[Federal Register Volume 89, Number 37 (Friday, February 23, 2024)]
[Rules and Regulations]
[Pages 13814-13849]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03278]
[[Page 13813]]
Vol. 89
Friday,
No. 37
February 23, 2024
Part II
Department of Labor
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Employment and Training Administration
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Department of Education
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20 CFR Part 677
34 CFR Parts 361 and 463
Workforce Innovation and Opportunity Act Effectiveness in Serving
Employers Performance Indicator; Final Rule
Federal Register / Vol. 89 , No. 37 / Friday, February 23, 2024 /
Rules and Regulations
[[Page 13814]]
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DEPARTMENT OF LABOR
Employment and Training Administration
20 CFR Part 677
[Docket No. ETA-2022-0006]
RIN 1205-AC01
DEPARTMENT OF EDUCATION
34 CFR Parts 361 and 463
RIN 1830-AA32
Workforce Innovation and Opportunity Act Effectiveness in Serving
Employers Performance Indicator
AGENCY: Office of Career, Technical, and Adult Education (OCTAE),
Rehabilitation Services Administration (RSA), Department of Education;
Employment and Training Administration (ETA), Department of Labor.
ACTION: Joint final rule.
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SUMMARY: The Workforce Innovation and Opportunity Act (WIOA)
establishes six primary indicators of performance and defines five of
those performance indicators. With this final rule, the U.S.
Departments of Labor and Education (Departments) define the sixth
performance indicator--effectiveness in serving employers--as Retention
with the Same Employer and require it be reported by one WIOA core
program on behalf of all six WIOA core programs within each State. This
final rule incorporates two changes from the notice of proposed
rulemaking (NPRM): the final rule does not limit the type of wage
information that must be used, thereby permitting the use of
supplemental wage information in the definition of the effectiveness in
serving employers performance indicator, and it specifies that the
definition is measuring retention in unsubsidized employment.
DATES: This final rule is effective March 25, 2024.
FOR FURTHER INFORMATION CONTACT:
U.S. Department of Labor: Michelle Paczynski, Administrator, Office
of Policy Development and Research, U.S. Department of Labor,
Employment and Training Administration, 200 Constitution Avenue NW,
Room N-5641, Washington, DC 20210-0001, Telephone: (202) 693-3700
(voice) (this is not a toll-free number) or 1-877-872-5627.
U.S. Department of Education: Hugh Reid, Policy, Planning, and
Research, U.S. Department of Education, Office of Career, Technical,
and Adult Education, 400 Maryland Avenue SW, LBJ-4A172, Washington, DC
20202-2800, Telephone: (202) 245-7491; or Jessica Hawes, WIOA Team
Coordinator, U.S. Department of Education, Office of Special Education
and Rehabilitative Services, Rehabilitation Services Administration,
400 Maryland Avenue SW, Washington, DC 20202-2800, Telephone: (202)
245-6486.
For persons with a hearing or speech disability who need assistance
to use the telephone system, please dial 711 to access
telecommunications relay services.
SUPPLEMENTARY INFORMATION:
Preamble Table of Contents
I. Background
A. Rulemaking Authority and Effectiveness in Serving Employers
Performance Indicator for WIOA Core Programs
B. Public Comments Received on Proposed Rulemaking
C. Summary of Changes From NPRM to Final Rule of the
Effectiveness in Serving Employers Performance Indicator for WIOA
Core Programs and Local Level Implementation for DOL-Administered
Core Programs
II. Section-by-Section Analysis of This Final Rule
A. Departments' Rationale for Retention With the Same Employer
as the Definition of the Effectiveness in Serving Employers
Performance Indicator
B. Retention With the Same Employer for the Effectiveness in
Serving Employers Performance Indicator in Sec. 677.155
C. Adjusted Levels of Performance for WIOA Core Programs--
Changes to Sec. 677.190
III. Regulatory Analysis and Review
A. Executive Orders 12866 (Regulatory Planning and Review),
13563 (Improving Regulation and Regulatory Review), and 14094
(Modernizing Regulatory Review) and Subtitle E of the Small Business
Regulatory Enforcement Fairness Act of 1996
B. Regulatory Flexibility Act, Small Business Regulatory
Enforcement Fairness Act, and Executive Order 13272 (Proper
Consideration of Small Entities in Agency Rulemaking)
C. Paperwork Reduction Act of 1995
D. Executive Order 13132 (Federalism)
E. Unfunded Mandates Reform Act of 1995
F. Executive Order 13175 (Indian Tribal Governments)
Acronyms and Abbreviations
AEFLA Adult Education and Family Literacy Act
AJC American Job Center
BLS Bureau of Labor Statistics
CFR Code of Federal Regulations
COVID-19 Coronavirus disease 2019
Departments U.S. Departments of Labor and Education
DOL U.S. Department of Labor
ED U.S. Department of Education
E.O. Executive Order
ETA Employment and Training Administration
FEIN Federal Employer Identification Number
FR Federal Register
GS General Schedule
ICR Information Collection Request
INA Indian and Native American
NAICS North American Industry Classification System
NPRM or proposed rule notice of proposed rulemaking
OCTAE Office of Career, Technical, and Adult Education
OEWS Occupational Employment and Wage Statistics
OIRA Office of Information and Regulatory Affairs
OMB Office of Management and Budget
PIRL Participant Individual Record Layout
PRA Paperwork Reduction Act of 1995
Pub. L. Public Law
PY Program Year
QCEW Quarterly Census of Employment and Wages
RFA Regulatory Flexibility Act
RIA Regulatory Impact Analysis
RIN Regulation Identifier Number
RSA Rehabilitation Services Administration
SBA U.S. Small Business Administration
SLDS Statewide Longitudinal Data System
Stat. United States Statutes at Large
SWIS State Wage Interchange System
TAC Technical Assistance Circular
TEGL Training and Employment Guidance Letter
UI Unemployment Insurance
UMRA Unfunded Mandates Reform Act
U.S.C. United States Code
VR Vocational Rehabilitation
WDB Workforce Development Board
WIOA Workforce Innovation and Opportunity Act
I. Background
In the final rule implementing WIOA,\1\ the Departments indicated
that they would initially implement the sixth indicator of
performance--effectiveness in serving employers--in the form of a pilot
program to test the feasibility and rigor of three proposed
approaches.\2\ The Departments assessed the pilot outcomes through
Program Year (PY) 2021, and on September 14, 2022, published a NPRM to
define in a single standardized way the effectiveness in serving
employers performance indicator for the regulations implementing the
jointly administered requirements governing WIOA's six core programs
(87 FR 56318).\3\
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\1\ Public Law 113-128, 128 Stat. 1425 (2014).
\2\ Workforce Innovation and Opportunity Act; Joint Rule for
Unified and Combined State Plans, Performance Accountability, and
the One-Stop System Joint Provisions; Final Rule, 81 FR 55792, 55845
(Aug. 19, 2016) (hereinafter ``Joint WIOA Final Rule'').
\3\ Workforce Innovation and Opportunity Act Effectiveness in
Serving Employers Performance Indicator; Joint Proposed Rule, 87 FR
56318 (Sept. 14, 2022) (hereinafter ``Joint WIOA Effectiveness in
Serving Employers NPRM'').
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[[Page 13815]]
A. Rulemaking Authority and Effectiveness in Serving Employers
Performance Indicator for WIOA Core Programs
On July 22, 2014, President Barack Obama signed into law WIOA,
which superseded titles I and II of the Workforce Investment Act of
1998 and amended the Wagner-Peyser Act and the Rehabilitation Act of
1973 (Rehabilitation Act). In WIOA sec. 503(f), Congress directed the
Departments to issue regulations implementing statutory requirements to
ensure that the public workforce system operates as a comprehensive,
integrated, and streamlined system to provide pathways to prosperity
and continuously improve the quality and performance of its services to
job seekers and employers. The Secretaries of Labor and Education are
also authorized to promulgate regulations governing the WIOA-authorized
programs, the Wagner-Peyser Act programs, and the Vocational
Rehabilitation (VR) program. Specifically, WIOA sec. 189(a) permits the
Secretary of Labor to prescribe rules and regulations to carry out
title I of WIOA. Similarly, section 12 of the Wagner-Peyser Act permits
the Secretary of Labor to promulgate rules to administer the Wagner-
Peyser Act programs. Section 410 of the General Education Provisions
Act authorizes the Secretary of Education to promulgate regulations
governing the programs the U.S. Department of Education (ED)
administers, including title II of WIOA--the Adult Education and Family
Literacy Act (AEFLA)--and the VR program. Section 414 of the Department
of Education Organization Act also authorizes the Secretary of
Education to prescribe rules and regulations necessary or appropriate
to administer and manage the function of ED.
WIOA sec. 116 establishes the performance indicators \4\ and
performance reporting \5\ requirements to assess \6\ the six WIOA core
programs' effectiveness in serving WIOA customers (i.e., participants,
other job seekers, and employers). The core programs are the adult,
dislocated worker, and youth programs under title I of WIOA; the AEFLA
program under title II of WIOA; programs authorized under the Wagner-
Peyser Act as amended by WIOA title III; and the VR program authorized
under title I of the Rehabilitation Act as amended by WIOA title IV.
