this section.
    (2) If an appropriate Secretary other than the Secretary of Labor 
or the Secretary of Education has authority to approve or determine 
complete a portion of the Combined State Plan for a program or activity 
described in Sec.  463.140(d), that portion of the plan must be 
reviewed, and approved, disapproved, or have a determination of 
completeness, by the appropriate Secretary within 120 days beginning on 
the day the plan is received by the appropriate Secretary from the 
State except as provided in paragraph (e) of this section.
    (d) The review and determination of approval or disapproval, or 
determination of completeness, of the relevant portion of the Combined 
State Plan must occur within 90 days for all Department of Labor and 
Education programs included in the State Plan and within 120 days for 
the programs administered by other Federal Agencies unless the 
appropriate Secretary determines in writing within that period that:
    (1) The Plan is inconsistent with the requirements of the six core 
programs or the Federal laws authorizing or applicable to the program 
or activity involved, including the criteria for approval of a plan or 
application, or determining the plan's completeness, if any, under such 
law;
    (2) The portion of the Plan describing the six core programs or the 
program or activity described in paragraph (a) of this section involved 
does not satisfy the criteria as provided in sec. 102 or 103 of WIOA, 
as applicable; or
    (3) The Plan is incomplete, or otherwise insufficient to determine 
whether it is consistent with a core program's requirements, other 
requirements of WIOA, or the Federal laws authorizing, or applicable 
to, the program or activity described in Sec.  463.140(d), including 
the criteria for

[[Page 20671]]

approval of a plan or application, if any, under such law.
    (e) If the Secretary of Labor, the Secretary of Education, or the 
appropriate Secretary does not make the written determination described 
in paragraph (d) of this section within the relevant period of time 
after submission of the Plan, that portion of the Combined State Plan 
over which the Secretary has jurisdiction will be considered approved.
    (f) Special rule. In paragraphs (d)(1) and (3) of this section, the 
term ``criteria for approval of a plan or application,'' with respect 
to a State or a core program or a program under the Carl D. Perkins 
Career and Technical Education Act of 2006 (20 U.S.C. 2301 et seq.), 
includes a requirement for agreement between the State and the 
appropriate Secretaries regarding State performance measures or State 
performance accountability measures, as the case may be, including 
levels of performance.


Sec.  463.145  What are the requirements for modifications of the 
Combined State Plan?

    (a) For the core program portions of the Combined State Plan, 
modifications are required at the end of the first 2-year period of any 
4-year Combined State Plan. The State Board must review the Combined 
State Plan, and the Governor must submit a modification of the Combined 
State Plan to reflect changes in labor market and economic conditions 
or in other factors affecting the implementation of the Combined State 
Plan.
    (b) In addition to the required modification review described in 
paragraph (a) of this section, a State may submit a modification of its 
Combined State Plan at any time during the 4-year period of the plan.
    (c) For any programs and activities described in Sec.  463.140(d) 
that are included in a State's Combined State Plan, the State--
    (1) May decide if the modification requirements under WIOA sec. 
102(c)(3) that apply to the core programs will apply to the optional 
programs or activities described in Sec.  463.140(d) that are included 
in the Combined State Plan or may comply with the procedures and 
requirements applicable to only the particular optional program or 
activity; and
    (2) Must submit, in accordance with the procedure described in 
Sec.  463.143, any other modification, amendment, or revision required 
by the Federal law authorizing, or applicable to, the program or 
activity described in Sec.  463.140(d). If the underlying programmatic 
requirements change for Federal laws authorizing such programs, a State 
must either modify its Combined State Plan or submit a separate plan to 
the appropriate Federal agency in accordance with the new Federal law 
authorizing the optional program or activity and other legal 
requirements applicable to such program or activity. A State also may 
amend its Combined State Plan to add an optional program or activity 
described in Sec.  463.140(d).
    (d) Modifications of the Combined State Plan are subject to the 
same public review and comment requirements that apply to the 
development of the original Combined State Plan as described in Sec.  
463.130(c) except that, if the modification, amendment, or revision 
affects the administration of a particular optional program and has no 
impact on the Combined State Plan as a whole or the integration and 
administration of the core and optional programs at the State level, a 
State may comply instead with the procedures and requirements 
applicable to the particular optional program.
    (e) Modifications for the core program portions of the Combined 
State Plan must be approved by the Secretary of Labor and the Secretary 
of Education, based on the approval standards applicable to the 
original Combined State Plan under Sec.  463.143. This approval must 
come after the approval of the Commissioner of the Rehabilitation 
Services Administration for modification of any portion of the Combined 
State Plan described in sec. 102(b)(2)(D)(iii) of WIOA.
    (f) Modifications for the portions of the Combined State Plan for 
any optional program or activity described in Sec.  463.140(d) must be 
submitted for approval by only the appropriate Secretary, based on the 
approval standards applicable to the original Combined State Plan under 
Sec.  463.143, if the State elects, or in accordance with the 
procedures and requirements applicable to the particular optional 
program if the modification, amendment, or revision affects the 
administration of only that particular optional program and has no 
impact on the Combined State Plan as a whole or the integration and 
administration of the core and optional programs at the State level.
0
10. Add subpart I to part 463, as added elsewhere in this issue of the 
Federal Register, to read as follows:
Subpart I--Performance Accountability Under Title I of the Workforce 
Innovation and Opportunity Act
Sec.
463.150 What definitions apply to Workforce Innovation and 
Opportunity Act performance measurement and reporting requirements?
463.155 What are the primary indicators of performance under the 
Workforce Innovation and Opportunity Act?
463.160 What information is required for State performance reports?
463.165 May a State require additional indicators of performance?
463.170 How are State adjusted levels of performance for primary 
indicators established?
463.175 What responsibility do States have to use quarterly wage 
record information for performance accountability?
463.180 What State actions are subject to a financial sanction under 
Workforce Innovation and Opportunity Act?
463.185 When are sanctions applied for failure to report?
463.190 When are sanctions applied for failure to achieve adjusted 
levels of performance?
463.195 What should States expect when a sanction is applied to the 
Governor's Reserve Allotment?
463.200 What other administrative actions will be applied to States' 
performance requirements?
463.205 What performance indicators apply to local areas?
463.210 How are local performance levels established?
463.215 Under what circumstances are local areas eligible for State 
Incentive Grants?
463.220 Under what circumstances may a corrective action or sanction 
be applied to local areas for poor performance?
463.225 Under what circumstances may local areas appeal a 
reorganization plan?
463.230 What information is required for the eligible training 
provider performance reports?
463.235 What are the reporting requirements for individual records 
for core Workforce Innovation and Opportunity Act title I, III, and 
IV programs?
463.240 What are the requirements for data validation of State 
annual performance reports?

Subpart I--Performance Accountability Under Title I of the 
Workforce Innovation and Opportunity Act


Sec.  463.150  What definitions apply to Workforce Innovation and 
Opportunity Act performance measurement and reporting requirements?

    (a) Participant. A reportable individual who has received staff-
assisted services after satisfying all applicable programmatic 
requirements for the provision of services, such as eligibility 
determination.
    (1) For the Vocational Rehabilitation (VR) program, a Participant 
is an individual who has an approved and signed Individualized Plan for 
Employment (IPE) and has begun to receive services.
    (2) The following individuals are not Participants:
    (i) Individuals who have not completed at least 12 contact hours in

[[Page 20672]]

the Adult Education and Family Literacy Act (AEFLA) program;
    (ii) Individuals who only use the self-service system; and
    (iii) Individuals who only receive information services or 
activities.
    (3) Programs must include participants in their performance 
calculations.
    (b) Reportable individual. An individual who has taken action that 
demonstrates an intent to use program services and who meets specific 
reporting criteria of the core program, including:
    (1) Individuals who provide identifying information;
    (2) Individuals who only use the self-service system; and
    (3) Individuals who only receive information on services or 
activities.
    (c) Exit. As defined for the purpose of performance calculations, 
exit is the point after which an individual who has received services 
through any program meets the following criteria:
    (1) For the adult, dislocated worker, and youth programs under 
Workforce Innovation and Opportunity Act (WIOA) title I, the AEFLA 
program under WIOA title II, and the Employment Services authorized by 
the Wagner-Peyser Act as amended by WIOA title III, exit date is the 
last date of service:
    (i) The exit date cannot be determined until 90 days of no services 
has elapsed. At that point the exit date is applied retroactively to 
the last date of service.
    (A) Ninety days of no service does not include self-service or 
information-only activities or follow-up services and
    (B) There are no future services planned, excluding follow-up 
services.
    (ii) [Reserved]
    (2)(i) For the VR program as amended by WIOA title IV:
    (A) The participant's record of service is closed in accordance 
with Sec.  463.56 because the participant has achieved an employment 
outcome; or
    (B) The participant's service record is closed because the 
individual has not achieved an employment outcome or the individual has 
been determined ineligible after receiving services in accordance with 
Sec.  463.43.
    (ii) Notwithstanding any other provision of this section, a 
participant will not be considered as meeting the definition of exit 
from the Vocational Rehabilitation program if the individual's service 
record is closed because the individual has achieved a supported 
employment outcome in an integrated setting but not in competitive 
integrated employment.


Sec.  463.155  What are the primary indicators of performance under the 
Workforce Innovation and Opportunity Act?

    (a) All States submitting either a Unified or Combined State Plan 
under Sec. Sec.  463.130 and 676.143 of this chapter, must propose 
expected levels of performance for each of the primary indicators of 
performance for the adult, dislocated worker, and youth programs under 
title I of WIOA, the AEFLA program under title II of WIOA, the Wagner-
Peyser Act as amended by title III of WIOA, and the VR program as 
amended by WIOA.
    (1) The six primary indicators for performance are:
    (i) The percentage of participants, who are in unsubsidized 
employment during the second quarter after exit from the program;
    (ii) The percentage of participants, who are in unsubsidized 
employment during the fourth quarter after exit from the program;
    (iii) Median earnings of participants, who are in unsubsidized 
employment during the second quarter after exit from the program;
    (iv) The percentage of participants who obtained a recognized post-
secondary credential or a secondary school diploma, or its recognized 
equivalent during participation in or within 1 year after exit from the 
program. A participant who has obtained a secondary school diploma or 
its recognized equivalent is only included in this measure if the 
participant is also employed or is enrolled in an education or training 
program leading to a recognized post-secondary credential within 1 year 
from program exit;
    (v) The percentage of participants who during a program year, are 
in an education or training program that leads to a recognized post-
secondary credential or employment and who are achieving measurable 
skill gains, defined as documented academic, technical, occupational or 
other forms of progress, towards such a credential or employment.
    (vi) Effectiveness in serving employers, based on indicators 
developed as required by sec. 116(b)(2)(A)(iv) of WIOA.
    (2) [Reserved]
    (b) The indicators in paragraphs (a)(1)(i) through (vi) of this 
section apply to the adult, dislocated worker, AEFLA and VR programs.
    (c) The indicators in paragraphs (a)(1)(i) through (iii) and (vi) 
of this section apply to the Employment Services.
    (d) For the youth program under title I of WIOA, the indicators 
are:
    (1) Percentage of participants who are in education or training 
activities, or in unsubsidized employment, during the second quarter 
after exit from the program;
    (2) Percentage of participants in education or training activities, 
or in unsubsidized employment, during the fourth quarter after exit 
from the program;
    (3) Median earnings of participants who are in unsubsidized 
employment during the second quarter after exit from the program;
    (4) The percentage of participants who obtained a recognized post-
secondary credential or a secondary school diploma, or its recognized 
equivalent, during participation or up to 1 year after exit. A 
participant who has obtained a secondary school diploma or its 
recognized equivalent is only included in this measure if the 
participant is also employed or is enrolled in an education or training 
program leading to a recognized post-secondary credential within 1 year 
from program exit;
    (5) The percentage of participants who during a program year, are 
in an education or training program that leads to a recognized post-
secondary credential or employment and who are achieving measurable 
skill gains, defined as documented academic, technical, occupational or 
other forms of progress towards such a credential or employment;
    (6) Effectiveness in serving employers, based on indicators 
developed as required by sec. 116(b)(2)(iv) of WIOA.


Sec.  463.160  What information is required for State performance 
reports?

