[Federal Register Volume 85, Number 89 (Thursday, May 7, 2020)]
[Notices]
[Pages 27249-27251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09803]


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DEPARTMENT OF LABOR

Employment and Training Administration


Notice Requesting Public Comment on the Proposed Methodology To 
Distribute Outcome Payments to States for the Unemployment Insurance 
(UI) Reemployment Services and Eligibility Assessments (RESEA) Program 
in Accordance With Title III, Section 306(f)(2) of the Social Security 
Act (SSA)

AGENCY: Employment and Training Administration (ETA), U.S. Department 
of Labor (Department).

ACTION: Request for public comment.

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SUMMARY: The Department is seeking public comment on the proposed 
methodology to distribute RESEA outcome payments to states each fiscal 
year (FY) after FY 2020 as required by Section 306(f)(2), SSA.

DATES: Submit written comments to the office listed in the addresses 
section below on or before June 8, 2020.

ADDRESSES: Questions on this notice and responsive comments related to 
the RESEA outcome payments allocation can be submitted to the U.S. 
Department of Labor, Employment and Training Administration, Office of 
Unemployment Insurance, 200 Constitution Avenue NW, Room S-4524, 
Washington, DC 20210, Attention: Lawrence Burns, or by email at [email protected].

FOR FURTHER INFORMATION CONTACT: Lawrence Burns, Division of 
Unemployment Insurance Operations, at 202 693-3141 (this is not a toll-
free number), TTY 1-877-889-5627 (this is not a toll-free number), or 
by email at [email protected]. The Department will respond to 
comments directly as necessary.

SUPPLEMENTARY INFORMATION: ETA proposes a three-step approach to 
determine whether a state is eligible for RESEA Outcome Payments. The 
proposed approach reflects RESEA's statutory purpose, as defined in 
Section 306(b)(1), SSA, to improve employment outcomes of individuals 
that receive unemployment compensation (UC) and to reduce the average 
duration of receipt of such compensation through employment. The three-
step approach includes:
    1. Evaluation of state reemployment performance using the RESEA 
program to determine if a state met or exceeded the target for the 
Reemployment Rate in the 2nd Quarter After Program Exit for RESEA 
participants performance measure;
    2. Evaluation of the state's Average UI duration to determine if 
the state demonstrated a decrease in its average UI duration as a 
result of the RESEA services provided to UI claimants; and
    3. Award allocation.

I. Introduction

    The federal-state UI program is a required partner in the 
comprehensive, integrated workforce system. Individuals who have lost 
employment through no fault of their own and have earned sufficient 
wage credits, may receive UI benefits if they meet initial and 
continuing eligibility requirements. Beginning in 2005, the Department 
and participating state workforce agencies have been addressing the 
individual reemployment needs of UI claimants and working to prevent 
and detect UI improper payments through the voluntary UI Reemployment 
and Eligibility Assessment (REA) program. Beginning in FY 2015, the 
voluntary RESEA program replaced the REA program. On February 9, 2018, 
the President signed the Bipartisan Budget Act of 2018 (Pub. L. 115-
123) (BBA), which included amendments to the SSA creating a permanent 
authorization for the RESEA program. In FY 2019, a total of 50 states 
and jurisdictions operated a RESEA program.
    The primary goals for the RESEA program are to: Improve employment 
outcomes for individuals that receive UC and to reduce average duration 
of receipt of UC through employment; strengthen program integrity and 
reduce improper payments; promote alignment with the broader vision of 
the Workforce Innovation and Opportunity Act (WIOA)--increasing program 
integration and service delivery for job seekers; and establish RESEA 
as an entry point to other workforce system partner programs for 
individuals receiving UC.

II. Background

    The RESEA provisions are contained in Section 30206 of the BBA, 
enacting Section 306 of the SSA. In addition to program requirements, 
Section 306 of the SSA also contains provisions for the funding of the 
RESEA program. The law specifies three uses and designates the 
proportion of annual appropriations to be assigned to these uses: (1) 
Base funding for states to operate the RESEA program (84 percent to 89 
percent depending on the year); (2) outcome payments designed to reward 
states meeting or exceeding certain criteria (10 percent to 15 percent 
of the appropriation depending on the year); and (3) up to one percent 
for the Secretary of Labor to use for research and technical assistance 
to states. Additionally, the law requires the Department to develop a 
methodology to allocate and distribute base funding and outcome 
payments to states beginning in FY 2021.
    In August 2019, ETA published a Notice in the Federal Register to 
inform states of the methodology to allocate base funding to states for 
the RESEA program. Details regarding the RESEA base formula allocation 
methodology can be found at: https://www.federalregister.gov/documents/2019/08/08/2019-16988/allocating-grants-to-states-for-reemployment-services-and-eligibility-assessments-resea-in. The present Notice 
proposes the methodology to distribute RESEA outcome payments to 
states.
    Section 306(f)(2)(A), SSA requires ETA to make ``outcome payments'' 
to states that meet or exceed the outcome goals for reducing the 
average duration of receipt of UC by improving employment outcomes. The 
law specifically states:

    ``IN GENERAL.--Of the amounts made available for grants under 
this section for each fiscal year after 2020, the Secretary shall 
reserve a percentage equal to the outcome reservation percentage \1\ 
for such fiscal year for outcome payments to increase the amount 
otherwise awarded to a State under paragraph (1). Such outcome 
payments shall be paid to States conducting reemployment services 
and eligibility assessments under this section that, during the 
previous fiscal year, met or exceeded the outcome goals provided in 
subsection (b)(1) related to reducing the average duration of 
receipt of unemployment compensation by improving employment 
outcomes''.
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    \1\ Section 306(f)(2)(B), SSA defines the ``outcome reservation 
percentage'' as 10 percent for fiscal years 2021 through 2026 and 15 
percent for fiscal years thereafter.

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[[Page 27250]]

III. Proposed Methodology To Determine States Eligible for Outcome 
Payments

    ETA is proposing a three-step approach to identify eligible states 
for the outcome payments. To assess RESEA program performance related 
to employment outcomes, ETA will use the four-quarter period ending 
September 30. While this proposed assessment period for the outcome 
payments differs from the RESEA program performance year (January to 
December), it aligns with statutory requirements under WIOA and 
provides for the necessary time for data collection, reporting, and 
analysis.

Step 1: RESEA Reemployment Measure

    To be considered eligible for receiving an outcome payment, a state 
must first meet or exceed its target for the Reemployment Rate in the 
2nd Quarter After Program Exit. Data for this measure is collected 
through the Participant Individual Record Layout (PIRL) (ETA 9172). The 
PIRL framework allows states to organize data in a standardized format 
within the Workforce Integrated Performance System (WIPS) using various 
elements or data points. Additional information on the PIRL elements 
can be found in the DOL-only PIRL at the following link: https://www.doleta.gov/performance/reporting/.
    Further details on the methodology of this measure are outlined in 
the Notice published by ETA in the Federal Register in May 2019 (84 FR 
24, 819).
    ETA will initially measure reemployment performance by adopting 
established targets based on the negotiated levels of performance for 
the Wagner-Peyser program participants. These performance targets are 
generated by the WIOA Statistical Adjustment Model required under Sec. 
116(b)(3)(viii), of WIOA. The Department established this Statistical 
Adjustment Model as an objective statistical regression model to adjust 
individual state negotiated levels of performance using actual economic 
conditions and the characteristics of participants served at the end of 
the performance period. The model will be updated and refined with 
ongoing use and application as additional quarters of WIOA outcome data 
become available. More detailed information on the Statistical 
Adjustment Model is available at the Department website: https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=3430.
    ETA will announce the negotiated targets applicable to the 
performance period using a separate guidance. States that do not meet 
or exceed the criteria for this measure will be eliminated from the 
outcome payment pool and will not proceed to the next step of 
performance outcome analysis.
    ETA will also continue to review and baseline RESEA data submitted 
by states. As data quality and reporting of the RESEA program improves, 
ETA will create a new statistical adjustment model that will enable the 
development of more refined performance targets to measure reemployment 
outcomes for RESEA participants only. These performance targets that 
are more tailored to the RESEA program will then replace the 
established targets based on the negotiated levels of performance for 
the Wagner-Peyser program participants.