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\4\ WIOA sec. 116(b)(2)(A) states the primary indicators of
performance: (1) the percentage of participants who are employed
during the second quarter after exit from the program; (2) the
percentage of participants who are employed during the fourth
quarter after exit from the program; (3) the median earnings of
participants who are employed during the second quarter after exit
from the program; (4) the percentage of participants who obtain a
recognized postsecondary credential during the program or within 1
year of exit from the program; (5) the percentage of participants
who achieve measurable skill gains during a program year; and (6)
``indicators of effectiveness in serving employers.'' This last
indicator is the subject of this final rule. Definitions of the
other five performance indicators were included in the Joint WIOA
Final Rule (see 20 CFR 677.155, 34 CFR 361.155, 34 CFR 463.155).
\5\ WIOA sec. 116(d)(2)(A) requires States to include in their
performance report information specifying levels of performance
achieved with respect to the primary indicators of performance
referenced in footnote 4 supra and the State adjusted levels of
performance for such indicators for each program.
\6\ WIOA sec. 116(b)(3)(A) establishes the procedures at the
State, local, and Federal levels to assess levels of performance by
each program, and the State as a whole, for each performance
indicator.
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In the 2016 Joint WIOA Final Rule, the Departments initiated a
phased approach to defining the effectiveness in serving employers
performance indicator. Currently, 20 CFR 677.155(a)(1)(vi) and 34 CFR
361.155(a)(1)(vi) and 463.155(a)(1)(vi) implement the effectiveness in
serving employers performance indicator as described in WIOA sec.
116(b)(2)(A)(i)(VI), subject to WIOA sec. 116(b)(2)(A)(iv), which
requires the Secretaries of Labor and Education to jointly develop and
establish the performance indicator, after consultation with
representatives of State and local governments, business and industry,
and other interested parties. To that end, in developing the Joint WIOA
Final Rule, the Departments consulted with stakeholders and considered
public comments on three proposed approaches to defining the
performance indicator, and in the Joint WIOA Final Rule, the
Departments stated they would work to implement a pilot program, the
details of which would be further delineated in joint Departmental
guidance (81 FR 55792, 55846).
The pilot tested all three approaches described by the Departments
in the Joint WIOA NPRM \7\ and Joint WIOA Final Rule, with the intent
of assessing each approach for its efficacy in measuring effectiveness
in serving employers. The piloted approaches were Retention with the
Same Employer, Repeat Business Customer, and Employer Penetration,
which are further discussed in Section II.A below. The Departments
included these approaches in the WIOA Joint Performance Information
Collection Request (ICR) (Office of Management and Budget (OMB) Control
Number 1205-0526) and required each State \8\ to report on any two of
the three approaches set out in the Joint WIOA Final Rule, as well as
any additional measure a State established related to services to
employers.\9\ On behalf of the Departments, the Department of Labor
(DOL) commissioned an examination of State experiences with the various
approaches through a third-party contractor, and the Departments used
the results of that study to help inform their analysis of which
definition of the effectiveness in serving employers performance
indicator to propose in the Joint WIOA Effectiveness in Serving
Employers NPRM.
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\7\ 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,
80 FR 20574 (Apr. 16, 2015) (hereinafter ``Joint WIOA NPRM'').
\8\ Throughout this final rule, the Departments use the term
``State'' to mean those geographical areas covered by the
definitions of ``State'' and ``outlying area,'' in WIOA secs. 3(56)
and 3(45), respectively. Therefore, for purposes of this final rule,
``State'' includes the 50 States, the District of Columbia, Puerto
Rico, the U.S. Virgin Islands, Guam, the Commonwealth of the
Northern Mariana Islands, American Samoa, and for certain programs,
the Republic of Palau.
\9\ Governors had the option to establish and report on a third
State-specific approach for measuring effectiveness in serving
employers, in addition to two of the three Departmental pilot
approaches selected by the State.
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B. Public Comments Received on Proposed Rulemaking
Because of the narrow scope of the regulation, the Departments
encouraged commenters to submit only comments regarding the definition
of the effectiveness in serving employers performance indicator and the
indicator's use in determining whether sanctions are necessary for
failure to achieve adjusted levels of performance as set forth herein.
The proposed amendments in the Joint WIOA Effectiveness in Serving
Employers NPRM were on a limited number of provisions in the
performance accountability regulations at 20 CFR part 677 and 34 CFR
parts 361 and 463. Therefore, the Departments determined comments
received on other provisions and aspects of the WIOA regulations that
were not covered in this final rule, whether promulgated jointly by the
Departments or independently by each agency, to be outside the scope of
this rulemaking and, thus, did not consider those comments when
developing this final rule.
[[Page 13816]]
The Joint WIOA Effectiveness in Serving Employers NPRM invited
written comments from the public concerning this rulemaking through
November 14, 2022. No commenters requested an extension of the comment
period. The comments received may be viewed by entering docket number
ETA-2022-0006 at https://www.regulations.gov.
The Departments received 47 comments in the docket for this
rulemaking, and the docket for the Workforce Innovation and Opportunity
Act Title I Non-Core Programs Effectiveness in Serving Employers
Performance Indicator NPRM (ETA-2022-0005, RIN 1205-AC08) published
concurrently with the Joint WIOA Effectiveness in Serving Employers
NPRM received 11 comments related to the Joint WIOA Effectiveness in
Serving Employers NPRM. Of those 58 comments, 43 were unique; 14 were
form letter copies, and 1 was not germane. Public sector commenters
included State and local government agencies, State and local workforce
development boards, and one-stop operators. Nonprofit sector commenters
included advocacy groups, professional associations, and training
providers. Of the unique comments, about one-third came from State
workforce agencies and State VR agencies. The Departments also received
comments from private citizens.
This section of the final rule provides a general overview of the
comments received. Section II (Section-by-Section Analysis of this
Final Rule), which follows this section, describes the comments in more
detail and provides the Departments' responses to them.
A commenter expressed general support for the proposed rule
because, in their view, it would benefit the workforce and promote cost
savings for employers in the long term. Many commenters addressed the
pilot program in a myriad of ways, including discussing the advantages
and disadvantages of the piloted approaches for measuring effectiveness
in serving employers, making alternative recommendations, requesting
flexibilities, and seeking an extension of certain aspects of the
pilot.
The Departments' proposal to use Retention with the Same Employer
as the indicator for measuring effectiveness in serving employers
received mixed reviews, with a few agreeing that it is the preferred
approach while others expressed concerns that it would not measure the
right things.
A few commenters asked the Departments for clarification about how
the proposed indicator will be calculated and implemented, with some
describing potential issues in data collection or recommending
different approaches to calculating the indicator. Other commenters
recommended that the Departments allow the use of supplemental wage
information in the definition of effectiveness in serving employers.
Responding to a request for comment in the proposed rule, some
commenters offered recommendations about ways the Departments could
mitigate potential unintended consequences and downsides of the
Retention with the Same Employer measure.
Several commenters provided feedback on the Departments' proposal
that the overall State indicator score for effectiveness in serving
employers be a shared outcome reported by one core program on behalf of
all six core programs in the State, with some opposing that approach
and others supporting it. A few commenters focused on concerns about
the administration and implementation of a shared outcome, requesting
clarification about local level implementation of the effectiveness in
serving employers performance indicator, and provided recommendations
to the Departments with regard to certain aspects of implementation. A
few commenters provided input on the administrative burden proposed in
the Regulatory Impact Analysis (RIA) of the Joint WIOA Effectiveness in
Serving Employers NPRM.
Additionally, a few commenters provided feedback on topics not
within the scope of the rulemaking, including earnings data collected
by workforce development boards and types of measurable skill gains
under WIOA. The Departments appreciate the thoughtfulness of these
comments and will address those germane to this final rule in the
section-by-section analysis below. However, as explained in the Joint
WIOA Effectiveness in Serving Employers NPRM and above, the scope of
this rulemaking is limited to amendments to the definition of the
effectiveness in serving employers performance indicator and the
indicator's use in determining whether sanctions are necessary for
failure to achieve adjusted levels of performance as set forth in the
proposed rule. Because these comments pertain to other provisions and
aspects of the WIOA regulations, they are considered outside the scope
of this rulemaking and are not addressed in the section-by-section
analysis below.
C. Summary of Changes From NPRM to Final Rule of the Effectiveness in
Serving Employers Performance Indicator for WIOA Core Programs and
Local Level Implementation for DOL-Administered Core Programs
The final rule implements Retention with the Same Employer as the
definition for the effectiveness in serving employers indicator, as
proposed in the NPRM, with two changes. First, this final rule removes
the requirement that wage records be used to document a participant's
employment status for purposes of the effectiveness in serving
employers performance indicator, thereby allowing for the use of
supplemental wage information as States are permitted to collect and
report for purposes of the three employment performance indicators
defined by WIOA sec. 116. Second, the final rule definition for
effectiveness in serving employers now uses the term ``unsubsidized
employment'' to better align with WIOA statutory language used in WIOA
sec. 116 with respect to other performance indicators, specifically
referring to unsubsidized employment in the second and fourth quarters
after exit, which are key inputs to the definition of Retention with
the Same Employer.