    (a) Section 116(d)(2) of WIOA requires States to submit a State 
performance report. The State performance report must be submitted 
annually using a template the Departments will disseminate and must 
provide, at a minimum, information on the actual performance levels 
achieved consistent with Sec.  463.175 with respect to:
    (1) The total number of participants served, and the total number 
of participants who exited each of the core programs identified in sec. 
116(b)(3)(A)(ii) of WIOA, including disaggregated counts of those who 
participated in and exited a core program, by:
    (i) Individuals with barriers to employment as defined in WIOA sec. 
3(24); and
    (ii) Co-enrollment in any of the programs in WIOA sec 
116(b)(3)(A)(ii).
    (2) Information on the performance levels achieved for the primary 
indicators for all of the core programs

[[Page 20673]]

identified in Sec.  463.155 including disaggregated levels for:
    (i) Individuals with barriers to employment as defined in WIOA sec. 
3(24);
    (ii) Age;
    (iii) Sex; and
    (iv) Race and ethnicity.
    (3) The total number of participants and exiters who received 
career and training services for the most recent program year and the 
three preceding program years, as applicable to the program;
    (4) Information on the performance levels achieved for the primary 
indicators consistent with Sec.  463.155 for career and training 
services for the most recent program year and the 3 preceding program 
years, as applicable to the program;
    (5) The percentage of participants in a program who obtained 
unsubsidized employment related to the training received (often 
referred to as training-related employment) through WIOA title I-B 
programs;
    (6) The amount of funds spent on each type of career and training 
service for the most recent program year and the 3 preceding program 
years, as applicable to the program;
    (7) The average cost per participant for those participants who 
received career and training services, respectively, during the most 
recent program year and the 3 preceding program years for, as 
applicable to the program;
    (8) The percentage of a State's annual allotment under WIOA sec. 
132(b) that the State spent on administrative costs; and
    (9) information that facilitates comparisons of programs with 
programs in other States.
    (10) For WIOA title I programs, a State performance narrative, 
which, for States in which a local area is implementing a pay-for-
performance contracting strategy, at a minimum provides:
    (i) A description of pay-for-performance contract strategies being 
used for programs;
    (ii) The performance of service providers entering into contracts 
for such strategies, measured against the levels of performance 
specified in the contracts for such strategies; and
    (iii) An evaluation of the design of the programs and performance 
strategies and, when available, the satisfaction of employers and 
participants who received services under such strategies.
    (b) The disaggregation of data for the State performance report 
must be done in compliance with WIOA sec. 116(d)(6)(C).
    (c) The State performance reports must include a mechanism of 
electronic access to the State's local area and ETP performance 
reports.
    (d) States must comply with these requirements from sec. 116 of 
WIOA as explained in joint guidance issued by the Departments of 
Education and Labor, which may include information on reportable 
individuals as determined by the Secretaries.


Sec.  463.165  May a State require additional indicators of 
performance?

    States may identify additional indicators of performance for the 
six core programs. These indicators must be included in the Unified or 
Combined State Plan.


Sec.  463.170  How are State adjusted levels of performance for primary 
indicators established?

    (a) A State must submit in the State Plan expected levels of 
performance on the primary indicators for each core program as required 
by sec. 116(b)(iv) of WIOA as explained in joint guidance issued by the 
Secretaries of Education and Labor.
    (1) The initial State Plan submitted under WIOA must contain 
expected levels of performance for the first 2 years of the State Plan 
period.
    (2) States must submit expected levels of performance for the third 
and fourth year of the State Plan before the third program year 
consistent with Sec. Sec.  463.135 and 463.145.
    (b) The State must reach agreement on levels of performance with 
the Secretaries of Education and Labor for each of the core programs 
based on the following factors:
    (1) How the levels of performance compare with State adjusted 
levels of performance established for other States;
    (2) The application of an objective statistical model established 
by the Secretaries of Education and Labor, subject to paragraph (d) of 
this section;
    (3) How the levels promote continuous improvement in performance 
based on the primary indicators and ensure optimal return on investment 
of Federal funds; and
    (4) The extent to which the levels assist the State in meeting the 
performance goals established by the Secretaries of Education and Labor 
for the core programs in accordance with the Government Performance and 
Results Act of 1993, and its amendments.
    (c) An objective statistical adjustment model will be developed and 
disseminated by the Secretaries. The model will be based on:
    (1) Differences among States in actual economic conditions, 
including unemployment rates and job losses or gains in particular 
industries; and
    (2) The characteristics of participants, including:
    (i) Indicators of poor work history;
    (ii) Lack of work experience;
    (iii) Lack of educational or occupational skills attainment;
    (iv) Dislocation from high-wage and high-benefit employment;
    (v) Low levels of literacy;
    (vi) Low levels of English proficiency;
    (vii) Disability status;
    (viii) Homelessness;
    (ix) Ex-offender status; and
    (x) Welfare dependency.
    (d) The objective statistical adjustment model developed under 
paragraph (c) of this section will be:
    (1) Applied to the core programs' primary indicators upon 
availability of data which is necessary to populate the model and apply 
it to the programs;
    (2) Subject to paragraph (d)(1) of this section, used before the 
beginning of a program year in order to establish State performance 
targets for the upcoming program year; and
    (3) Subject to paragraph (d)(1) of this section, used to revise 
performance levels at the end of a program year based on actual 
circumstances, consistent with sec. 116(b)(3)(vii) of WIOA.
    (e) States must comply with these requirements from sec. 116 of 
WIOA as explained in joint guidance issued by the Departments of 
Education and Labor.


Sec.  463.175  What responsibility do States have to use quarterly wage 
record information for performance accountability?

    (a) States must, consistent with State laws, use quarterly wage 
record information in measuring the progress on State adjusted levels 
of performance for the primary indicators outlined in Sec.  463.155 and 
local performance indicators identified in Sec.  463.205. The use of 
social security numbers from participants and such other information as 
is necessary to measure the progress of those participants through 
quarterly wage record information is authorized.
    (b) ``Quarterly wage record information'' means intrastate and 
interstate wages paid to an individual, the social security number (or 
numbers, if more than one) of the individual and the name, address, 
State, and the Federal employer identification number of the employer 
paying the wages to the individual.
    (c) The Governor may designate a State agency [or appropriate State 
entity] to assist in carrying out the performance reporting 
requirements for WIOA core programs and eligible

[[Page 20674]]

training providers. The Governor or such agency [or appropriate State 
entity] is responsible for:
    (1) Facilitating data matches;
    (2) Data quality reliability, protection against disaggregation 
that would violate privacy.


Sec.  463.180  What State actions are subject to a financial sanction 
under Workforce Innovation and Opportunity Act?

    The following failures by a State are subject to financial sanction 
under WIOA sec. 116(d):
    (a) The failure by a State to submit the State annual performance 
report required under WIOA sec. 116(d)(2); or
    (b) The failure by a State to meet adjusted levels of performance 
for the primary indicators of performance in accordance with sec. 
116(f) of WIOA.


Sec.  463.185  When are sanctions applied for failure to report?

    (a) Sanctions will be applied when a State fails to submit the 
State annual performance reports required under sec. 116(d)(2) of WIOA. 
It is a failure to report if the State either:
    (1) Does not submit a State annual performance report by the date 
for timely submission set in performance reporting guidance; or
    (2) Submits a State annual performance report by the date for 
timely submission, but the report is incomplete.
    (b) Sanctions will not be assessed if the reporting failure is due 
to exceptional circumstances outside of the State's control. 
Exceptional circumstances may include, but are not limited to:
    (1) Natural disasters,
    (2) Unexpected personnel transitions; and
    (3) Unexpected technology related impacts.
    (c) In the event that a State may not be able to submit a complete 
and accurate performance report by the deadline for timely reporting:
    (1) The State must notify the Secretary of Labor or Secretary of 
Education as soon as possible of a potential impact on the ability to 
submit their State annual performance reports by no later than 30 days 
prior to the established deadline in order to not be considered failing 
to report.
    (2) In circumstances where unexpected events occur within the 30-
day period before the deadline for submission of the State annual 
performance reports, the Secretary of Labor and Secretary of Education 
will review requests for extending the reporting deadline in accordance 
with the Departments' procedures explained in guidance on reporting 
timelines.


Sec.  463.190  When are sanctions applied for failure to achieve 
adjusted levels of performance?

    (a) States' negotiated levels of performance will be adjusted 
through the application of the statistical adjustment model established 
under Sec.  463.170 to account for actual conditions experienced during 
a program year and characteristics of participants, annually at the 
close of each program year.
    (b) States that fail to meet adjusted levels of performance for the 
primary indicators of performance outlined in Sec.  463.155 for any 
year will receive technical assistance, including assistance in the 
development of a performance improvement plan provided by the Secretary 
of Labor or Secretary of Education.
    (c) State failure to meet adjusted levels of performance will be 
determined through three criteria:
    (1) Overall State program scores, based on the percent achieved by 
a program on each of the six primary indicators compared to the 
adjusted goal for each primary indicator. The average of the percentage 
of the adjusted goal achieved for each primary indicator will 
constitute the overall program score for the State;
    (2) Overall State indicator scores, based on the percent achieved 
by each program on each of the individual primary indicators compared 
to the adjusted goal. The average of the percentage of the adjusted 
goal achieved for each of the six core programs' will constitute an 
overall indicator score for the State; and
    (3) Individual indicator scores, based on the percent achieved by 
each program on each of the individual primary indicators compared to 
the adjusted goals.
    (d) A performance failure occurs when:
    (1) Any overall State program score or overall State indicator 
score falls below 90 percent for the program year; or
    (2) Any of the States' individual indicator scores fall below 50 
percent for the program year.
    (e) Sanctions based on performance failure will be applied to 
States if, for 2 consecutive years, the State fails to meet 90 percent 
of the overall State program score, 90 percent of the overall State 
indicator score, or 50 percent on any individual indicator score for 
the same program or indicator.


Sec.  463.195  What should States expect when a sanction is applied to 
the Governor's Reserve Allotment?

    (a) The Secretary of Labor and the Secretary of Education will 
reduce the Governor's Reserve Allotment by 5 percent of the maximum 
available amount for the immediately succeeding program year if:
    (1) The State fails to submit the State annual performance reports 
as required under WIOA sec. 116(d)(2), as defined in Sec.  463.185; or
    (2) The State fails to meet State adjusted levels of performance 
for the same primary performance indicator(s) under either Sec.  
463.190(d)(1) or (2) for the second consecutive year as defined in 
Sec.  463.190.
    (b) If the State fails under paragraphs (a)(1) and (2) of this 
section in the same program year, the Secretary of Labor and the 
Secretary of Education will reduce the Governor's Reserve Allotment by 
10 percent of the maximum available amount for the immediately 
succeeding program year.
    (c) If a State's Governor's Reserve Allotment is reduced:
    (1) The reduced amount will not be returned to the State in the 
event that the State later improves performance or submits its annual 
performance report; and
    (2) The Governor's reserve will continue to be set at the reduced 
level in each subsequent year until the Secretary of Labor or the 
Secretary of Education, dependent upon the impacted program, determines 
that the State met the State adjusted levels of performance for the 
applicable primary performance indicators and has submitted all of the 
required performance reports.
    (d) A State may request review of a sanction the U.S. Department of 
Labor imposes in accordance with the provisions of Sec.  683.800 of 
this chapter.


Sec.  463.200  What other administrative actions will be applied to 
States' performance requirements?

    (a) In addition to sanctions for failure to report or failure to 
meet adjusted levels of performance, States will be subject to 
administrative actions in the case of poor performance.
    (b) States' performance achievement on the individual primary 
indicators will be assessed in addition to the overall program score 
and overall indicator score. Based on this assessment, as clarified and 
explained in guidance, for performance on any individual primary 
indicator, the Secretary of Labor or the Secretary of Education will 
require the State to establish a performance risk plan to address 
continuous improvement on the individual primary indicator.

[[Page 20675]]

Sec.  463.205  What performance indicators apply to local areas?