Step 2: UI Duration

    States that meet or exceed the target established for the RESEA 
Reemployment Measure (Step 1) must also demonstrate reduced average UI 
duration. Average UI duration is defined as ``The number of weeks 
compensated for the year divided by the number of first payments in the 
year.'' \2\ The performance period used to evaluate UI duration will be 
the same four-quarter period ending September 30 as the reemployment 
measure, and will be computed using data reported by states on the ETA 
5159 Report.
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    \2\ https://oui.doleta.gov/unemploy/content/data_stats/datasum99/4thqtr/gloss.asp.
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    Because UI duration can be impacted by factors such as changes in 
the economy or state laws, it is necessary to use a regression model to 
achieve consistency across states. Therefore, ETA has developed a 
regression model to estimate a state's average duration that 
incorporates state-specific explanatory variables. The following 
variables allow the model to develop state estimates for UI duration 
that are unique to a state based on its localized economic conditions:
     Total Unemployment Rate--the number of unemployed people 
as a percentage of the labor force; \3\
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    \3\ https://www.bls.gov/cps/cps_htgm.htm#definitions.
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     Potential Duration of UI benefits--the number of full 
weeks of benefits for which a claimant is eligible within a benefit 
year; \4\
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    \4\ https://wdr.doleta.gov/directives/attach/ETAH/ETHand401_5th.pdf, page I-2-24, Section 2(B)(a).
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     UI Exhaustion Rate--the average monthly exhaustions 
divided by the average monthly first payments; \5\
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    \5\ https://oui.doleta.gov/unemploy/content/data_stats/datasum99/4thqtr/gloss.asp.
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     Average state weekly benefit amount payment--the total 
amount of benefits paid divided by the total number of weeks 
compensated; \6\ and
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    \6\ https://wdr.doleta.gov/directives/attach/ETAH/ETHand401_5th.pdf, page I-6-59, Section 2(B)(a)(1).
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     Year-to-year change in payroll employment (nonfarm 
payroll)--the total number of persons on establishment payrolls 
employed full or part time who received pay for any part of the pay 
period which includes the 12th day of the month.\7\
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    \7\ https://www.bls.gov/bls/glossary.htm#P.
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    The regression model generates the estimated average UI duration 
for each state and compares it to each state's actual average UI 
duration. If a state's actual average UI duration is lower than the 
state's estimated average UI duration provided by the regression model, 
the state will have demonstrated a reduction in UI duration. A state 
that does not demonstrate a reduction in UI duration as described above 
will be eliminated from the outcome payment pool. The regression model 
will be updated each year to incorporate changing state conditions.

Step 3: Award Allocation

    Once the pool of eligible states is identified after completing 
Steps 1 and 2, ETA will distribute the funds reserved for outcome 
payments. The same methodology used to calculate RESEA base funding, as 
outlined in the Notice in the Federal Register announcing the RESEA 
base allocation formula (84 FR 39018), will be applied to calculate the 
amounts to distribute as outcome payments to eligible states. The base 
allocation formula uses two primary input variables:
     State Average Insured Unemployment Rate--the number of 
unemployed persons as a percent of the labor force (employed and 
unemployed persons); \8\ and
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    \8\ https://www.bls.gov/cps/uiclaims.htm.
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     Civilian Labor Force--all people age 16 and older who are 
classified as employed or unemployed. In other words, the labor force 
level is the number of people who are either working or actively 
looking for work.\9\
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    \9\ https://www.bls.gov/cps/definitions.htm#laborforce.
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    By adopting the base formula allocation, outcome payments will be 
proportional to the size of the RESEA program operated in each awarded 
state.

IV. Outcome Payments Distribution Timeline

    Section 306(f)(2)(A), of the SSA, requires the Department to make 
outcome payments based on RESEA outcomes reported for the previous 
fiscal year starting in FY 2020. There are

[[Page 27251]]

several timing issues associated with calculation of the performance to 
enable the outcome payments. First, the period of performance for RESEA 
is January 1 through December 31. The reemployment outcomes data has a 
four-quarter lag (three quarters for reemployment outcomes to be 
available, and one quarter for state reporting). In order to allow time 
for necessary data collection and analysis, the distribution of funds 
will occur in December of the FY following the year in which the RESEA 
grant funds are awarded. For example, the outcome payments for FY 2020 
will be made to states by December 31, 2021 (note that the UI and RESEA 
programs have five quarters to distribute funding in any fiscal year). 
The following schedule applies to the 2020 performance period:
     Data for performance period October 2019 through September 
2020 is available for ETA review in November 2021;
     Once performance data is available, the pool of eligible 
states will be determined using the methodology outlined in Section III 
above; and
     Outcome payments will be distributed no later than 
December 2021.
    Questions or comments concerning the proposed methodology for RESEA 
outcome payments must be submitted using the instructions set out in 
the ADDRESSES section above. Submitted comments will be a matter of 
public record and can posted on the internet, without redaction. The 
Department encourages commenters not to include personally identifiable 
information, confidential business data, or other sensitive statements/
information in any comments. It is the responsibility of the commenter 
to determine what is personal or confidential business information.

    Signed in Washington, DC.
John Pallasch,
Assistant Secretary for Employment and Training.
[FR Doc. 2020-09803 Filed 5-6-20; 8:45 am]
 BILLING CODE 4510-FW-P