Regarding commenters' concerns and requests for clarification about
local level implementation, as detailed below, the Departments have
determined that WIOA sec. 116(c)(1)(A)(i) requires that all of the
primary indicators of performance, including the effectiveness in
serving employers performance indicator, must be applied at the local
level for the WIOA title I programs (Adult, Dislocated Worker, and
Youth).\10\ Therefore, States must apply the effectiveness in serving
employers performance indicator at the local level. The Departments
believe this indicator should be assessed at each level for the WIOA
title I programs in the same manner as the other primary indicators of
performance are assessed.
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\10\ Pursuant to WIOA sec. 116(c)(1)(A)(i), the requirement to
implement the primary indicators of performance at the local level
do not apply to the other core programs, specifically the AEFLA,
Wagner-Peyser Act, and VR programs.
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II. Section-by-Section Analysis of This Final Rule
In the discussion of the regulatory text changes below, the heading
references the DOL CFR part and section number. However, ED has
identical provisions at 34 CFR part 361, subpart E (under its State VR
program regulations) and at 34 CFR part 463, subpart I (under its AEFLA
regulations). For purposes of
[[Page 13817]]
brevity, the discussion of regulatory text changes below appears only
once--in conjunction with the DOL section number--but is applicable to
all three regulatory sections and constitutes the Departments'
collective explanation of the final rule. These changes to the joint
performance regulations will appear in each of the CFR parts identified
in this paragraph when the regulations are published in the CFR.
Section II of the final rule provides the Departments' responses to
comments and explains the two changes in the language of the final rule
from the proposed rulemaking. Section II.A provides greater background
detail on the pilot for effectiveness in serving employers, comments
regarding the pilot, commenters' suggestions for other approaches to
measuring effectiveness in serving employers that were not part of the
pilot, and the Departments' rationale for choosing Retention with the
Same Employer as the definition of the effectiveness in serving
employer performance indicator. Section II.B discusses comments
received on the proposal to modify Sec. 677.155 to adopt Retention
with the Same Employer as the definition for the effectiveness in
serving employers performance indicator and explains the Departments'
decision to finalize the measure with two changes from the NPRM, as
suggested by multiple commenters. Section II.C discusses comments on
proposed modifications to Sec. 677.190 where the effectiveness in
serving employers performance indicator is incorporated into adjusted
levels of performance.
A. Departments' Rationale for Retention With the Same Employer as the
Definition of the Effectiveness in Serving Employers Performance
Indicator
This section provides background detail on the pilot for
effectiveness in serving employers, comments regarding the pilot,
commenters' suggestions for other approaches to measuring effectiveness
in serving employers that were not part of the pilot, and the
Departments' rationale for choosing Retention with the Same Employer as
the definition of the effectiveness in serving employer performance
indicator.
In developing the Joint WIOA Effectiveness in Serving Employers
NPRM, the Departments reviewed annual report data \11\ for Program Year
(PY) 2017 through PY 2020 \12\ for each of the three approaches for
measuring effectiveness in serving employers piloted as described in
the 2016 Joint WIOA Final Rule, with a focus on using information that
would provide an accurate picture of how well the public workforce
system serves employers while minimizing employer burden. Specifically,
States, under guidance from the Departments (hereinafter ``joint
guidance''), piloted the following definitions for the effectiveness in
serving employers performance indicator: \13\
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\11\ The indicator is reported on an annual basis; therefore,
the reporting period is the program year from July 1 through June
30.
\12\ ETA, ``Workforce Performance Results,'' https://www.dol.gov/agencies/eta/performance/results (last visited Oct. 23,
2021); ETA, ``PY 2020 WIOA National Performance Summary,'' Feb. 28,
2022, https://www.dol.gov/sites/dolgov/files/ETA/Performance/pdfs/PY%202020%20WIOA%20National%20Performance%20Summary.pdf (last
visited July 31, 2023). PY 2020 data were the most current
information available at the time of the Joint WIOA Effectiveness in
Serving Employers NPRM in September 2022 and, thus, were included in
the Departments' rationale for the Joint WIOA Effectiveness in
Serving Employers NPRM. At the time of the development of this final
rule, PY 2021 data are available and are discussed below. The PY
2021 data support the Departments' rationale in this final
rulemaking. ETA, ``PY 2021 WIOA National Performance Summary,'' Feb.
28, 2022, https://www.dol.gov/sites/dolgov/files/ETA/Performance/pdfs/PY%202021%20WIOA%20National%20Performance%20Summary.pdf (last
visited July 31, 2023).
\13\ The Departments issued joint guidance on December 19, 2016,
``Performance Accountability Guidance for Workforce Innovation and
Opportunity Act (WIOA) Title I, Title II, Title III, and Title IV
Core Programs'' (Training and Employment Guidance Letter [TEGL] No.
10-16, OCTAE Program Memorandum 17-2, and RSA Technical Assistance
Circular [TAC] 17-01), that described the pilot indicators for
effectiveness in serving employers. The Departments updated this
joint guidance in August 2017, with the issuance of a change to the
guidance, and required States to submit the first report of annual
results using data collected during PY 2017 (July 1, 2017-June 30,
2018), meaning that States did not report any data for the pilot
study for purposes of PY 2016. However, due to the lag in Quarterly
Census of Employment and Wages (QCEW) data availability for the
Retention with the Same Employer and Repeat Business Customer
approaches, the initial results for the effectiveness in serving
employers performance indicator pilot were not available for
reporting in the WIOA annual report due October 16, 2017. As a
result, States reported their initial data in PY 2017. ETA, TEGL No.
10-16, Change 1, ``Performance Accountability Guidance for Workforce
Innovation and Opportunity Act (WIOA) Title I, Title II, Title III,
and Title IV Core Programs,'' Aug. 23, 2017, page 26, https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=3255; ED, OCTAE Program
Memorandum 17-2, ``Performance Accountability Guidance for Workforce
Innovation and Opportunity Act (WIOA) Title I, Title II, Title III,
and Title IV Core Programs,'' Aug. 23, 2017, page 23, https://www2.ed.gov/about/offices/list/ovae/pi/AdultEd/octae-program-memo-17-2.pdf; ED, RSA-TAC-17-01, ``Performance Accountability Guidance
for Workforce Innovation and Opportunity Act (WIOA) Title I, Title
II, Title III, and Title IV Core Programs,'' Aug. 17, 2017, page 23,
https://rsa.ed.gov/sites/default/files/subregulatory/tac-17-01.pdf.
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Retention with the Same Employer: Percentage of
participants with wage records who exit from WIOA core programs and
were employed by the same employer in the second and fourth quarters
after exit.
Repeat Business Customer: Percentage of employers who have
used WIOA core program services more than once during the last three
reporting periods.
Employer Penetration: Percentage of employers using WIOA
core program services out of all employers in the State.
During the pilot,\14\ the Departments determined that the
effectiveness in serving employers performance indicator should be a
shared outcome across all six core programs within each State (i.e.,
meaning that one program would report on behalf of all six core
programs in the State), rather than reported separately by each of the
six core programs.
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\14\ The pilot study began in PY 2016 and lasted through PY
2021. However, States must continue to report on the piloted
measures for the effectiveness in serving employers performance
indicator until these final regulations take effect.
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For PY 2021--the most recent data available at the time the
Departments made their decisions for this final rulemaking--the piloted
approaches for the effectiveness in serving employers performance
indicator provided the following performance results: \15\
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\15\ The most current public workforce system performance
accountability data can be found on ETA's website. ETA, ``Workforce
Performance Results,'' https://www.dol.gov/agencies/eta/performance/results (last visited Oct. 13, 2023). See ETA, ``PY 2021 WIOA
National Performance Summary,'' Dec. 22, 2022, page 9, https://www.dol.gov/sites/dolgov/files/ETA/Performance/pdfs/PY%202021%20WIOA%20National%20Performance%20Summary.pdf.
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Retention with the Same Employer PY 2021 Rate: 56 percent
(35 States reported effectiveness in serving employers performance
using this definition);
Repeat Business Customer PY 2021 Rate: 35 percent (47
States reported using this definition); and
[[Page 13818]]
Employer Penetration PY 2021 Rate: 8 percent (48 States
reported using this definition).
Exhibit 1 summarizes this information and provides further detail
about the calculation methodology used to determine the outcome rate
for the three approaches.
Exhibit 1--Pilot Definition Outcomes for Program Year 2021
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Number of
Performance states
Pilot definition outcome Pilot definition calculation reporting
national rate methodology * outcomes for
(%) definition
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Retention with the Same Employer........... 56 The number of participants with 35
wage records who exit during the
reporting period and were employed
by the same employer during the
second quarter after exit and the
fourth quarter after exit DIVIDED
by the number of participants with
wage records who exit and were
employed during the second quarter
after exit.