    (a) Each local workforce investment area in a State under title I 
of WIOA is subject to the same primary indicators of performance for 
the core programs for WIOA title I under Sec.  463.155(a)(1) and (d) 
that apply to the State.
    (b) In addition to the indicators described in paragraph (a) of 
this section, under Sec.  463.165, the Governor may apply additional 
indicators of performance to local areas in the State.
    (c) States must annually make local area performance reports 
available to the public using a template that the Departments will 
disseminate in guidance, including by electronic means. The State must 
provide electronic access to the public local area performance report 
in its annual State performance report.
    (d) The local area performance report must provide information on 
the actual performance levels for the local area based on quarterly 
wage records consistent with the requirements for States under Sec.  
463.175.
    (e) The local area performance report must include:
    (1) Performance levels achieved by the local area for the 
indicators for the adult, dislocated worker, and youth programs under 
title I of WIOA in Sec.  463.155(a)(1) and (3);
    (2) Performance levels achieved by the local area for the adult, 
dislocated worker, and youth programs under title I of WIOA in Sec.  
463.160(a);
    (3) The percentage of a local area's allotment under WIOA sec. 
128(b) and sec. 133(b) that the local area spent on administrative 
costs; and
    (4) Other information that facilitates comparisons of programs with 
programs in other local areas (or planning regions if the local area is 
part of a planning region).
    (f) States must comply with any requirements from sec. 116(d)(3) of 
WIOA as explained in guidance, including the use of the performance 
reporting template, issued by the Department of Labor.


Sec.  463.210  How are local performance levels established?

    (a) The objective statistical adjustment model required under sec. 
116(b)(3)(A)(viii) of WIOA and described in the Sec.  463.170 must be:
    (1) Used to establish local performance targets for the upcoming 
program year, and
    (2) Used to revise performance levels at the end of a program year 
based on actual circumstances, consistent with WIOA sec. 116(c)(3).
    (b) The Governor, Local Board, and chief elected official must 
reach agreement on local targets and levels based on a negotiations 
process before the start of a program year with the use of the 
objective statistical model described in paragraph (a) of this section. 
The negotiations will include a discussion of circumstances not 
accounted for in the model and will take into account the extent to 
which the levels promote continuous improvement. The objective 
statistical model will be applied at the end of the program year based 
on actual conditions experienced.
    (c) The negotiations process described in paragraph (b) of this 
section must be developed by the Governor and disseminated to all Local 
Boards and chief elected officials.
    (d) The Local Boards may apply performance measures to service 
providers that differ from the performance measures that apply to the 
local area. These performance measures should be established after 
considering:
    (1) The established local performance levels,
    (2) The services provided by each provider; and
    (3) The populations the service providers are intended to serve.


Sec.  463.215  Under what circumstances are local areas eligible for 
State Incentive Grants?

    (a) The Governor is not required to award local incentive funds. 
The Governor may use non-Federal funds to create incentives for Local 
Boards to implement pay-for-performance contract strategies for the 
delivery of training services described in WIOA sec. 134(c)(3) or 
activities described in WIOA sec. 129(c)(2) in the local areas served 
by the Local Boards.
    (b) Pay-for-performance contract strategies must be implemented in 
accordance with Sec. Sec.  683.500 through 683.530 of this chapter and 
Sec.  463.160.


Sec.  463.220  Under what circumstances may a corrective action or 
sanction be applied to local areas for poor performance?

    (a) If a local area fails to meet the levels of performance agreed 
to under Sec.  463.210 for the primary indicators of performance in the 
adult, dislocated worker, and youth programs authorized under WIOA 
title I in any program year, technical assistance must be provided by 
the Governor or, upon the Governor's request, by the Secretary of 
Labor.
    (1) A State must establish the threshold for failure in meeting 
levels of performance for a local area before negotiating the adjusted 
levels of performance for the local area.
    (2) The technical assistance may include:
    (i) Assistance in the development of a performance improvement 
plan,
    (ii) The development of a modified local or regional plan; or
    (iii) Other actions designed to assist the local area in improving 
performance.
    (b) If a local area fails to meet the levels of performance agreed 
to under Sec.  463.210 for the primary indicators of performance for 
the adult, dislocated worker, and youth programs authorized under WIOA 
title I for a third consecutive program year, the Governor must take 
corrective actions. The corrective actions must include the development 
of a reorganization plan under which the Governor:
    (1) Requires the appointment and certification of a new Local 
Board, consistent with the criteria established under Sec.  679.350 of 
this chapter;
    (2) Prohibits the use of eligible providers and one-stop partners 
that have been identified as achieving poor levels of performance; or
    (3) Takes such other significant actions as the Governor determines 
are appropriate.


Sec.  463.225  Under what circumstances may local areas appeal a 
reorganization plan?

    (a) The Local Board and chief elected official for a local area 
that is subject to a reorganization plan under WIOA sec. 116(g)(2)(A) 
may appeal to the Governor to rescind or revise the reorganization plan 
not later than 30 days after receiving notice of the reorganization 
plan. The Governor must make a final decision within 30 days after 
receipt of the appeal.
    (b) The Local Board and chief elected official may appeal the final 
decision of the Governor to the Secretary of Labor not later than 30 
days after receiving the decision from the Governor. Any appeal of the 
Governor's final decision must be:
    (1) Appealed jointly by the Local Board and chief elected official 
to the Secretary under Sec.  683.650 of this chapter; and
    (2) Must be submitted by certified mail, return receipt requested, 
to the Secretary, U.S. Department of Labor, 200 Constitution Ave. NW., 
Washington DC 20210, Attention: ASET. A copy of the appeal must be 
simultaneously provided to the Governor.
    (c) Upon receipt of the joint appeal from the Local Board and chief 
elected official, the Secretary must make a final decision within 30 
days. In making this determination the Secretary may consider any 
comments submitted by the Governor in response to the appeals.
    (d) The decision by the Governor to impose a reorganization plan 
becomes effective at the time it is issued and

[[Page 20676]]

remains effective unless the Secretary of Labor rescinds or revises the 
reorganization plan under WIOA sec. 116(g)(2)(B)(ii).


Sec.  463.230  What information is required for the eligible training 
provider performance reports?

    (a) States are required to make available, and publish, annually 
using a template the Departments will disseminate including through 
electronic means, the eligible training provider performance reports 
for eligible training providers who provide services under sec. 122 of 
WIOA that are described in Sec. Sec.  680.400 through 680.530 of this 
chapter. These reports at a minimum must include, consistent with Sec.  
463.175 and with respect to each program of study that is eligible to 
receive funds under WIOA:
    (1) The total number of participants who received training services 
under the adult and dislocated worker programs authorized under WIOA 
title I for the most recent year and the 3 preceding program years, 
including:
    (i) The number of participants under the adult and dislocated 
worker programs disaggregated by barriers to employment;
    (ii) The number of participants under the adult and dislocated 
worker programs disaggregated by race, ethnicity, sex, and age;
    (iii) The number of participants under the adult and dislocated 
worker programs disaggregated by the type of training entity for the 
most recent program year and the 3 preceding program years;
    (2) The total number of participants who exit a program of study or 
its equivalent, including disaggregate counts by the type of training 
entity during the most recent program year and the 3 preceding program 
years;
    (3) The average cost-per-participant for participants who received 
training services for the most recent program year and the 3 preceding 
program years disaggregated by type of training entity;
    (4) The total number of individuals exiting from the program of 
study (or the equivalent); and
    (5) The levels of performance achieved for the primary indicators 
of performance identified in Sec.  463.155(a)(1)(i) through (iv) with 
respect to all individuals in a program of study (or the equivalent).
    (b) Registered apprenticeship programs are not required to submit 
performance information. See Sec.  680.470 of this chapter. If a 
registered apprenticeship program voluntarily submits performance 
information to a State, the State must include this information in the 
report.
    (c) The State must provide electronic access to the public eligible 
training provider performance report in its annual State performance 
report.
    (d) States must comply with any requirements from sec. 116(d)(4) of 
WIOA as explained in guidance issued by the Department of Labor.
    (e) The Governor may designate one or more State agencies such as a 
State education agency or State educational authority to assist in 
overseeing eligible training provider performance and facilitating the 
production and dissemination of eligible training provider performance 
reports. These agencies may be the same agencies that are designated as 
responsible for administering the eligible training providers list as 
provided under Sec.  680.500 of this chapter. The Governor or such 
agencies, or authorities, is responsible for:
    (1) Facilitating data matches between ETP records and UI wage data 
in order to produce the report;
    (2) The creation and dissemination of the reports as described in 
paragraphs (a) through (d) of this section;
    (3) Coordinating the dissemination of the performance reports with 
the eligible training provider list and the information required to 
accompany the list, as provided in Sec.  680.500 of this chapter.


Sec.  463.235  What are the reporting requirements for individual 
records for core Workforce Innovation and Opportunity Act title I, III, 
and IV programs?

    (a) On a quarterly basis, each State must submit to the Secretary 
of Labor or Secretary of Education, as appropriate, individual records 
that include demographic information, information on services received, 
and information on resulting outcomes, as appropriate, for each 
reportable individual in a core program administered by the Secretary 
of Labor or Education. Such records submitted to the Department of 
Labor must be submitted in one record that is integrated across all 
core Department of Labor programs.
    (b) For individual records submitted to the Secretary of Labor, 
records must be integrated across all core programs administered by the 
Secretary of Labor in one single file.
    (c) States must comply with any other requirements from sec. 
116(d)(2) of WIOA as explained in guidance issued by the Department of 
Labor.


Sec.  463.240  What are the requirements for data validation of State 
annual performance reports?

    (a) States must establish procedures, consistent with guidelines 
issued by the Secretary of Education or Secretary of Labor, to submit 
complete annual performance reports that contain information that is 
valid and reliable.
    (b) If a State fails to meet standards in paragraph (a) of this 
section as determined by the Secretary of Labor or Secretary of 
Education, the appropriate Secretary will provide technical assistance 
and may require the State to develop and implement corrective actions, 
which may require the State to provide training for its subrecipients.
    (c) The Secretary of Labor and the Secretary of Education will 
provide training and technical assistance to States in order to 
implement this section.
0
11. Add subpart J to part 463, as added elsewhere in this issue of the 
Federal Register, to read as follows:
Subpart J--Description of the One-Stop System Under Title I of the 
Workforce Innovation and Opportunity Act
Sec.
463.300 What is the one-stop delivery system?
463.305 What is a comprehensive one-stop center and what must be 
provided there?
463.310 What is an affiliated site and what must be provided there?
463.315 Can a stand-alone Wagner-Peyser employment service office be 
designated as an affiliated one-stop site?
463.320 Are there any requirements for networks of eligible one-stop 
partners or specialized centers?
463.400 Who are the required one-stop partners?
463.405 Is Temporary Assistance for Needy Families a required one-
stop partner?
463.410 What other entities may serve as one-stop partners?
463.415 What entity serves as the one-stop partner for a particular 
program in the local area?
463.420 What are the roles and responsibilities of the required one-
stop partners?
463.425 What are the applicable career services that must be 
provided through the one-stop delivery system by required one-stop 
partners?
463.430 What are career services?
463.435 What are the business services provided through the one-stop 
delivery system, and how are they provided?
463.440 When may a fee be charged for the business services in this 
subpart?
463.500 What is the Memorandum of Understanding for the one-stop 
delivery system and what must be included in the Memorandum of 
Understanding?
463.505 Is there a single Memorandum of Understanding for the local 
area, or must there be separate Memoranda of Understanding between 
the Local Board and each partner?