Repeat Business Customer................... 35 The total number of establishments, 47
as defined by the Bureau of Labor
Statistics (BLS) Quarterly Census
of Employment and Wages (QCEW)
program, served during the current
reporting period (i.e., one
program year) and that during the
prior three reporting periods have
used core program services more
than once DIVIDED by the number of
establishments, as defined by BLS
QCEW, served during the current
reporting period.
Employer Penetration....................... 8 The total number of establishments, 48
as defined by the BLS QCEW
program, that received a service
or, if it is an ongoing activity,
are continuing to receive a
service or other assistance during
the reporting period DIVIDED by
the total number of
establishments, as defined by BLS
QCEW. This measure is a unique
count of employers using WIOA core
programs. If an establishment
receives, or continues to receive,
more than one service during the
reporting period (i.e., during the
program year), that establishment
should be counted only once in
this calculation.
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* As described in the joint guidance issued by the Departments.
Throughout the pilot period, only one State reported on a State-
specific approach to the effectiveness in serving employers performance
indicator.\16\ However, this State-specific approach was only applied
to Wagner-Peyser Act programs (as amended by WIOA title III), not all
six core programs.\17\
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\16\ See Shayne Spaulding, Burt Barnow, Amanda Briggs, John
Trutko, Alex Trutko, and Ian Hecker, ``Measuring the Effectiveness
of Services to Employers: Options for Performance Measures under the
Workforce Innovation and Opportunity Act,'' Jan. 2021, Chapter 5
(Alternative Measures and Data Sources), https://wdr.doleta.gov/research/FullText_Documents/ETAOP2021-17%20Measures%20of%20Effectiveness%20in%20Serving%20Employers_Final%20Report.pdf (hereinafter ``Final Pilot Study Report'').
\17\ One State reported a State-specific approach to measuring
effectiveness in serving employers, which the State called ``Active
Job Orders with Referrals.'' This measure is explained in the
State's PY 2019 WIOA Annual Statewide Performance Report Narrative,
which can be accessed at https://www.dol.gov/sites/dolgov/files/eta/performance/pdfs/PY2019/PA_PY19%20WIOA%20Annual%20Report%20Narrative.pdf (last visited Jan.
27, 2022).
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The Departments assessed the pilot through a DOL contract that
resulted in a final report titled Measuring the Effectiveness of
Services to Employers: Options for Performance Measures under the
Workforce Innovation and Opportunity Act.\18\ (hereinafter referred to
as the Final Pilot Study Report). Specifically, the Final Pilot Study
Report assessed each approach to defining the effectiveness in serving
employers performance indicator for validity, reliability,
practicality, and unintended consequences.\19\ Though the Final Pilot
Study Report did not definitively recommend one approach, in assessing
the study's findings for each of the three approaches of the
effectiveness in serving employers performance indicator and
considering the subject matter expertise gained through the
Departments' administration of WIOA, the Departments concluded, as
explained in the Joint WIOA Effectiveness in Serving Employers NPRM,
that Retention with the Same Employer provides a valid and reliable
approach to measuring the indicator, while placing the least amount of
burden on States to implement it.
---------------------------------------------------------------------------
\18\ S. Spaulding, et al., ``Measuring the Effectiveness of
Services to Employers: Options for Performance Measures under the
Workforce Innovation and Opportunity Act,'' Jan. 2021, https://wdr.doleta.gov/research/FullText_Documents/ETAOP2021-17%20Measures%20of%20Effectiveness%20in%20Serving%20Employers_Final%20Report.pdf.
\19\ See id. at 3-6 (stating that validity ``is used to assess
whether you are measuring what you intend to measure''; that
reliability ``refers to the ability to maintain consistency in data
collection over time and across organizations collecting the data'';
that practicality means that the measure ``must be relatively
uncomplicated and simple to administer to avoid threats to
reliability and validity'' and ``must be practical to use in
administrating programs''; and that unintended consequences are
``negative consequences or behaviors that result, like the
displacement of goals or conflict with other goals'').
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The Departments received several comments regarding the pilot,
findings from the Final Pilot Study Report, and alternatives to
measuring the effectiveness in serving employers performance indicator.
These comments and the Departments' responses are discussed below.
Suggestions To Use Multiple Performance Indicators To Measure
Effectiveness in Serving Employers
Comments: One commenter asserted that the Retention with the Same
Employer measure only provides a partial perspective for how the system
is serving employers and urged the Departments to consider the other
performance measures piloted over the previous period, as well as
additional information, to more comprehensively demonstrate the impact
of services rendered to employers.
A commenter stated that the Final Pilot Study Report noted the
benefit of using multiple measures to understand the WIOA system's
effectiveness in serving employers. According to the commenter, the
Final Pilot Study Report asserted that because the system uses multiple
measures to understand the system's effectiveness in serving workers,
it would make sense to use
[[Page 13819]]
multiple measures to understand the system's effectiveness in serving
employers. The commenter suggested additional data collection methods
to better understand the system's effectiveness in meeting employers'
needs, including periodic, random, and anonymous satisfaction surveys
for both workers and employers, WIOA system user satisfaction surveys,
and focus groups with both workers and employers.
Departments' Response: As discussed in more detail in the
introduction to Section II.A. above, the Final Pilot Study Report
considered each approach to defining the effectiveness in serving
employers performance indicator for validity, reliability,
practicality, and unintended consequences. Based upon a review of the
pilot results, the Departments determined that a single measure best
limits the implementation burden to States. Moreover, while the Final
Pilot Study Report may have noted advantages for using multiple
measures to understand the system's effectiveness in serving employers,
the Departments note, in response to the commenter, that the Final
Pilot Study Report did not definitively conclude multiple measures were
necessary to assess effectiveness in serving employers. Therefore, the
Departments decline to amend this final rule to use multiple approaches
for defining the effectiveness in serving employers indicator of
performance.
Over the pilot period and through stakeholder engagements, the
Departments heard from employers about the burden of surveys and the
preference for a measure that did not rely on survey responses. Because
a survey would be too burdensome, the Departments decline to accept the
suggestion to use surveys to assess effectiveness in serving employers.
Alternative Approaches to Defining Effectiveness in Serving Employers
Performance Indicator
Comments: The Departments received comments in support of
alternative approaches to measuring effectiveness in serving employers.
These comments included preferences for other piloted approaches
(Employer Penetration and Repeat Business Customer) or variations
thereof, as well as a variety of suggestions for application of those
various metrics.
Other commenters voiced support for different approaches, such as
tracking work-based learning services, using employer satisfaction
surveys, and tracking a suite of data points: number of job orders
posted and number of candidates referred per posting; use of incumbent
worker training (by percentage of WIOA funds used and number of
businesses served); number, array, and availability of business
services offered by a workforce development board or American Job
Center (AJC); funding passed from workforce development boards or AJCs
through to local businesses; or number of businesses engaged with
Registered Apprenticeship opportunities through workforce development
boards or AJCs.
A different commenter suggested Employer Penetration could be
improved by measuring the increase in businesses served rather than the
actual penetration rate, using a recording period longer than a
quarter, and using penetration figures determined by 3-digit North
American Industry Classification System (NAICS) sectors.
Departments' Response: The Departments acknowledge the various
benefits of the different proposed pilot approaches for measuring the
effectiveness in serving employers indicator. The Departments also
appreciate the suggestions of different additional approaches to be
considered; however, these metrics do not apply well to all six WIOA
core programs due to differences in program design. For example, among
the WIOA core programs, only Wagner-Peyser Act programs provide job
order services to employers. Therefore, a job order measure would not
be applicable to all six WIOA core programs. Moreover, as noted in the
introduction to Section II.A. above, throughout the 6-year pilot
period, States could submit a State-specific approach for measuring
effectiveness in serving employers. Only one State did so throughout
the pilot period, which suggests that States did not identify any
viable additional approaches. The Departments do not believe it is
prudent to impose untested, unpiloted approaches, through this final
rule, particularly given the benefits and use of the Retention with the
Same Employer metric.
The suggested alternative approaches mentioned in the comments,
such as Employer Penetration and Repeat Business Customer, were
ultimately not selected as indicators of employer satisfaction due to
(1) the nature of a very low employer penetration rate compared to all
businesses within a State, leading to difficulties in improving the
measure over time; and (2) the fact that a satisfied business may not
need to partner with the State workforce system again. Additionally,
these alternative measures are not based on existing standardized
reporting mechanisms, would be impractical to apply to all grantees
across core programs, and would not fully track satisfied employers
based on measuring only outputs of services provided.
In the Joint WIOA Effectiveness in Serving Employers NPRM, the
Departments explained their rationale for proposing the Retention with
the Same Employer measure and not proposing either Employer Penetration
or Repeat Business Customer as the definition for the effectiveness in
serving employers performance indicator. Specifically, the Departments
noted in the Joint WIOA Effectiveness in Serving Employers NPRM that
Employer Penetration, which reports the percentage of employers using
services out of all employers in the State, would have required counts
of services provided to employers requiring States and local areas to
report unique counts of employer establishments receiving services
through the WIOA core programs. While the Employer Penetration
definition would have the benefit of capturing the extent to which
employers within a State are engaged with WIOA core programs and would
provide those programs an incentive to work with additional employers,
it would require a more data-intensive analysis than the Retention with
the Same Employer approach. Additionally, in the Final Pilot Study
Report, the Department found significant weaknesses in this pilot
approach including: (1) emphasis on quantity rather than quality or
intensity of the employer service provided; (2) reliability issues
associated with data entry and the process to count unique
establishments; (3) measurement of program output rather than outcome;
(4) potential for creation of perverse incentives to prioritize program
breadth rather than depth in services; and (5) lack of sensitivity to
industry sectors targeted by State and local workforce agencies.
The Repeat Business Customer definition, which reports the
percentage of employers receiving services in a year who also received
services within the previous 3 years requires a more data-intensive
analysis than the Retention with the Same Employer. In the Final Pilot
Study Report, the Department also found significant weaknesses in this
pilot approach including that it: (1) may provide a disincentive to
reach out to new employers; (2) is subject to variation in industry and
sector economic conditions; and (3) may require a statistical
adjustment model to mitigate the weaknesses and improve implementation
and interpretation.
As we summarized in the introduction to Section II.A., comments
received in response to the NPRM, the
[[Page 13820]]
findings of an independent study conducted on the pilot, and the data
reported by States in their annual reports, all considered, have not
persuaded the Departments to change course and adopt either of the
other alternative definitions for the effectiveness in serving
employers performance indicator. Instead, the Departments adopt through
this final rule the Retention with the Same Employer measure as the
definition for the effectiveness in serving employers performance
indicator as proposed. See 87 FR 56318, 56323.
Regarding employer satisfaction surveys, the Departments note that
employer satisfaction surveys introduce a higher level of burden and
potentially inconsistent results because of the subjective nature of
such surveys and the respondents completing them compared to the
quantifiable and verifiable employment data collected and reported for
the Retention with the Same Employer metric. Furthermore, during
previous webinars and town halls with State workforce agencies, members
of the employer community, and other stakeholders that the Departments
held in September and October 2014 to inform the development of the
Joint WIOA NPRM (80 FR 20609) and the Joint WIOA Final Rule (81 FR
55792, 55848),\20\ employers specifically commented that they consider
satisfaction surveys burdensome and recommended they not be used in
this indicator. At that time, several employers also provided input
that reducing employee turnover was paramount for their success.
---------------------------------------------------------------------------
\20\ The Departments conducted an extensive consultation process
regarding methods for measuring the effectiveness in serving
employers performance indicator. Prior to publication of the Joint
WIOA NPRM, the Departments engaged with numerous stakeholders
through a series of town hall meetings with State workforce
agencies, State and local workforce development boards, and members
of the employer community in September and October 2014, in various
cities across the country (80 FR 20609). A great deal of discussion
regarding proposed methods for measuring this indicator took place
during the consultation process. The outcome of these discussions
was the three options listed in the NPRM. Understanding the
importance of receiving extensive feedback on this issue, the
Departments requested further input via the NPRM and the WIOA Joint
Performance ICR (81 FR 55848).
---------------------------------------------------------------------------
The Departments appreciate the commenters' ideas for additional
data points to be collected and encourage States to do so where it aids
in guiding service delivery policies. Specifically, commenters
recommended including collecting and reporting data on: the number of
job orders posted and number of candidates referred per posting; use of
incumbent worker training (by percentage of WIOA funds used and number
of businesses served); number, array, and availability of business
services offered by a workforce development board or AJC; funding
passed from workforce development boards or AJCs through to local
businesses; or number of businesses engaged with Registered
Apprenticeship opportunities through workforce development boards or
AJCs. The Departments decline to use these additional data points in
defining the effectiveness in serving employers indicator because they
are not applicable to all of the programs, and in cases where the
metric is a count of services they would merely measure the quantity of
services provided to employers rather than the effectiveness of those
services. The Departments believe these suggestions would measure
outputs compared to an outcome. In most cases, an output like the
number of services provided may not correlate to the ultimate goal,
placing and retaining quality employees in this case, and therefore is
not ideal for measuring effectiveness in serving employers.
After careful consideration of public comment opportunities,
ongoing State stakeholder engagement efforts,\21\ review of pilot data
and narrative input submitted since 2017 through required annual
performance reports,\22\ and a third-party study, the Departments
concluded that the Retention with the Same Employer approach provided a
valid and reliable approach to measuring the indicator while placing
the least amount of burden on States to implement.
---------------------------------------------------------------------------
\21\ ETA's WorkforceGPS technical assistance website provides
access to materials from trainings and stakeholder engagements,
including (1) the Effectiveness in Serving Employers Resource Page
accessible at https://performancereporting.workforcegps.org/resources/2018/01/29/21/13/Effectiveness-in-Serving-Employers-Resource-Page, (2) the 2019 Performance Accountability Training
accessible at https://performancereporting.workforcegps.org/resources/2019/10/03/20/25/WIOA_2019_Performance_Accountability_Training, and (3) the January
2020 Peer Learning Group event accessible at https://www.workforcegps.org/events/2020/01/13/17/40/WIOA-Performance-Peer-Learning-Group-Effectiveness-in-Serving-Employers.
\22\ Annual performance reports can be found on ETA's website.
ETA, ``Workforce Performance Results,'' https://www.dol.gov/agencies/eta/performance/results (last visited Apr. 26, 2023).
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Recommendation To Extend Pilot for an Additional 2 Years and Allow More
Time for Testing Other Measures
Comments: Numerous commenters recommended that the pilot be
extended for an additional 2 years to allow for the development of new
and innovative indicators and urged that States be encouraged to
propose such indicators. Several commenters remarked on the
interruptions the Coronavirus disease 2019 (COVID-19) pandemic caused
to the labor market and the resulting difficulties with the collection
of representative and useful data during the pilot.
A commenter recommended that the Departments allow additional time
for States to identify and test different ways of measuring participant
career progression instead of only employee retention.
Departments' Response: After reviewing the outcomes of the Final
Pilot Study Report and the information learned in the study, the
Departments determined the 6-year pilot period was sufficient to gather
relevant experience with the possible approaches. There is no evidence
to suggest, and the commenters did not provide any such evidence, that
extending the pilot period for potential approaches to measure
effectiveness in serving employers would result in substantially new
information. WIOA reporting did not cease during the COVID-19 pandemic,
and States still submitted pilot data. While there was an impact on
some service delivery, particularly with respect to the approaches used
for delivering those services, there was no change in the Departments'
expectations for States to continue to provide services to participants
and employers. Therefore, the Departments believe that the data from
the program years affected by the pandemic are representative and
useful to determine the definition of the effectiveness in serving
employers performance indicator, and these same years will provide
useful data for purposes of the statistical adjustment model when the
Departments determine there are sufficient data available to produce
reliable results to assess for performance of this indicator.
Furthermore, there has been ample time to test and provide suggestions
for other potential approaches to measure this indicator during the
pilot period. The Departments do not agree that extending the pilot
period for identifying new potential measures for the effectiveness in
serving employers indicator at this time would likely result in
substantially new information, particularly given that only one State
developed its own measure during the pilot period that lasted 6 program
years, which was ample time for States to suggest an alternative metric
(see the introduction to Section II.A. for complete discussion).
Therefore, the Departments decline to extend the pilot phase and,
instead, have decided to define the indicator as described in this
final rule.
[[Page 13821]]
The Departments believe this definition, as adopted in this final rule,
will promote accountability in serving employers and ultimately benefit
workforce system participants.
After careful consideration of the information gained from the
States' reports on using the three piloted approaches, the Final Pilot
Study Report's findings, and the comments on the pilot and other
potential approaches to defining effectiveness in serving employers,
the Departments are finalizing the proposed definition of the
effectiveness in serving employers performance indicator as Retention
with the Same Employer on a statewide level. As discussed in further
detail below in Section II.B, this final rule implements the proposed
changes to 20 CFR 677.155(a)(1)(vi) and (c)(6), with one modification.
WIOA sec. 116(b)(2)(A)(i)(VI) applies the same effectiveness in
serving employers performance indicator to four non-core programs DOL
administers under WIOA title I.\23\ For consistency and alignment
across WIOA programs, in addition to all the reasons discussed above,
DOL is incorporating this same definition for the effectiveness in
serving employers performance indicator into regulations in a separate,
but related, rulemaking, DOL-Only Performance Accountability Final Rule
(RIN 1205-AC08), published concurrently with this final rule elsewhere
in the Federal Register.
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\23\ WIOA secs. 159(c), 166(h), 167(c)(3), and 171(f) direct the
Secretary of Labor to establish levels of performance for the
relevant primary indicators of performance in WIOA sec. 116(b)(2)(A)
for the Job Corps program, Indian and Native American programs, the
National Farmworker Jobs Program, and the YouthBuild program,
respectively.
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B. Retention With the Same Employer for the Effectiveness in Serving
Employers Performance Indicator in Sec. 677.155
Sec. 677.155 What are the primary indicators of performance under the
Workforce Innovation and Opportunity Act?