[[Page 20677]]

463.510 How should the Memorandum of Understanding be negotiated?
463.600 Who may operate one-stop centers?
463.605 How is the one-stop operator selected?
463.610 How is sole source selection of one-stop operators 
accomplished?
463.615 Can an entity serving as one-stop operator compete to be a 
one-stop operator under the procurement requirements of this 
subpart?
463.620 What is the one-stop operator's role?
463.625 Can a one-stop operator also be a service provider?
463.630 Can State merit staff still work in a one-stop where the 
operator is not a governmental entity?
463.635 What is the effective date of the provisions of this 
subpart?
463.700 What are one-stop infrastructure costs?
463.705 What guidance must the Governor issue regarding one-stop 
infrastructure funding?
463.710 How are infrastructure costs funded?
463.715 How are one-stop infrastructure costs funded in the local 
funding mechanism?
463.720 What funds are used to pay for infrastructure costs in the 
local one-stop infrastructure funding mechanism?
463.725 What happens if consensus on infrastructure funding is not 
reached at the local level between the Local Board, chief elected 
officials, and one-stop partners?
463.730 What is the State one-stop infrastructure funding mechanism?
463.735 How are partner contributions determined in the State one-
stop funding mechanism?
463.740 What funds are used to pay for infrastructure costs in the 
State one-stop infrastructure funding mechanism?
463.745 How is the allocation formula used by the Governor 
determined in the State one-stop funding mechanism?
463.750 When and how can a one-stop partner appeal a one-stop 
infrastructure amount designated by the State under the State 
infrastructure funding mechanism?
463.755 What are the required elements regarding infrastructure 
funding that must be included in the one-stop Memorandum of 
Understanding?
361.760 How do one-stop partners jointly fund other shared costs 
under the Memorandum of Understanding?
463.800 How are one-stop centers and one-stop delivery systems 
certified for effectiveness, physical and programmatic 
accessibility, and continuous improvement?
463.900 What is the common identifier to be used by each one-stop 
delivery system?

Subpart J--Description of the One-Stop System Under Title I of the 
Workforce Innovation and Opportunity Act


Sec.  463.300  What is the one-stop delivery system?

    (a) The one-stop delivery system brings together workforce 
development, educational, and other human resource services in a 
seamless customer-focused service delivery network that enhances access 
to the programs' services and improves long-term employment outcomes 
for individuals receiving assistance. One-stop partners administer 
separately funded programs as a set of integrated streamlined services 
to customers.
    (b) Title I of the Workforce Innovation and Opportunity Act (WIOA) 
assigns responsibilities at the local, State, and Federal level to 
ensure the creation and maintenance of a one-stop delivery system that 
enhances the range and quality of education and workforce development 
services that business and individual customers can access.
    (c) The system must include at least one comprehensive physical 
center in each local area as described in Sec.  463.305.
    (d) The system may also have additional arrangements to supplement 
the comprehensive center. These arrangements include:
    (1) An affiliated site or a network of affiliated sites, where one 
or more partners make programs, services, and activities available, as 
described in Sec.  463.310;
    (2) A network of eligible one-stop partners, as described in 
Sec. Sec.  463.400 through 463.410, through which each partner provides 
one or more of the programs, services, and activities that are linked, 
physically or technologically, to an affiliated site or access point 
that assures customers are provided information on the availability of 
career services, as well as other program services and activities, 
regardless of where they initially enter the workforce system in the 
local area; and
    (3) Specialized centers that address specific needs, including 
those of dislocated workers, youth, or key industry sectors, or 
clusters.
    (e) Required one-stop partner programs must provide access to 
programs, services, and activities through electronic means if 
applicable and practicable. This is in addition to providing access to 
services through the mandatory comprehensive physical one-stop center 
and any affiliated sites or specialized centers. The provision of 
programs and services by electronic methods such as Web sites, 
telephones, or other means must improve the efficiency, coordination, 
and quality of one-stop partner services. Electronic delivery must not 
replace access to such services at a comprehensive one-stop center or 
be a substitute to making services available at an affiliated site if 
the partner is participating in an affiliated site. Electronic delivery 
systems must be in compliance with the nondiscrimination and equal 
opportunity provisions of WIOA in sec. 188 and its implementing 
regulations at 29 CFR part 37.
    (f) The design of the local area's one-stop delivery system must be 
described in the Memorandum of Understanding (MOU) executed with the 
one-stop partners, described in Sec.  463.500.


Sec.  463.305  What is a comprehensive one-stop center and what must be 
provided there?

    (a) A comprehensive one-stop center is a physical location where 
jobseeker and employer customers can access the programs, services, and 
activities of all required one-stop partners. A comprehensive one-stop 
center must have at least one title I staff person physically present.
    (b) The comprehensive one-stop center must provide:
    (1) Career services, described in Sec.  463.430;
    (2) Access to training services described in Sec.  680.200 of this 
chapter;
    (3) Access to any employment and training activities carried out 
under sec. 134(d) of WIOA;
    (4) Access to programs and activities carried out by one-stop 
partners listed in Sec. Sec.  463.400 through 463.410, including 
Wagner-Peyser employment services; and
    (5) Workforce and labor market information.
    (c) Customers must have access to these programs, services, and 
activities during regular business days at a comprehensive one-stop 
center. The Local Board may establish other service hours at other 
times to accommodate the schedules of individuals who work on regular 
business days. The State Board will evaluate the hours of access to 
service as part of the evaluation of effectiveness in the one-stop 
certification process described in Sec.  463.800(b).
    (d) ``Access'' to programs and services means having either: 
Program staff physically present at the location; having partner 
program staff physically present at the one-stop appropriately trained 
to provide information to customers about the programs, services, and 
activities available through partner

[[Page 20678]]

programs; or providing direct linkage through technology to program 
staff who can provide meaningful information or services.
    (1) A ``direct linkage'' means providing direct connection at the 
one-stop, within a reasonable time, by phone or through a real-time 
Web-based communication to a program staff member who can provide 
program information or services to the customer.
    (2) A ``direct linkage'' does not include providing a phone number 
or computer Web site that can be used at an individual's home; 
providing information, pamphlets, or materials; or making arrangements 
for the customer to receive services at a later time or on a different 
day.
    (e) All comprehensive one-stop centers must be physically and 
programmatically accessible to individuals with disabilities, as 
described in Sec.  463.800.


Sec.  463.310  What is an affiliated site and what must be provided 
there?

    (a) An affiliated site, or affiliate one-stop center, is a site 
that makes available to jobseeker and employer customers one or more of 
the one-stop partners' programs, services, and activities. An 
affiliated site does not need to provide access to every required one-
stop partner program. The frequency of program staff's physical 
presence in the affiliated site will be determined at the local level. 
Affiliated sites are access points in addition to the Comprehensive 
one-stop center(s) in each local area. If used by local areas as a part 
of the service delivery strategy, affiliate sites should be implemented 
in a manner that supplements and enhances customer access to services.
    (b) As described in Sec.  463.315, Wagner-Peyser employment 
services cannot be a stand-alone affiliated site.
    (c) States, in conjunction with the Local Workforce Development 
Boards, must examine lease agreements and property holdings throughout 
the one-stop delivery system in order to use property in an efficient 
and effective way. Where necessary and appropriate, States and Local 
Boards must take expeditious steps to align lease expiration dates with 
efforts to consolidate one-stop operations into service points where 
Wagner-Peyser employment services are collocated as soon as reasonably 
possible. These steps must be included in the State Plan.
    (d) All affiliated sites must be physically and programmatically 
accessible to individuals with disabilities, as described in Sec.  
463.800.


Sec.  463.315  Can a stand-alone Wagner-Peyser employment service 
office be designated as an affiliated one-stop site?

    (a) Separate stand-alone Wagner-Peyser employment services offices 
are not permitted under WIOA, as also described in Sec.  652.202 of 
this chapter.
    (b) If Wagner-Peyser employment services are provided at an 
affiliated site, there must be at least one other partner in the 
affiliated site with staff physically present more than 50 percent of 
the time the center is open. Additionally, the other partner must not 
be the partner administering local veterans' employment 
representatives, disabled veterans' outreach program specialists, or 
unemployment compensation programs. If Wagner-Peyser employment 
services and any of these three programs are provided at an affiliated 
site, an additional partner must have staff present in the center more 
than 50 percent of the time the center is open.


Sec.  463.320  Are there any requirements for networks of eligible one-
stop partners or specialized centers?

    Any network of one-stop partners or specialized centers must be 
connected to, such as having processes in place to make referrals to, 
the comprehensive and any appropriate affiliate one-stop centers. 
Wagner-Peyser employment services cannot stand alone in a specialized 
center. Just as described in Sec.  463.315 for an affiliated site, a 
specialized center must include other programs besides Wagner-Peyser 
employment services, local veterans' employment representatives, 
disabled veterans' outreach program specialists, and unemployment 
compensation.


Sec.  463.400  Who are the required one-stop partners?

    (a) Section 121(b)(1)(B) of WIOA identifies the entities that are 
required partners in the local one-stop systems.
    (b) The required partners are the entities responsible for 
administering the following programs and activities in the local area:
    (1) Programs authorized under title I of WIOA, including:
    (i) Adults;
    (ii) Dislocated workers;
    (iii) Youth;
    (iv) Job Corps;
    (v) YouthBuild;
    (vi) Native American programs; and
    (vii) Migrant and seasonal farmworker programs;
    (2) Employment services authorized under the Wagner-Peyser Act (29 
U.S.C. 49 et seq.);
    (3) Adult education and literacy activities authorized under title 
II of WIOA;
    (4) The Vocational Rehabilitation program authorized under title I 
of the Rehabilitation Act of 1973 (29 U.S.C. 720 et seq.);
    (5) The Senior Community Service Employment Program authorized 
under title V of the Older Americans Act of 1965 (42 U.S.C. 3056 et 
seq.);
    (6) Career and technical education programs at the post-secondary 
level authorized under the Carl D. Perkins Career and Technical 
Education Act of 2006 (20 U.S.C. 2301 et seq.);
    (7) Trade Adjustment Assistance activities authorized under chapter 
2 of title II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.);
    (8) Jobs for Veterans State Grants programs authorized under 
chapter 41 of title 38, U.S.C.;
    (9) Employment and training activities carried out under the 
Community Services Block Grant (42 U.S.C. 9901 et seq.);
    (10) Employment and training activities carried out by the 
Department of Housing and Urban Development;
    (11) Programs authorized under State unemployment compensation laws 
(in accordance with applicable Federal law);
    (12) Programs authorized under sec. 212 of the Second Chance Act of 
2007 (42 U.S.C. 17532); and
    (13) Temporary Assistance for Needy Families (TANF) authorized 
under part A of title IV of the Social Security Act (42 U.S.C. 601 et 
seq.), unless exempted by the Governor under Sec.  463.405(b).


Sec.  463.405  Is Temporary Assistance for Needy Families a required 
one-stop partner?

    (a) Yes, TANF, authorized under part A of title IV of the Social 
Security Act (42 U.S.C. 601 et seq.), is a required partner. (WIOA sec. 
121(b)(1)(B)(xiii)).
    (b) The Governor may determine that TANF will not be a required 
partner in the State, or within some specific local areas in the State. 
In this instance, the Governor must notify the Secretaries of the U.S. 
Departments of Labor and Health and Human Services in writing of this 
determination.
    (c) In States, or local areas within a State, where the Governor 
has determined that TANF is not required to be a partner, local TANF 
programs may still opt to be a one-stop partner, or to work in 
collaboration with the one-stop center.


Sec.  463.410  What other entities may serve as one-stop partners?

    (a) Other entities that carry out a workforce development program, 
including Federal, State, or local programs and programs in the private

[[Page 20679]]

sector, may serve as additional partners in the one-stop system if the 
Local Board and chief elected official(s) approve the entity's 
participation.
    (b) Additional partners may include:
    (1) Employment and training programs administered by the Social 
Security Administration, including the Ticket to Work and Self-
Sufficiency Program established under sec. 1148 of the Social Security 
Act (42 U.S.C. 1320b-19);
    (2) Employment and training programs carried out by the Small 
Business Administration;
    (3) Supplemental Nutrition Assistance Program (SNAP) employment and 
training programs, authorized under secs. 6(d)(4) and 6(o) of the Food 
and Nutrition Act of 2008 (7 U.S.C. 2015(d)(4));
    (4) Client Assistance Program authorized under sec. 112 of the 
Rehabilitation Act of 1973 (29 U.S.C. 732);
    (5) Programs authorized under the National and Community Service 
Act of 1990 (42 U.S.C. 12501 et seq.); and
    (6) Other appropriate Federal, State or local programs, including 
employment, education, and training programs provided by public 
libraries or in the private sector.


Sec.  463.415  What entity serves as the one-stop partner for a 
particular program in the local area?

    (a) The entity that carries out the program and activities listed 
in Sec.  463.400 or Sec.  463.405, and therefore serves as the one-stop 
partner, is the grant recipient, administrative entity, or organization 
responsible for administering the funds of the specified program in the 
local area. The term ``entity'' does not include the service providers 
that contract with, or are subrecipients of, the local administrative 
entity. For programs that do not include local administrative entities, 
the responsible State agency should be the partner. Specific entities 
for particular programs are identified in paragraph (b) of this 
section. If a program or activity listed in Sec.  463.400 is not 
carried out in a local area, the requirements relating to a required 
one-stop partner are not applicable to such program or activity in that 
local one-stop system.
    (b) For title II of WIOA, the entity that carries out the program 
for the purposes of paragraph (a) of this section is the sole entity or 
agency in the State or outlying area responsible for administering or 
supervising policy for adult education and literacy activities in the 
State or outlying area. The State eligible entity may delegate its 
responsibilities under paragraph (a) of this section to one or more 
eligible providers or consortium of eligible providers.
    (c) For the Vocational Rehabilitation program, authorized under 
title I of the Rehabilitation Act, the entity that carries out the 
program for the purposes of paragraph (a) of this section is the 
designated State agencies or designated State units specified under 
sec. 101(a)(2) of the Rehabilitation Act that is primarily concerned 
with vocational rehabilitation, or vocational and other rehabilitation, 
of individuals with disabilities.
    (d) Under WIOA, the national programs, including Job Corps, the 
Native American program, YouthBuild, and Migrant and Seasonal 
Farmworker programs are required one-stop partners. The entity for the 
Native American program and Migrant and Seasonal Farmworker programs is 
the grantee of those respective programs. The entity for Job Corps is 
the Job Corps center.
    (e) For the Carl D. Perkins Career and Technical Education Act of 
2006, the entity that carries out the program for the purposes of 
paragraph (a) of this section is the State eligible agency. The State 
eligible agency may delegate its responsibilities under paragraph (a) 
of this section to one or more State agencies, eligible recipients at 
the post-secondary level, or consortia of eligible recipients at the 
post-secondary level.


Sec.  463.420  What are the roles and responsibilities of the required 
one-stop partners?

    Each required partner must:
    (a) Provide access to its programs or activities through the one-
stop delivery system, in addition to any other appropriate locations; 
(WIOA sec. 121(b)(1)(A)(i).)
    (b) Use a portion of funds made available to the partner's program, 
to the extent consistent with the Federal law authorizing the partner's 
program and with Federal cost principles in 2 CFR parts 200 and 3474 
(requiring, among other things, that costs are allowable, reasonable, 
necessary, and allocable), to:
    (1) Provide applicable career services; and
    (2) Work collaboratively with the State and Local Boards to 
establish and maintain the one-stop delivery system. This includes 
jointly funding the one-stop infrastructure through partner 
contributions that are based upon:
    (i) A reasonable cost allocation methodology by which 
infrastructure costs are charged to each partner in proportion to the 
relative benefits;
    (ii) Federal cost principles; and
    (iii) Any local administrative cost requirements in the Federal law 
authorizing the partner's program. (This is further described in Sec.  
463.700). (WIOA sec. 121(b)(1)(A)(ii).)
    (c) Enter into an MOU with the Local Board relating to the 
operation of the one-stop system that meets the requirements of Sec.  
463.500(d);
    (d) Participate in the operation of the one-stop system consistent 
with the terms of the MOU, requirements of authorizing laws, the 
Federal cost principles, and all other applicable legal requirements; 
(WIOA sec. 121(b)(1)(A)(iv)) and
    (e) Provide representation on the State and Local Workforce 
Development Boards as required and participate in Board committees as 
needed. (WIOA secs. 101(b)(iii) and 107(b)(2)(C) and (D))


Sec.  463.425  What are the applicable career services that must be 
provided through the one-stop delivery system by required one-stop 
partners?

    (a) The applicable career services to be delivered by required one-
stop partners are those services listed in Sec.  463.430 that are 
authorized to be provided under each partner's program.
    (b) One-stop centers provide services to individual customers based 
on individual needs, including the seamless delivery of multiple 
services to individual customers. There is no required sequence of 
services. (WIOA sec. 121(e)(1)(A).)


Sec.  463.430  What are career services?

    Career services, as identified in sec. 134(c)(2) of WIOA, consist 
of three types:
    (a) Basic career services must be made available and, at a minimum, 
must include the following services, as consistent with allowable 
program activities and Federal cost principles:
    (1) Determinations of whether the individual is eligible to receive 
assistance from the adult, dislocated worker, or youth programs;
    (2) Outreach, intake (including worker profiling), and orientation 
to information and other services available through the one-stop 
delivery system;
    (3) Initial assessment of skill levels including literacy, 
numeracy, and English language proficiency, as well as aptitudes, 
abilities (including skills gaps), and supportive services needs;
    (4) Labor exchange services, including--
    (i) Job search and placement assistance, and, when needed by an 
individual, career counseling, including--
    (A) Provision of information on in-demand industry sectors and 
occupations (as defined in sec. 3(23) of WIOA); and,

[[Page 20680]]

    (B) Provision of information on nontraditional employment; and
    (ii) Appropriate recruitment and other business services on behalf 
of employers, including information and referrals to specialized 
business services other than those traditionally offered through the 
one-stop delivery system;
    (5) Provision of referrals to and coordination of activities with 
other programs and services, including programs and services within the 
one-stop delivery system and, when appropriate, other workforce 
development programs;
    (6) Provision of workforce and labor market employment statistics 
information, including the provision of accurate information relating 
to local, regional, and national labor market areas, including--
    (i) Job vacancy listings in labor market areas;
    (ii) Information on job skills necessary to obtain the vacant jobs 
listed; and
    (iii) Information relating to local occupations in demand and the 
earnings, skill requirements, and opportunities for advancement for 
those jobs;
    (7) Provision of performance information and program cost 
information on eligible providers of training services by program and 
type of providers;
    (8) Provision of information, in usable and understandable formats 
and languages, about how the local area is performing on local 
performance accountability measures, as well as any additional 
performance information relating to the area's one-stop delivery 
system;
    (9) Provision of information, in usable and understandable formats 
and languages, relating to the availability of supportive services or 
assistance, and appropriate referrals to those services and assistance, 
including: Child care; child support; medical or child health 
assistance available through the State's Medicaid program and 
Children's Health Insurance Program; benefits under SNAP; assistance 
through the earned income tax credit; and assistance under a State 
program for Temporary Assistance for Needy Families, and other 
supportive services and transportation provided through that program;
    (10) Provision of information and assistance regarding filing 
claims for unemployment compensation, by which the one-stop must 
provide meaningful assistance to individuals seeking assistance in 
filing a claim for unemployment compensation.
    (i) ``Meaningful assistance'' means:
    (A) Providing assistance on-site using staff who are well-trained 
in unemployment compensation claims filing and the rights and 
responsibilities of claimants, or
    (B) Providing assistance by phone or via other technology, as long 
as the assistance is provided by trained and available staff and within 
a reasonable time.
    (ii) The costs associated in providing this assistance may be paid 
for by the State's unemployment insurance program, or the WIOA adult or 
dislocated worker programs, or some combination thereof.
    (11) Assistance in establishing eligibility for programs of 
financial aid assistance for training and education programs not 
provided under WIOA.
    (b) Individualized career services must be made available if 
determined to be appropriate in order for an individual to obtain or 
retain employment. These services include the following services, as 
consistent with program requirements and Federal cost principles:
    (1) Comprehensive and specialized assessments of the skill levels 
and service needs of adults and dislocated workers, which may include--
    (i) Diagnostic testing and use of other assessment tools; and
    (ii) In-depth interviewing and evaluation to identify employment 
barriers and appropriate employment goals;
    (2) Development of an individual employment plan, to identify the 
employment goals, appropriate achievement objectives, and appropriate 
combination of services for the participant to achieve his or her 
employment goals, including the list of, and information about, the 
eligible training providers (as described in Sec.  680.180 of this 
chapter);
    (3) Group counseling;
    (4) Individual counseling;
    (5) Career planning;
    (6) Short-term pre-vocational services including development of 
learning skills, communication skills, interviewing skills, 
punctuality, personal maintenance skills, and professional conduct 
services to prepare individuals for unsubsidized employment or 
training;
    (7) Internships and work experiences that are linked to careers (as 
described in Sec.  680.170 of this chapter);
    (8) Workforce preparation activities;
    (9) Financial literacy services as described in sec. 129(b)(2)(D) 
of WIOA and Sec.  681.500 of this chapter;
    (10) Out-of-area job search assistance and relocation assistance; 
and
    (11) English language acquisition and integrated education and 
training programs.
    (c) Follow-up services must be provided, as appropriate, including: 
Counseling regarding the workplace, for participants in adult or 
dislocated worker workforce investment activities who are placed in 
unsubsidized employment, for up to 12 months after the first day of 
employment.


Sec.  463.435  What are the business services provided through the one-
stop delivery system, and how are they provided?

    (a) Certain career services must be made available to local 
businesses, specifically labor exchange activities and labor market 
information described in Sec. Sec.  463.430(a)(4)(ii) and (a)(6). Local 
areas must establish and develop relationships and networks with large 
and small employers and their intermediaries. (WIOA sec. 
134(c)(1)(A)(iv)). Local areas also must develop, convene, or implement 
industry or sector partnerships. (WIOA sec. 134(c)(1)(A)(v)).
    (b) Customized business services may be provided to employers, 
employer associations, or other such organizations (WIOA sec. 
134(d)(1)(A)(ii)). These services are tailored for specific employers 
and may include:
    (1) Customized screening and referral of qualified participants in 
training services to employers;
    (2) Customized services to employers, employer associations, or 
other such organizations, on employment-related issues;
    (3) Customized recruitment events and related services for 
employers including targeted job fairs;
    (4) Human resource consultation services, including but not limited 
to assistance with:
    (i) Writing/reviewing job descriptions and employee handbooks;
    (ii) Developing performance evaluation and personnel policies;
    (iii) Creating orientation sessions for new workers;
    (iv) Honing job interview techniques for efficiency and compliance;
    (v) Analyzing employee turnover; or
    (vi) Explaining labor laws to help employers comply with wage/hour 
and safety/health regulations;
    (5) Customized labor market information for specific employers, 
sectors, industries or clusters; and
    (6) Other similar customized services.
    (c) Local areas may also provide other business services and 
strategies that meet the workforce investment needs of area employers, 
in accordance with partner programs' statutory requirements and 
consistent with

[[Page 20681]]

Federal cost principles. These business services may be provided 
through effective business intermediaries working in conjunction with 
the Local Board, or through the use of economic development, 
philanthropic, and other public and private resources in a manner 
determined appropriate by the Local Board and in cooperation with the 
State. Allowable activities, consistent with each partner's authorized 
activities, include, but are not limited to:
    (1) Developing and implementing industry sector strategies 
(including strategies involving industry partnerships, regional skills 
alliances, industry skill panels, and sectoral skills partnerships);
    (2) Customized assistance or referral for assistance in the 
development of a registered apprenticeship program;
    (3) Developing and delivering innovative workforce investment 
services and strategies for area employers, which may include career 
pathways, skills upgrading, skill standard development and 
certification for recognized post-secondary credential or other 
employer use, and other effective initiatives for meeting the workforce 
investment needs of area employers and workers;
    (4) Assistance to area employers in managing reductions in force in 
coordination with rapid response activities and with strategies for the 
aversion of layoffs, which may include strategies such as early 
identification of firms at risk of layoffs, use of feasibility studies 
to assess the needs of and options for at-risk firms, and the delivery 
of employment and training activities to address risk factors;
    (5) The marketing of business services to appropriate area 
employers, including small and mid-sized employers; and
    (6) Assisting employers with accessing local, State, and Federal 
tax credits.
    (d) All business services and strategies must be reflected in the 
local plan, described in Sec.  679.560(b)(3) of this chapter.


Sec.  463.440  When may a fee be charged for the business services in 
this subpart?

    (a) There is no requirement that a fee-for-service be charged to 
employers.
    (b) No fee may be charged for services provided in Sec.  
463.435(a).
    (c) A fee may be charged for services provided under Sec.  
463.435(b) and (c). Services provided under Sec.  463.435(c) may be 
provided through effective business intermediaries working in 
conjunction with the Local Board and may also be provided on a fee-for-
service basis or through the leveraging of economic development, 
philanthropic, and other public and private resources in a manner 
determined appropriate by the Local Board. The Local Workforce 
Development Board may examine the services provided compared with the 
assets and resources available within the local one-stop delivery 
system and through its partners to determine an appropriate cost 
structure for services, if any.