Section 677.155 sets forth the primary indicators of performance
that the Departments use to evaluate the performance of WIOA's six core
programs, as required by WIOA sec. 116(b)(2)(A)(i). These primary
performance indicators apply to the six WIOA core programs (i.e.,
adult, dislocated worker, and youth programs, the AEFLA program,
Wagner-Peyser Act programs, and the VR program). These primary
performance indicators create a common language shared across the
programs' performance measures, support system alignment, enhance
programmatic decision-making, and help participants make informed
decisions related to training, all of which are consistent with the
purposes of WIOA as stated in WIOA sec. 2. Paragraphs 677.155(a)(1)(vi)
and (c)(6) implement the sixth statutory performance indicator as
described in WIOA sec. 116(b)(2)(A)(i)(VI), subject to WIOA sec.
116(b)(2)(A)(iv), which requires the Departments to develop the
indicator after consultation with the stakeholders listed at WIOA sec.
116(b)(4)(B) and discussed above. This performance indicator measures
program effectiveness in serving employers.
In this final rulemaking, for the reasons discussed in the NPRM and
in Section II.A. above, the Departments have decided to revise Sec.
677.155(a)(1)(vi) to establish Retention with the Same Employer as the
standard definition for measuring effectiveness in serving employers,
the sixth performance indicator for all WIOA core programs. The final
rulemaking removes the general title of ``effectiveness in serving
employers''; \24\ defines Retention with the Same Employer as the
percentage of participants who exited the program in unsubsidized
employment and were employed by the same employer in the second and
fourth quarters after exiting the program; clarifies that, for the six
WIOA core programs, the indicator is a statewide indicator that is
reported by one core program on behalf of all six core programs in the
State; and references guidance to signal to States that the Departments
will provide additional details and explanations for reporting on the
effectiveness in serving employers performance indicator in joint
guidance. The final rulemaking also updates Sec. 677.155(c)(6) to
define effectiveness in serving employers as Retention with the Same
Employer for the WIOA title I youth program in a manner that mirrors
the definition for the other WIOA core programs in paragraph (a)(1)(vi)
as just described.
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\24\ The regulations for definitions for the other WIOA
performance indicators do not include descriptive or general names
of the indicators; they simply provide the definitions of the
indicators. For consistency with the regulations for the other
indicators, final Sec. 677.155(a)(1)(vi) removes the name of the
effectiveness in serving employers indicator and adds the
definition.
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For the reasons discussed below, in response to multiple comments
received to allow for the use of supplemental wage information in the
definition of measuring effectiveness in serving employers, this final
rulemaking removes references to wage records in Sec. 677.155 that had
been proposed in the Joint WIOA Effectiveness in Serving Employers
NPRM. This change clarifies that the sources of wage data are not
limited, meaning they could be wage records or supplemental wage
information. As noted above, the Departments also want to make clear
the final rule uses the term ``unsubsidized employment'' to align the
effectiveness in serving employers performance indicator to WIOA
statutory language, specifically referring to unsubsidized employment
in the second and fourth quarters after exit, which are key inputs to
this indicator's definition of Retention with the Same Employer.
Support for Retention With the Same Employer
Comments: Several commenters were generally supportive of the
proposal to use Retention with the Same Employer as the definition for
effectiveness in serving employers. Supportive comments include
assertions that when an employee is performing their duties
competently, their employer generally tries to retain the employee.
Similarly, other commenters stated that Retention with the Same
Employer demonstrates the effectiveness with which employee skills and
training have been matched to employer needs. Another commenter argued
that Retention with the Same Employer demonstrates a continued
relationship between the employer and participants, as well as the
success of WIOA customers, while the other two piloted approaches are
based only on employer data and fail to capture job match
effectiveness. Another commenter expressed support for the proposal
because, in their view, it would benefit the workforce and promote cost
savings for employers in the long term.
Several commenters agreed with the Departments' conclusion that
Retention with the Same Employer would be the least burdensome
definition of the three piloted measures. Similarly, another commenter
agreed that this definition would be the least burdensome approach
because States already collect wage records for other WIOA-related
reporting and because States would be able to coordinate data
aggregation for the six core programs more easily with this measure
than with the other two piloted measures. Another echoed this
sentiment, adding that the measure would be based on data that is
objective, already collected by many States, and that can be
standardized across States and territories.
Departments' Response: We appreciate commenters supporting
Retention with the Same Employer as the definition for effectiveness in
[[Page 13822]]
serving employers. As discussed in more detail in Section II.A., we
agree that this definition best aligns with WIOA employment performance
indicators by using existing Participant Individual Record Layout
(PIRL) terms and data elements (i.e., use of ``participants,''
``unsubsidized employment,'' and ``exit'') and measuring the same
quarters as the employment rate indicators (i.e., the second and fourth
quarters after program exit), is the least burdensome definition of the
three piloted measures, effectively illustrates the workforce system's
ability to serve employers by reducing new employee turnover, and
minimizes the burden on States and employers in measuring effectiveness
in serving employers.
Retention With the Same Employer Definition: Program Impacts
Comments: Several commenters raised numerous points in asserting
that adopting Retention with the Same Employer would adversely impact
service delivery design and business outreach services. Commenters
expressed opposition to measuring effectiveness in serving employers
with Retention with the Same Employer, asserting that changing
employers often enables individuals to seek jobs with higher pay or
better benefits, which is a positive outcome but would reflect
negatively on WIOA programs under the proposed definition. A few
commenters asserted that, by negatively counting individuals who switch
jobs, the proposed measure would incentivize programs to place
individuals in jobs with minimal mobility, punish programs that provide
individuals with skills and knowledge that enable them to seek higher
paid jobs with other employers, and disincentivize programs from
sharing better job placements because retention numbers would decrease
if a participant switched to a better job after their initial
placement.
Other commenters shared these concerns, asserting that programs
should not be punished if participants' employment growth is with a
different employer from the one with which the individual is initially
placed and that WIOA participants should not be trapped in a job for
the sake of WIOA programs' performance indicators.
Similarly, one commenter expressed concern that by incentivizing
placing individuals in positions with limited mobility, the measure
could serve to perpetuate or worsen racial and economic inequities or
lead to worker exploitation, as well as further disadvantage job
seekers with criminal records, undocumented immigrants, and individuals
receiving income supplements conditioned on engaging in work
activities.
Another commenter reasoned that while retention indicates some
level of employer satisfaction, it may not be the desired outcome for
the job seeker, who may be in a low-wage position or need to work
multiple jobs to earn a living wage.
Another broad theme of opposition to the proposed measure is that
Retention with the Same Employer primarily measures the success of a
job seeker. A commenter asserted that success according to the proposed
measure requires ongoing support of job seekers, not employers, which
WIOA programs often provide, but that the employer inputs, such as
wages, working conditions, and workplace culture, are not related to
WIOA services. Similarly, another commenter asserted that the indicator
would not measure or identify when an employer receives a service,
stating that it would primarily reflect intervention with a client.
Several commenters asserted that using the proposed definition
could disincentivize employers to support and train employees in such a
way that enhances employees' ability to advance into a better job with
another employer. Other commenters asserted that a performance
indicator that prioritizes Retention with the Same Employer would be
particularly misaligned with the current economy, in which employers
are offering bonuses, higher salaries, and other benefits to attract
talent. Another commenter remarked that high costs of living have
forced many employees to move from expensive metropolitan areas to less
expensive rural areas, thus leaving their jobs.
Several commenters raised concerns that Retention with the Same
Employer is not a good fit for newer and smaller employers, younger
workers, and certain sectors of the economy. One commenter said that
while it considered the proposed definition to be the best of the three
piloted definitions, measuring effectiveness in serving employers
through Retention with the Same Employer would disincentivize programs
from working with new or small employers because their employee
retention history may be unknown and, thus, they may be seen as a risky
partner.
A couple of commenters asserted that the proposed definition would
not be the best measure of effectiveness in serving employers for
younger generations, who are increasingly populating the workforce,
place a high value on work/life balance, and will readily leave a
position for a better opportunity, or for gig-economy workers, who
change jobs frequently in search of better opportunities.
One commenter expressed concern that the proposed measure could
negatively capture seasonal employment noting that some employers
require seasonal employment so retention in the second and fourth
quarters is not assessing the effectiveness of services provided to
these employers. Similarly, another commenter noted that the metric
does not recognize instances in which rapid replacements or temporary
positions are necessary for fulfillment. The commenter noted that for
those employers, skills training and WIOA services have little
influence over retention rates. Similarly, another commenter asserted
that the proposed measure would reflect negatively on WIOA programs in
States where much of the workforce is transient.
Departments' Response: The Departments acknowledge the wide range
of concerns expressed by commenters that implementing the Retention
with the Same Employer definition may have adverse impacts on job
seeker services and business outreach. The Departments address these
concerns below.
Job mobility: The Departments note that an individual who moves to
a new job with the same employer would be considered a successfully
retained participant under this indicator because the indicator
measures retention ``with the same employer'' in the second and fourth
quarters; there is no requirement that the participant remain in the
same employment status or position with the employer to count as a
positive outcome. The Departments also note that the employer that will
be measured for purposes of this indicator for this particular
participant is not always the same employer that received services from
a core program and initially hired the participant. The Departments
also agree that many circumstances affect an employer's retention of
employees, some of which may be outside the purview of WIOA services,
including the general economy and business landscape of an area, which
may include seasonal employers or other industries with cyclical work
cycles that could impact calculated retention rates. These external
economic impacts are likely not unique to one specific geographic area.