Sec.  463.500  What is the Memorandum of Understanding for the one-stop 
delivery system and what must be included in the Memorandum of 
Understanding ?

    (a) The MOU is the product of local discussion and negotiation, and 
is an agreement developed and executed between the Local Board, with 
the agreement of the chief elected official and the one-stop partners, 
relating to the operation of the one-stop delivery system in the local 
area. Two or more local areas in a region may develop a single joint 
MOU, if they are in a region that has submitted a regional plan under 
sec. 106 of WIOA.
    (b) The MOU must include:
    (1) A description of services to be provided through the one-stop 
delivery system, including the manner in which the services will be 
coordinated and delivered through the system;
    (2) A final plan, or an interim plan if needed, on how the costs of 
the services and the operating costs of the system will be funded, 
including:
    (i) Funding of infrastructure costs of one-stop centers in 
accordance with Sec. Sec.  463.700 through 463.755; and
    (ii) Funding of the shared services and operating costs of the one-
stop delivery system described in Sec.  463.760;
    (3) Methods for referring individuals between the one-stop 
operators and partners for appropriate services and activities;
    (4) Methods to ensure that the needs of workers, youth, and 
individuals with barriers to employment, including individuals with 
disabilities, are addressed in providing access to services, including 
access to technology and materials that are available through the one-
stop delivery system;
    (5) The duration of the MOU and procedures for amending it; and
    (6) Assurances that each MOU will be reviewed, and if substantial 
changes have occurred, renewed, not less than once every 3-year period 
to ensure appropriate funding and delivery of services.
    (c) The MOU may contain any other provisions agreed to by the 
parties that are consistent with WIOA title I, the authorizing statutes 
and regulations of one-stop partner programs, and the WIOA regulations. 
(WIOA sec. 121(c).)
    (d) When fully executed, the MOU must contain the signatures of the 
Local Board, one-stop partners, the chief elected official(s), and the 
time period in which the agreement is effective. The MOU must be 
updated not less than every 3 years to reflect any changes in the 
signatory official of the Board, one-stop partners, and chief elected 
officials, or one-stop infrastructure funding.
    (e) If a one-stop partner appeal to the State regarding 
infrastructure costs, using the process described in Sec.  463.750, 
results in a change to the one-stop partner's infrastructure cost 
contributions, the MOU must be updated to reflect the final one-stop 
partner infrastructure cost contributions.


Sec.  463.505  Is there a single Memorandum of Understanding for the 
local area, or must there be separate Memoranda of Understanding 
between the Local Board and each partner?

    (a) A single ``umbrella'' MOU may be developed that addresses the 
issues relating to the local one-stop delivery system for the Local 
Board, chief elected official and all partners. Alternatively, the 
Local Board (with agreement of chief elected official) may enter into 
separate agreements between each partner or groups of partners.
    (b) Under either approach, the requirements described in Sec.  
463.500 apply. Since funds are generally appropriated annually, the 
Local Board may negotiate financial agreements with each partner 
annually to update funding of services and operating costs of the 
system under the MOU.


Sec.  463.510  How should the Memorandum of Understanding be 
negotiated?

    (a) WIOA emphasizes full and effective partnerships between Local 
Boards, chief elected officials, and one-stop partners. Local Boards 
and partners must enter into good-faith negotiations. Local Boards, 
chief elected officials, and one-stop partners may also request 
assistance from a State agency responsible for administering the 
partner program, the Governor, State Board, or other appropriate 
parties on other aspects of the MOU.
    (b) Local Boards and one-stop partners must establish, in the MOU, 
a final plan for how the Local Board and programs will fund the 
infrastructure costs of the one-stop centers. If a final plan regarding 
infrastructure costs is not complete when other sections of the MOU are 
ready, an interim infrastructure cost plan may be included instead, as 
described in Sec.  463.715(c).

[[Page 20682]]

Once the final infrastructure cost plan is approved, the Local Board 
and one-stop partners must amend the MOU to include the final plan for 
funding infrastructure costs of the one-stop centers, including a 
description of the funding mechanism established by the Governor 
relevant to the local area. Infrastructure cost funding is described in 
detail in subpart E of this part. (WIOA sec. 121(h)(2).)
    (c) The Local Board must report to the State Board, Governor, and 
relevant State agency when MOU negotiations with one-stop partners have 
reached an impasse.
    (1) The Local Board and partners must document the negotiations and 
efforts that have taken place in the MOU. The State Board, one-stop 
partner programs, and the Governor may consult with the appropriate 
Federal agencies to address impasse situations related to issues other 
than infrastructure funding after attempting to address the impasse. 
Impasses related to infrastructure cost funding must be resolved using 
the State infrastructure cost funding mechanism described in Sec.  
463.730.
    (2) The Local Board must report failure to execute an MOU with a 
required partner to the Governor, State Board, and the State agency 
responsible for administering the partner's program. Additionally, if 
the State cannot assist the Local Board in resolving the impasse, the 
Governor or the State Board must report the failure to the Secretary of 
Labor and to the head of any other Federal agency with responsibility 
for oversight of a partner's program.


Sec.  463.600  Who may operate one-stop centers?

    (a) One-stop operators may be a single entity (public, private, or 
nonprofit) or a consortium of entities. If the consortium of entities 
is one of one-stop partners, it must include a minimum of three of the 
one-stop partners described in Sec.  463.400.
    (b) The one-stop operator may operate one or more one-stop centers. 
There may be more than one one-stop operator in a local area.
    (c) The types of entities that may be a one-stop operator include:
    (1) An institution of higher education;
    (2) An Employment Service State agency established under the 
Wagner-Peyser Act;
    (3) A community-based organization, nonprofit organization, or 
workforce intermediary;
    (4) A private for-profit entity;
    (5) A government agency;
    (6) A Local Board, with the approval of the chief local elected 
official and the Governor; or
    (7) Another interested organization or entity, which is capable of 
carrying out the duties of the one-stop operator. Examples may include 
a local chamber of commerce or other business organization, or a labor 
organization.
    (d) Elementary schools and secondary schools are not eligible as 
one-stop operators, except that a nontraditional public secondary 
school such as a night school, adult school, or an area career and 
technical education school may be selected.
    (e) The State and Local Boards must ensure that, in carrying out 
WIOA programs and activities, one-stop operators:
    (1) Disclose any potential conflicts of interest arising from the 
relationships of the operators with particular training service 
providers or other service providers (further discussed in Sec.  
679.430 of this chapter);
    (2) Do not establish practices that create disincentives to 
providing services to individuals with barriers to employment who may 
require longer-term career and training services; and
    (3) Comply with Federal regulations and procurement policies 
relating to the calculation and use of profits, including those at 
Sec.  683.295 of this chapter, the Uniform Guidance at 2 CFR chapter 
II, and other applicable regulations and policies.


Sec.  463.605  How is the one-stop operator selected?

    (a) Consistent with paragraphs (b) and (c) of this section, the 
Local Board must select the one-stop operator through a competitive 
process, as required by sec. 121(d)(2)(A) of WIOA, at least once every 
4 years. A State may require, or a Local Board may choose to implement, 
a competitive selection process more than once every 4 years.
    (b) In instances in which a State is conducting the competitive 
process described in paragraph (a) of this section, the State must 
follow the same policies and procedures it uses for procurement with 
non-Federal funds.
    (c) All other non-Federal entities, including subrecipients of a 
State (such as local areas), must use a competitive process based on 
the principles of competitive procurement in the Uniform Administrative 
Guidance set out at 2 CFR 200.318 through 200.326.
    (d) Entities described in paragraph (c) of this section must first 
determine the nature of the process to be used to comply with sec. 
121(d)(2)(A) of WIOA. The acceptable processes are:
    (1) Procurement by sealed bids;
    (2) Procurement by competitive proposals; or
    (3) Procurement by sole source, permitted only if:
    (i) Analysis of market conditions and other factors lead to a 
determination that it is necessary to use sole-source procurement 
because:
    (A) There is only one entity that could serve as an operator; or
    (B) Unusual and compelling urgency will not permit a delay 
resulting from competitive solicitation; or
    (ii) Results of the competition conducted under paragraphs (d)(1) 
or (2) of this section were determined to be inadequate.
    (e) Entities must prepare written documentation explaining the 
determination concerning the nature of the competitive process to be 
followed in selecting a one-stop operator.


Sec.  463.610  How is sole source selection of one-stop operators 
accomplished?

    (a) As set forth in Sec.  463.605(d)(3), under certain conditions, 
sole source procurement is an allowable method of procurement.
    (b) In the event that sole source procurement is determined 
necessary and reasonable, in accordance with Sec.  463.605(d)(3), 
written documentation must be prepared and maintained concerning the 
entire process of making such a selection.
    (c) Such sole source procurement must include appropriate conflict 
of interest policies and procedures. These policies and procedures must 
conform to the specifications in Sec.  679.430 of this chapter for 
demonstrating internal controls and preventing conflict of interest.
    (d) A Local Board can be selected as a one-stop operator through 
sole source procurement only with agreement of the chief elected 
official in the local area and the Governor. The Local Board must 
establish sufficient conflict of interest policies and procedures and 
they must be approved by the Governor.


Sec.  463.615  Can an entity serving as one-stop operator compete to be 
a one-stop operator under the procurement requirements of this subpart?

    (a) Local Boards can compete for and be selected as one-stop 
operators, as long as appropriate firewalls and conflict of interest 
policies and procedures are in place. These policies and procedures 
must conform to the specifications in Sec.  679.430 of this chapter for 
demonstrating internal controls and preventing conflict of interest.
    (b) State and local agencies can compete for and be selected as 
one-stop operators by the Local Board, as long as appropriate firewalls 
and conflict of interest policies and procedures are in place. These 
policies and procedures

[[Page 20683]]

must conform to the specifications in Sec.  679.430 of this chapter for 
demonstrating internal controls and preventing conflict of interest.
    (c) In the case of single State areas where the State Board serves 
as the Local Board, the State agency is eligible to compete for and be 
selected as operator as long as appropriate firewalls and conflict of 
interest policies are in place and followed for the competition. These 
policies and procedures must conform to the specifications in Sec.  
679.430 of this chapter for demonstrating internal controls and 
preventing conflict of interest.


Sec.  463.620  What is the one-stop operator's role?

    (a) At a minimum, the one-stop operator must coordinate the service 
delivery of required one-stop partners and service providers. Local 
Boards may establish additional roles of one-stop operator, including, 
but not limited to: Coordinating service providers within the center 
and across the one-stop system, being the primary provider of services 
within the center, providing some of the services within the center, or 
coordinating service delivery in a multi-center area. The competition 
for a one-stop operator must clearly articulate the role of the one-
stop operator.
    (b) A one-stop operator may not perform the following functions: 
Convene system stakeholders to assist in the development of the local 
plan; prepare and submit local plans (as required under sec. 107 of 
WIOA); be responsible for oversight of itself; manage or significantly 
participate in the competitive selection process for one-stop 
operators; select or terminate one-stop operators, career services, and 
youth providers; negotiate local performance accountability measures; 
and develop and submit budget for activities of the Local Board in the 
local area. An entity serving as a one-stop operator may perform some 
or all of these functions if it also serves in another capacity, if it 
has established sufficient firewalls and conflict of interest policies. 
The policies must conform to the specifications in Sec.  679.430 of 
this chapter for demonstrating internal controls and preventing 
conflict of interest.


Sec.  463.625  Can a one-stop operator also be a service provider?

    Yes, but there must be appropriate firewalls in place in regards to 
the competition, and subsequent oversight, monitoring, and evaluation 
of performance of the service provider. The operator cannot develop, 
manage or conduct the competition of a service provider in which it 
intends to compete. In cases where an operator is also a service 
provider, there must be firewalls and internal controls within the 
operator-service provider entity, as well as specific policies and 
procedures at the Local Board level regarding oversight, monitoring, 
and evaluation of performance of the service provider. The firewalls 
must conform to the specifications in Sec.  679.430 of this chapter for 
demonstrating internal controls and preventing conflict of interest.