If external economic factors were to affect the outcome of the
indicator, they would be captured in the statistical adjustment model.
Additionally, regarding States with a higher transient worker
population or where individuals are more likely to
[[Page 13823]]
leave for a higher paying job, the Departments' statistical adjustment
model will account for such differences as it adjusts for variations in
economic conditions and participant characteristics. These adjustment
differences by the statistical adjustment model will be critical when
the Departments determine there are sufficient data to produce reliable
results for performance assessment purposes with the effectiveness in
serving employers indicator.
The Departments acknowledge that individuals may leave for higher
wages with a new employer, but States can seek to address these
concerns in a variety of ways that are beneficial to both the employer
and the participant, such as striving to find quality job placements or
working with employers to develop career pathways and good jobs that
more effectively incentivize participants they have hired to maintain
their employment with the same employer. Despite these concerns and as
discussed more fully in Section II.A., the Departments are adopting the
Retention with the Same Employer definition of the indicator for
multiple reasons, specifically because it: is the least burdensome
since it uses data elements reported by States for other performance
indicators; has a stable data collection mechanism in that the
requisite data are already reported via an OMB-approved information
collection request; aligns with other employment performance indicators
in that it uses similar terminology and data elements; and demonstrates
maintained relationships between employers and employees, thereby
demonstrating that the services provided by the WIOA core programs not
only meet the long-term needs of the participants but also the needs of
employers in each State.
Equity: The Departments disagree with the comment that the selected
metric will potentially perpetuate or worsen racial and economic
inequities or negatively impact those with justice system issues,
immigrants, and those receiving income supplements conditioned on
engaging in work activities. As discussed in other parts of this final
rule, we believe the Retention with the Same Employer metric does allow
for employment opportunities and upward mobility for all workers. To be
clear, the metric measures the number of participants who remained with
the same employer over a period of time, not necessarily in the same
job position or even the same geographic location. Consistent with
various requirements of WIOA, the Departments continually emphasize
that States and local areas should serve all participants so that they
may obtain unsubsidized and sustainable employment. For example, as
discussed more fully in ``Requirements for Workforce Innovation and
Opportunity Act (WIOA) State Plans for Program Years (PYs) 2024-2027,''
jointly issued by the Departments on October 31, 2023,\25\ when
developing their annual plans, States and local areas should
demonstrate how they will develop education, training, and career
service strategies that better address and promote equity to improve
access and outcomes for disadvantaged populations. Furthermore, serving
all participants, including those with barriers to employment, so that
they may obtain unsubsidized and sustainable employment is reflected in
the WIOA primary indicators of performance that measure all
participants' employment in the second and fourth quarters after exit.
Given that the definition of effectiveness in serving employers adopted
by this final rule uses the data obtained in these indicators, the
effectiveness in serving employers indicator will also reflect States'
service delivery to all WIOA participants, including those with
barriers to employment.
---------------------------------------------------------------------------
\25\ ETA, TEGL No. 04-23, ``Requirements for Workforce
Innovation and Opportunity Act (WIOA) State Plans for Program Years
(PY) 2024-2027,'' Oct. 31, 2023, https://www.dol.gov/agencies/eta/advisories/tegl-04-23; ED, OCTAE Program Memorandum 24-2,
``Requirements for Workforce Innovation and Opportunity Act (WIOA)
State Plans for Program Years (PY) 2024-2027,'' Oct. 31, 2023,
https://www2.ed.gov/about/offices/list/ovae/pi/AdultEd/octae-program-memo-24-2.pdf; ED, RSA-TAC-24-02, ``Requirements for
Workforce Innovation and Opportunity Act (WIOA) State Plans for
Program Years (PY) 2024-2027,'' Oct. 31, 2023, https://rsa.ed.gov/sites/default/files/subregulatory/TAC-24-02.pdf.
---------------------------------------------------------------------------
Another example is WIOA sec. 134(c)(3)(E), which requires that
priority be given to recipients of public assistance, low-income
individuals, and individuals who are basic skills deficient (including
English language learners) when individualized career services and
training services are provided using funds allocated to a local area
for the WIOA title I Adult program. This priority of service
requirement applies when providing these services under the title I
Adult program at all times, regardless of the amount of funds available
to provide services in the local area. WIOA requires States to develop
criteria, policies, and procedures for applying this priority for
purposes of the title I Adult program, including monitoring local
areas' compliance with this priority (see 20 CFR 680.600 and TEGL No.
19-16). Moreover, for the AEFLA and VR programs, section 427 of the
General Education Provisions Act (20 U.S.C. 1228a) requires grantees to
include in their applications--i.e., their WIOA State Plans--a
description of how they will ensure participants' equitable access to
and participation in the programs by addressing barriers based on
gender, race, national origin, color, disability, and age. Lastly, WIOA
permits States to develop and use internal metrics in addition to those
reported to the Departments. This encourages States and local areas to
develop and track additional measures that enhance internal service
delivery policies, and continue to track the impact of any sector-
specific strategies particularly relevant to their State. Therefore,
the Departments have concluded that the Retention with the Same
Employer definition for the effectiveness in serving employers
performance indicator will not contribute to racial and economic
inequities or negatively impact WIOA core program participants.
Counting services provided to employers: Some commenters suggested
defining the measure as a count of the services delivered to employers.
As discussed above in Section II.A, the Departments note that counting
services would be measuring an input (effort) rather than an output
(effectiveness). Aligning with the approach of all other indicators,
Retention with the Same Employer measures output (results), whether an
exiter is retained at the same employer in both the second and fourth
quarters after exit, rather than a count of services to employers. The
number of services does not necessarily provide a direct correlation to
the effectiveness in serving employers. Therefore, the Departments have
decided to use an outcome measure, such as retention of employees, as
the desired goal to be measured through this indicator.
Lack of inclusion of the job seeker: Commenters expressed concern
that the chosen definition for this measure focused unnecessarily on
services to employers to the detriment of job seekers. WIOA sec.
116(b)(2)(A)(i)(VI) requires the Departments to assess ``effectiveness
in serving employers.'' Therefore, this metric necessarily focuses on
services to employers, not the job seekers. Nevertheless, Retention
with the Same Employer highlights the alignment between employers and
job seekers by measuring the workforce system's alignment with employer
needs during the second and fourth quarters after a participant exits
WIOA programs.
Effectiveness in serving employers is one of six indicators of
performance under WIOA; it is the only shared
[[Page 13824]]
indicator across core programs, and the only indicator that is not
designed to measure job seeker outcomes. In other words, all other
performance indicators (i.e., employment in the second and fourth
quarters after exit, median earnings in the second quarter after exit,
credential attainment, and measurable skill gains) are designed to
assess job seeker outcomes. However, the Departments also recognize
that a service delivery design solely focused on the effectiveness in
serving employers performance indicator, without regard to job seeker
needs, would be at risk of failing to meet other areas of program
performance. Therefore, the Departments have concluded that the chosen
definition for the effectiveness in serving employers performance
indicator strikes the proper balance between the needs of employers and
those of job seekers and, thus, will not have a detrimental impact on
job seekers.
Employer training: The Departments believe it more likely that
employers provide training to encourage employees to advance within
their own company. The performance indicator under WIOA is intended to
measure the effectiveness of the WIOA core programs in serving
employers. Retention with the Same Employer is calculated as the
percentage of participants in unsubsidized employment who exited the
program and were employed by the same employer in the second and fourth
quarters after exiting the program. As such, the indicator is not
designed to measure the internal training practices of employers, but
rather the effectiveness of AJC services by reducing employee turnover
within the first year of employment.
Outreach to and working with smaller or newer employers: The
Departments acknowledge the needs of new and small employers and have
determined that the definition for effectiveness in serving employers
makes no distinction about the size of the employer, and therefore is
not a disincentive for working with employers of any size. The
Departments encourage programs, at both the State and local levels, to
work closely with new and small employers to find participants who
match well with the employers' needs. Ultimately it is the
responsibility of the programs to assist job seekers in finding
meaningful, long-lasting employment opportunities. Moreover, the
Retention with the Same Employer calculation is not restricted to
employers who received a direct employer service through a WIOA core
program, so there is no incentive for WIOA core programs to avoid
providing services to new or small employers.
The Departments acknowledge that individuals may leave for higher
wages with a new employer, but there are a variety of ways in which
States can seek to address these concerns in ways that are beneficial
to both the employer and the participant, such as striving to find
quality job placements or working with employers to develop career
pathways and good jobs that more effectively incentivize participants
they have hired to maintain their employment with the same employer.