Sec.  463.630  Can State merit staff still work in a one-stop where the 
operator is not a governmental entity?

    Yes. State merit staff can continue to perform functions and 
activities in the one-stop career center. The Local Board and one-stop 
operator must establish a system for management of merit staff in 
accordance with State policies and procedures. Continued use of State 
merit staff may be included in the competition for and final contract 
with the one-stop operator.


Sec.  463.635  What is the effective date of the provisions of this 
subpart?

    (a) No later than June 30, 2017, one-stop operators selected under 
the competitive process described in this subpart must be in place and 
operating the one-stop.
    (b) By June 30, 2016, every Local Board must demonstrate it is 
taking steps to prepare for competition of its one-stop operator. This 
demonstration may include, but is not limited to, market research, 
requests for information, and conducting a cost and price analysis.


Sec.  463.700  What are one-stop infrastructure costs?

    (a) Infrastructure costs of one-stop centers are nonpersonnel costs 
that are necessary for the general operation of the one-stop center, 
including:
    (1) Rental of the facilities;
    (2) Utilities and maintenance;
    (3) Equipment (including assessment-related products and assistive 
technology for individuals with disabilities); and
    (4) Technology to facilitate access to the one-stop center, 
including technology used for the center's planning and outreach 
activities.
    (b) Local Boards may consider common identifier costs as costs of 
one-stop infrastructure.
    (c) Each entity that carries out a program or activities in a local 
one-stop center, described in Sec. Sec.  463.400 through 463.410, must 
use a portion of the funds available for the program and activities to 
maintain the one-stop delivery system, including payment of the 
infrastructure costs of one-stop centers. These payments must be in 
accordance with this subpart; Federal cost principles, which require 
that all costs must be allowable, reasonable, necessary, and allocable 
to the program; and all other applicable legal requirements.


Sec.  463.705  What guidance must the Governor issue regarding one-stop 
infrastructure funding?

    (a) The Governor, after consultation with chief elected officials, 
the State Board, and Local Boards, and consistent with guidance and 
policies provided by the State Board, must develop and issue guidance 
for use by local areas, specifically:
    (1) Guidelines for State-administered one-stop partner programs for 
determining such programs' contributions to a one-stop delivery system, 
based on such programs' proportionate use of such system consistent 
with Office of Management and Budget Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards in 2 CFR part 200, including determining funding for the costs 
of infrastructure; and
    (2) Guidance to assist Local Boards, chief elected officials, and 
one-stop partners in local areas in determining equitable and stable 
methods of funding the costs of infrastructure at one-stop centers 
based on proportionate benefits received, and consistent with Federal 
cost principles.
    (b) The guidance must include:
    (1) The appropriate roles of the one-stop partner programs in 
identifying one-stop infrastructure costs;
    (2) Approaches to facilitate equitable and efficient cost 
allocation that results in a reasonable cost allocation methodology 
where infrastructure costs are charged to each partner in proportion to 
relative benefits received, consistent with Federal cost principles; 
and
    (3) The timelines regarding notification to the Governor for not 
reaching local agreement and triggering the State-funded infrastructure 
mechanism described in Sec.  463.730, and timelines for a one-stop 
partner to submit an appeal in the State-funded infrastructure 
mechanism.


Sec.  463.710  How are infrastructure costs funded?

    Infrastructure costs are funded either through the local funding 
mechanism described in Sec.  463.715 or through the State funding 
mechanism described in Sec.  463.730.

[[Page 20684]]

Sec.  463.715  How are one-stop infrastructure costs funded in the 
local funding mechanism?

    (a) In the local funding mechanism, the Local Board, chief elected 
officials, and one-stop partners agree to amounts and methods of 
calculating amounts each partner will contribute for one-stop 
infrastructure funding, include the infrastructure funding terms in the 
MOU, and sign the MOU. The local one-stop funding mechanism must meet 
all of the following requirements:
    (1) The infrastructure costs are funded through cash and fairly 
evaluated in-kind partner contributions and include any funding from 
philanthropic organizations or other private entities, or through other 
alternative financing options, to provide a stable and equitable 
funding stream for ongoing one-stop delivery system operations;
    (2) Contributions must be negotiated between one-stop partners, 
chief elected officials, and the Local Board and the amount to be 
contributed must be included in the MOU;
    (3) The one-stop partner program's proportionate share of funding 
must be calculated in accordance with the Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards in 2 CFR part 200 based upon a reasonable cost allocation 
methodology whereby infrastructure costs are charged to each partner in 
proportion to relative benefits received, and must be allowable, 
reasonable, necessary, and allocable;
    (4) Partner shares must be periodically reviewed and reconciled 
against actual costs incurred, and adjusted to ensure that actual costs 
charged to any one-stop partners are proportionate and equitable to the 
benefit received by the one-stop partners and their respective programs 
or activities.
    (b) In developing the section of the MOU on one-stop infrastructure 
funding fully described in Sec.  463.755, the Local Board and chief 
elected officials will:
    (1) Ensure that the one-stop partners adhere to the guidance 
identified in Sec.  463.705 on one-stop delivery system infrastructure 
costs.
    (2) Work with one-stop partners to achieve consensus and informally 
mediate any possible conflicts or disagreements among one-stop 
partners.
    (3) Provide technical assistance to new one-stop partners and local 
grant recipients to ensure that those entities are informed and 
knowledgeable of the elements contained in the MOU and the one-stop 
infrastructure costs arrangement.
    (c) The MOU may include an interim infrastructure funding 
agreement, including as much detail as the Local Board has negotiated 
with one-stop partners, if all other parts of the MOU have been 
negotiated, in order to allow the partner programs to operate in the 
one-stop centers. The interim infrastructure agreement must be 
finalized within 6 months of when the MOU is signed. If the 
infrastructure interim infrastructure agreement is not finalized within 
that timeframe, the Local Board must notify the Governor, as described 
in Sec.  463.725.


Sec.  463.720  What funds are used to pay for infrastructure costs in 
the local one-stop infrastructure funding mechanism?

    (a) In the local one-stop infrastructure funding mechanism, one-
stop partner programs can determine what funds they will use to fund 
infrastructure costs. The use of these funds must be in accordance with 
the requirements in this subpart, and with the relevant partner's 
authorizing statutes and regulations, including, for example, 
prohibitions against supplanting non-Federal resources, statutory 
limitations on administrative costs, and all other applicable legal 
requirements. In the case of partners administering adult education and 
literacy programs authorized by title II of WIOA or the Carl D. Perkins 
Career and Technical Education Act of 2006, these funds may include 
Federal funds that are available for State administration of adult 
education and literacy programs authorized by title II of WIOA or for 
State administration of post-secondary level programs and activities 
under the Perkins Act, and non-Federal funds that the partners 
contribute to meet these programs' matching or maintenance of effort 
requirements. These funds also may include local administrative funds 
available to local entities or consortia of local entities that have 
been delegated authority to serve as one-stop local partners by a State 
eligible agency as permitted by Sec. Sec.  463.415(b) and (e).
    (b) There are no specific caps on the amount or percent of overall 
funding a one-stop partner may contribute to fund infrastructure costs 
under the local one-stop funding mechanism, except that contributions 
for administrative costs may not exceed the amount available for 
administrative costs under the authorizing statute of the partner 
program. However, amounts contributed for infrastructure costs must be 
allowable and based on proportionate use by or benefit to the partner 
program, taking into account the total cost of the one-stop 
infrastructure as well as alternate financing options, and must be 
consistent with 2 CFR chapter II, including the Federal cost 
principles.


Sec.  463.725  What happens if consensus on infrastructure funding is 
not reached at the local level between the Local Board, chief elected 
officials, and one-stop partners?

    If, after July 1, 2016, and each subsequent July 1, the Local 
Board, chief elected officials, and one-stop partners do not reach 
consensus on methods of sufficiently funding local infrastructure 
through the local infrastructure cost funding mechanism, and include 
that consensus agreement in the signed MOU, then the Local Board must 
notify the Governor and the Governor must administer funding through 
the State one-stop funding mechanism, as described in Sec.  463.730. 
(WIOA sec. 121(h)(2))


Sec.  463.730  What is the State one-stop infrastructure funding 
mechanism?

    (a) In the State one-stop infrastructure funding mechanism, the 
Governor, after consultation with the chief elected officials, Local 
Boards, and the State Board, determines one-stop partner contributions, 
based upon a methodology where infrastructure costs are charged to each 
partner in proportion to relative benefits received and consistent with 
the partner program's authorizing laws and regulations, 2 CFR chapter 
II, including the Federal cost principles, and other applicable legal 
requirements described in Sec.  463.735(a).
    (b) The State Board develops an allocation formula to allocate 
funds to local areas to support the infrastructure costs for local area 
one-stop centers for all local areas that did not use the local funding 
mechanism, and the Governor uses that formula to allocate the funds. 
This is described in detail in Sec.  463.745.


Sec.  463.735  How are partner contributions determined in the State 
one-stop funding mechanism?

    (a) In the State one-stop funding mechanism, the Governor, after 
consultation with State and Local Boards and chief elected officials, 
will determine the amount each partner must contribute to assist in 
paying the infrastructure costs of one-stop centers. The Governor must 
calculate amounts based on the proportionate use of the one-stop 
centers by each partner, consistent with chapter II of title 2, Code of 
Federal Regulations (or any corresponding similar regulation or 
ruling), taking into account the costs of administration of the one-
stop delivery system for purposes not related to one-stop centers for 
each partner such as costs associated with maintaining the Local Board, 
or information technology systems. The Governor will also take into 
account the statutory requirements for each partner program, all other

[[Page 20685]]

applicable legal requirements, and the partner program's ability to 
fulfill such requirements.
    (b) In certain situations, the Governor does not determine the 
infrastructure cost contributions for one-stop partner programs.
    (1) The Governor will not determine the contribution amounts for 
infrastructure funds for Native American grantees described in 20 CFR 
part 684. (WIOA sec. 121(h)(2)(D)(iii).) The appropriate portion of 
funds to be provided by Native American grantees to pay for one-stop 
infrastructure must be determined as part of the development of the MOU 
described in Sec.  463.500 and specified in that MOU.
    (2) In a State in which the State constitution or a State statute 
places policy-making authority that is independent of the authority of 
the Governor in an entity or official with respect to the funds 
provided for adult education and literacy activities, post-secondary 
career and technical education activities, or vocational rehabilitation 
services, the chief officer of that entity or the official must 
determine the contribution amounts for infrastructure funds in 
consultation with the Governor. (WIOA sec. 121(h)(2)(C)(ii).)
    (c) Limitations. Per WIOA sec. 122(h)(2)(D), the amount established 
by the Governor under paragraph (a) of this section may not exceed the 
following caps:
    (1) WIOA Formula programs and employment service. The portion of 
funds required to be contributed under the WIOA youth, adult, or 
dislocated worker programs, or under the Wagner- Peyser Act (29 U.S.C. 
49 et seq.) must not exceed 3 percent of the amount of Federal funds 
provided to carry out that program in the State for a program year.
    (2) Other one-stop partners. The portion of funds required to be 
contributed must not exceed 1.5 percent of the amount of Federal funds 
provided to carry out that education program or employment and training 
program in the State for a fiscal year. For purposes of Carl D. Perkins 
Career and Technical Education Act of 2006, the cap on contributions is 
determined based on the funds made available for State administration 
of post-secondary level programs and activities.
    (3) Vocational rehabilitation. Within a State, the entity or 
entities administering the programs described in WIOA sec. 
121(b)(1)(B)(iv) the allotment is based on the one State allotment, 
even in instances where that allotment is shared between two State 
agencies, and will not be required to provide from that program a 
cumulative portion that exceeds--
    (i) 0.75 percent of the amount of Federal funds provided to carry 
out such program in the State for Fiscal Year 2016;
    (ii) 1.0 percent of the amount provided to carry out such program 
in the State for Fiscal Year 2017;
    (iii) 1.25 percent of the amount provided to carry out such program 
in the State for Fiscal Year 2018; and
    (iv) 1.5 percent of the amount provided to carry out such program 
in the State for Fiscal Year 2019 and following years.
    (4) Federal direct spending programs. For local areas that have not 
reached a one-stop infrastructure funding agreement by consensus, an 
entity administering a program funded with direct spending as defined 
in sec. 250(c)(8) of the Balanced Budget and Emergency Deficit Control 
Act of 1985, as in effect on February 15, 2014 (2 U.S.C. 900(c)(8)), 
must not be required to provide more for infrastructure costs than the 
amount that the Governor determined (as described in Sec.  463.735(a)).
    (d) If the above limitations result in funding less than each 
partner's proportionate share and contribute to inadequate funding of 
the allocation amount determined under Sec.  463.745(b), the Governor 
may direct the Local Board, chief elected officials, and one-stop 
partners to reenter negotiations to reduce the infrastructure costs to 
reflect the amount of funds that are available for such costs, discuss 
proportionate share of each one-stop partner, or to identify 
alternative sources of financing for one-stop infrastructure funding, 
but, in any event, a partner will only be required to pay an amount 
that is consistent with the proportionate benefit received by the 
partner, the program's authorizing laws and regulations, the Federal 
cost principles, and other applicable legal requirements.
    (1) The Local Board, chief elected officials, and one-stop 
partners, after renegotiation, may come to agreement and sign an MOU 
and proceed under the local one-stop funding mechanism.
    (2) If after renegotiation, agreement amongst partners still cannot 
be reached or alternate financing identified, the Governor may adjust 
the specified allocation, in accordance with the amounts available and 
the limitations described in Sec.  463.735(c).


Sec.  463.740  What funds are used to pay for infrastructure costs in 
the State one-stop infrastructure funding mechanism?

    (a) In the State one-stop infrastructure funding mechanism, 
infrastructure costs for WIOA title I programs, including Native 
American Programs described in 20 CFR part 684, can be paid using 
program funds, administrative funds, or both. Infrastructure costs for 
the Senior Community Service Employment Program under title V of the 
Older Americans Act (42 U.S.C. 3056 et seq.) can also be paid using 
program funds, administrative funds, or both. (WIOA sec. 
121(h)(2)(D)(i)(II).)
    (b) In the State one-stop infrastructure funding mechanism, 
infrastructure costs for other required one-stop partner programs 
(listed in Sec. Sec.  463.400 through 463.410) are limited to the 
program's administrative funds, as appropriate. (WIOA sec. 
121(h)(2)(D)(i)(I).)
    (c) In the State one-stop infrastructure funding mechanism, 
infrastructure costs for the adult education program authorized by 
title II of WIOA must be paid from the funds that are available for 
State administration or from non-Federal funds that the partner 
contributes to meet the program's matching or maintenance of effort 
requirement. Infrastructure costs for title II of WIOA may also be paid 
from funds available for local administration of programs and 
activities to eligible providers or consortia of eligible providers 
delegated responsibilities to act as a local one-stop partner pursuant 
to Sec.  463.415(b).
    (d) In the State one-stop infrastructure funding mechanism, 
infrastructure costs for the Carl D. Perkins Career and Technical 
Education Act of 2006 must be paid from the Federal funds that are 
available for State administration of post-secondary level programs and 
activities under the Perkins Act, or from non-Federal funds that the 
partner contributes to meet the program's matching or maintenance of 
effort requirement. Infrastructure costs for the Carl D. Perkins Career 
and Technical Education Act of 2006 may also be paid from funds 
available for local administration of post-secondary level programs and 
activities to eligible recipients or consortia of eligible recipients 
delegated responsibilities to act as a local one-stop partner pursuant 
to Sec.  463.415(e).


Sec.  463.745  How is the allocation formula used by the Governor 
determined in the State one-stop funding mechanism?

    (a) The State Board must develop an allocation formula to be used 
by the Governor to allocate funds to the local areas that did not 
successfully use the local funding mechanism. The allocation formula 
must take into account the number of one-stop centers in a local area, 
the population served by such centers, the services provided by

[[Page 20686]]

such centers, and other factors relating to the performance of such 
centers that the State Board determines are appropriate and that are 
consistent with Federal cost principles. (WIOA 121(h)(3)(B))
    (b) Using the funds contributed by the one-stop partners described 
in Sec.  463.735, the Governor will then use this formula to allocate 
funds to the local areas that did not use the local funding mechanism 
to fund one-stop center infrastructure costs, so long as that funding 
distribution is consistent with Federal cost principles for each of the 
affected one-stop partners.


Sec.  463.750  When and how can a one-stop partner appeal a one-stop 
infrastructure amount designated by the State under the State 
infrastructure funding mechanism?

    (a) The Governor must establish a process, described under sec. 
121(h)(2)(E) of WIOA, for a one-stop partner administering a program 
described in Sec. Sec.  463.400 through 463.410 to appeal the 
Governor's determination regarding the one-stop partner's portion of 
funds to be provided for one-stop infrastructure costs. This appeal 
process must be described in the Unified State Plan. (WIOA secs. 
121(h)(2)(E) and 102(b)(2)(D)(i)(IV).)
    (b) The appeal may be made on the ground that the Governor's 
determination is inconsistent with proportionate share requirements in 
Sec.  463.735(a), the cost contribution limitations in Sec.  
463.735(b), or the cost contribution caps in Sec.  463.735(c).
    (c) The process must ensure prompt resolution of the appeal in 
order to ensure the funds are distributed in a timely manner, 
consistent with the requirements of Sec.  683.630 of this chapter.
    (d) The one-stop partner must submit an appeal in accordance with 
State's deadlines for appeals specified in the guidance issued under 
Sec.  463.705(b)(3), or if the State has not set a deadline, within 21 
days from the Governor's determination.


Sec.  463.755  What are the required elements regarding infrastructure 
funding that must be included in the one-stop Memorandum of 
Understanding?

    The MOU, fully described in Sec.  463.500, must contain the 
following information whether the local areas use either the local one-
stop or the State one-stop infrastructure funding method:
    (a) The period of time in which this infrastructure funding 
agreement is effective. This may be a different time period than the 
duration of the MOU.
    (b) Identification of an infrastructure and shared services budget 
that will be periodically reconciled against actual costs incurred and 
adjusted accordingly to ensure that it reflects a cost allocation 
methodology that demonstrates how infrastructure costs are charged to 
each partner in proportion to relative benefits received, and that 
complies with chapter II of title 2 of the Code of Federal Regulations 
(or any corresponding similar regulation or ruling).
    (c) Identification of all one-stop partners, chief elected 
officials, and Local Board participating in the infrastructure funding 
arrangement.
    (d) Steps the Local Board, chief elected officials, and one-stop 
partners used to reach consensus or an assurance that the local area 
followed the guidance for the State one-stop infrastructure funding 
process.
    (e) Description of the process to be used between partners to 
resolve issues during the MOU duration period when consensus cannot be 
reached.
    (f) Description of the periodic modification and review process to 
ensure equitable benefit among one-stop partners.


Sec.  463.760  How do one-stop partners jointly fund other shared costs 
under the Memorandum of Understanding?

    (a) In addition to jointly funding infrastructure costs, one-stop 
partners listed in Sec. Sec.  463.400 through 463.410 must use a 
portion of funds made available under their programs' authorizing 
Federal law (or fairly evaluated in-kind contributions) to pay the 
additional costs relating to the operation of the one-stop delivery 
system, which must include applicable career services.
    (b) Additionally, one-stop partners may jointly fund shared 
services to the extent consistent with their programs' Federal 
authorizing statutes and other applicable legal requirements. Shared 
services' costs may include the costs of shared services that are 
authorized for and may be commonly provided through the one-stop 
partner programs to any individual, such as initial intake, assessment 
of needs, appraisal of basic skills, identification of appropriate 
services to meet such needs, referrals to other one-stop partners, and 
business services. Shared operating costs may also include shared costs 
of the Local Board's functions.
    (c) These shared costs must be allocated according to the 
proportion of benefit received by each of the partners, consistent with 
the Federal law authorizing the partner's program, and consistent with 
all other applicable legal requirements, including Federal cost 
principles in chapter II of title 2 of the Code of Federal Regulations 
(or any corresponding similar regulation or ruling) requiring that 
costs are reasonable, necessary, and allocable.
    (d) Any shared costs agreed upon by the one-stop partners must be 
included in the MOU.


Sec.  463.800  How are one-stop centers and one-stop delivery systems 
certified for effectiveness, physical and programmatic accessibility, 
and continuous improvement?

    (a) The State Board, in consultation with chief elected officials 
and Local Boards, must establish objective criteria and procedures for 
Local Boards to use when certifying one-stop centers.
    (1) The State Board must review and update the criteria every 2 
years as part of the review and modification of State Plans pursuant to 
Sec.  463.135.
    (2) The criteria must be consistent with the Governor's and State 
Board's guidelines, guidance and policies on infrastructure funding 
decisions, described in Sec.  463.705. The criteria must evaluate the 
one-stop centers and one-stop delivery system for effectiveness, 
including customer satisfaction, physical and programmatic 
accessibility, and continuous improvement.
    (3) When the Local Board is the one-stop operator as described in 
Sec.  679.410 of this chapter, the State Board must certify the one-
stop center.
    (b) Evaluations of effectiveness must include how well the one-stop 
center integrates available services for participants and businesses, 
meets the workforce development needs of participants and the 
employment needs of local employers, operates in a cost-efficient 
manner, coordinates services among the one-stop partner programs, and 
provides maximum access to partner program services even outside 
regular business hours. These evaluations must take into account 
feedback from one-stop customers. They must also include evaluations of 
how well the one-stop center ensures equal opportunity for individuals 
with disabilities to participate in or benefit from one-stop center 
services. These evaluations must include criteria evaluating how well 
the centers and delivery systems take actions to comply with the 
disability-related regulations implementing WIOA sec. 188, set forth at 
29 CFR part 37. Such actions include, but are not limited to:
    (1) Providing reasonable accommodations for individuals with 
disabilities;
    (2) Making reasonable modifications to policies, practices, and 
procedures where necessary to avoid discrimination against persons with 
disabilities;

[[Page 20687]]

    (3) Administering programs in the most integrated setting 
appropriate;
    (4) Communicating with persons with disabilities as effectively as 
with others; and
    (5) Providing appropriate auxiliary aids and services, including 
assistive technology devices and services, where necessary to afford 
individuals with disabilities an equal opportunity to participate in, 
and enjoy the benefits of, the program or activity.
    (c) Evaluations of continuous improvement must include how well the 
one-stop center supports the achievement of the negotiated local levels 
of performance for the indicators of performance for the local area 
described in sec. 116(b)(2) of WIOA and 20 CFR part 677. Other 
continuous improvement factors may include a regular process for 
identifying and responding to technical assistance needs, a regular 
system of continuing professional staff development, and having systems 
in place to capture and respond to specific customer feedback.
    (d) Local Boards must assess at least once every 3 years the 
effectiveness, physical and programmatic accessibility, and continuous 
improvement of one-stop centers and the one-stop delivery systems using 
the criteria and procedures developed by the State Board. The Local 
Board may establish additional criteria, or set higher standards for 
service coordination, than those set by the State criteria. Local 
Boards must review and update the criteria every 2 years as part of the 
Local Plan update process described in Sec.  463.580. Local Boards must 
certify one-stop centers in order to be eligible to receive 
infrastructure funds in the State infrastructure funding mechanism 
described in Sec.  463.730.
    (e) All one-stop centers must comply with applicable physical 
accessibility requirements, as set forth in 29 CFR part 37.


Sec.  463.900  What is the common identifier to be used by each one-
stop delivery system?

    (a) The common one-stop delivery system identifier is ``American 
Job Center.''
    (b) As of July 1, 2016, each one-stop delivery system must include 
the ``American Job Center'' identifier or ``a proud partner of the 
American Job Center network'' on all products, programs, activities, 
services, facilities, and related property and materials used in the 
one-stop system.
    (c) One-stop partners, States or local areas may use additional 
identifiers on their products, programs, activities, services, 
facilities, and related property and materials.

Thomas E. Perez,
Secretary of Labor.
Arne Duncan,
Secretary of Education.
[FR Doc. 2015-05528 Filed 4-2-15; 4:15 pm]
 BILLING CODE 4000-01-P; 4510-FN-P; 4510-FT-P