The Departments encourage provision of WIOA services to new and small
employers to enhance employee retention. Examples of such services
include, but are not limited to, the provision of labor market
information to demonstrate what constitutes competitive wages and
benefits in their industry, working with employers to develop career
pathways for employees to pursue and advance in employment, providing
technical assistance on the hiring of individuals with disabilities
(including the requirements of the Americans with Disabilities Act),
and sharing other research on the factors that increase retention
rates. The Departments note that there is no restriction on working
with new and small employers and expect that Retention with the Same
Employer will lead to better services.
Seasonality: In cases of temporary seasonal work, AJCs should
strive to place participants into long-term employment opportunities
when possible. While a seasonal employee will not be a positive outcome
in the indicator, the statistical adjustment model will account for
this, and the Departments do not expect States to achieve a 100 percent
positive outcome.
Retention With the Same Employer and Other Aspects of Effectiveness in
Serving Employers
Another broad theme that commenters raised in opposition to the
proposed measure was that it would not measure all of the aspects of
effectiveness in serving employers. Their primary assertions were that
outcomes may be skewed due to the inclusion or exclusion of specific
populations, wage sources, or employers in the calculation.
Comments: One commenter expressed concern that not all employers
who receive a service from the local workforce development board would
have the effectiveness of those services assessed using the Retention
with the Same Employer definition. For example, the commenter stated
that if a local workforce development board hosted a job fair and an
employer hired someone who was not a WIOA participant, those services
to the employer would not be taken into account.
Commenters provided feedback regarding the pools of individuals and
employers being measured in the proposed Retention with the Same
Employer approach. They suggested that only employers that received a
direct WIOA service be measured, that only targeted industries be
included, that businesses that issue Worker Adjustment and Retraining
Notification (WARN) Act notices be exempted, that participants employed
by companies impacted by a qualified plant closing or mass layoff
identified through the WARN Act Notification process if they lose or
change employment locations be excluded, that employers that close or
conduct layoffs during the reporting period be excluded from the
measure's calculations, that the metric not include changes in employer
caused by firms going bankrupt or downsizing, or that the measure
extend beyond WIOA-funded programs.
Another comment mentioned that the proposed rule will solely focus
on dislocated workers and that the greater public workforce system will
suffer as this rulemaking will not encourage collaboration where
dislocated workers are not present.
Some commenters noted that employers may have received no services.
One commenter argued that while retention indicates some level of
employer satisfaction, it does not speak to what business service an
employer received. Similarly, a few commenters asserted that the
performance indicated by the measure might not be a result of employers
receiving a direct service from the workforce development system.
Another commenter stated that the measure would say little about actual
interactions between employers and their local workforce development
board.
One commenter asserted that the proposed measure would not reflect
the effectiveness of direct employer interaction, because placement of
participants at a specific employer is not the result of employer
service delivery but of credential skills obtained through tuition
assistance, and that the employers reflected in the measure may not
have sought or received a service but simply had a job opening filled
by a program participant. Several commenters asserted that the proposed
measure has no mechanism for linking the retention of a particular
employee with instances of employer services being provided, therefore
only indirectly reflecting effectiveness in
[[Page 13825]]
serving employers and failing to inform strategic action to improve
performance.
The commenters further stated that the measure can be calculated
without any employer services data. Other commenters stated that
Retention with the Same Employer does not capture all services to an
employer. A commenter critical of the proposed measure asserted that
there are too many services provided to employers that are unrelated to
a program-funded job seeker, and furthermore that employment status at
program exit is unknown to local program operators. The commenter also
asserted that the measure would not truly capture effectiveness because
it is limited to program-funded job seekers and would not evaluate all
employer services and is instead primarily a retention metric for WIOA-
funded job seekers.
Similarly, one commenter expressed opposition to the proposed
measure, arguing that because AJCs and workforce development boards
refer a universal pool of candidates for job openings, it would be
inappropriate to only measure success for WIOA-enrolled customers.
Other commenters similarly criticized the proposed indicator because,
while workforce systems will provide services to any job seeker, the
only employers that would be captured are those that a WIOA-funded job
seeker exits a program to be employed by. Another commenter noted that
Retention with the Same Employer does not speak to acuity of placement
(for example, how difficult the position was to fill, how in demand the
position is, whether the role was seasonal specific and not intended to
maintain retention, rarity of skill set, or time to hire). A different
commenter relatedly suggested that combining Retention with the Same
Employer with some measure of acuity (such as skill/education level of
the position or time to placement) and the ability to filter for those
employers who received a business service would improve the measure.
Departments' Response: As noted previously, the Departments have
determined that Retention with the Same Employer in both the second and
fourth quarters after exit demonstrates a successful match between the
job seeker and the employer. Moreover, the services delivered by core
programs routinely benefit the broader employer community by increasing
basic skills of the candidate pool, enhancing free job posting and
search tools, and preparing workplaces and job seekers with
disabilities for successful employment. WIOA participants who receive
services that successfully prepare them to fill jobs that meet
employers' needs benefit all the employers in the local economy,
regardless of whether a specific employer directly received services
from a WIOA core program.
Regarding the pool of participants measured in this indicator, one
commenter mentioned that this metric only utilizes dislocated workers,
but that is incorrect. The indicator will include all WIOA core program
participants, regardless of employment status at time of participation
or program enrollment.
Regarding whether the proposed indicator measures all aspects of
effectiveness in serving employers, the Departments believe there are
many aspects to employer effectiveness, some of which are very
difficult to quantify and report. Therefore, the Departments chose one
aspect of effectiveness that employers stated would be beneficial and
can be measured across programs and States with minimal burden to
employers--employee retention.
The Retention with the Same Employer calculation of effectiveness
in serving employers is not restricted to employers who received a
direct employer service through a WIOA core program. However, the
services delivered by core programs, whether to participants or to the
employers themselves, routinely benefit the broader employer community
by increasing basic skills of the candidate pool, enhancing free job
posting and search tools, and preparing workplaces and job seekers with
disabilities for successful employment.\26\ WIOA participants who
receive services that successfully prepare them to fill jobs that meet
employers' needs benefit all the employers in the local economy,
regardless of whether a specific employer directly received services
from a WIOA core program; therefore, the Departments have determined
that excluding employers that have not received a WIOA core program
service within the reporting period is not an appropriate holistic
measure of the workforce system's impact on Retention with the Same
Employer. In fact, such an approach would be contrary to the purpose of
the performance measure itself. For example, it would be possible for a
participant to obtain employment--from an employer that received
services from a core program--as a result of services received from one
of the six core programs, but change jobs within the first quarter
after exiting the program to a new job with a different employer (that
did not receive services from a WIOA core program) where the
participant remained for at least a year. In these final regulations,
the Departments define the effectiveness in serving employers
performance indicator as the participant's Retention with the Same
Employer in the second and fourth quarters after exiting the program.
In other words, in this example, the employer that will be measured for
purposes of this indicator for this particular participant is not the
same employer that received services from a core program and initially
hired the participant. Furthermore, the Departments acknowledge that
this metric is one of many aspects of effectiveness in serving
employers, but believe that retention is an important aspect to measure
as stated by employer representatives during stakeholder engagements.
States are encouraged to measure effectiveness in serving employers in
other methods that are not required to be submitted officially to the
Departments for performance accountability, consistent with WIOA sec.
116(b)(1)(A)(ii).
---------------------------------------------------------------------------
\26\ For example, 34 CFR 361.3 authorizes State VR agencies to
expend VR funds on the costs of providing VR services and
administering the program. According to 34 CFR 361.5(c)(2)(iii) and
(iv), administrative costs include providing information about the
VR program to the public (which, for purposes of this final rule,
would include the broader employer community) and technical
assistance and support services to other State agencies, private
nonprofit organizations, and businesses and industries. In addition,
34 CFR 361.49(a)(4) permits State VR agencies to provide technical
assistance to businesses that are seeking to employ individuals with
disabilities. There is no requirement the business be seeking to
hire a current VR program participant.
---------------------------------------------------------------------------
The Departments disagree with the suggestion that the metric should
exclude cases where the participants are employed with employers that
have a mass layoff or issue WARN notices. We did not exclude these
employers because it is not practical to exclude them from the measure
calculation. This is due to the limitations of the information that is
currently available in State wage records, which will be the typical
source for States to collect the required inputs for this metric. To
the extent that States are concerned that this could impact results,
the Departments anticipate the statistical adjustment model \27\ will
take into account this
[[Page 13826]]
concern. For this and other reasons, the Departments will not negotiate
targets for this indicator at 100 percent.
---------------------------------------------------------------------------
\27\ Pursuant to WIOA sec. 116(b)(3)(A)(viii), the Departments
developed an objective statistical adjustment model that is used to
both negotiate expected levels of performance for each of the
performance indicators to be incorporated into the approved Unified
or Combined State Plan or State Plan modification (WIOA sec.
116(b)(3)(A)(iv)), and for purposes of determining the adjusted
levels of performance for each indicator at the end of the Program
Year (WIOA sec. 116(b)(3)(A)(vii)). For more detailed information
about the statistical adjustment model, see the negotiations and
sanctions guidance in TEGL No. 11-19, Change 1, and related ED
guidance. ETA, TEGL No. 11-19, Change 1, ``Negotiations and
Sanctions Guidance for the Workforce Innovation and Opportunity Act
(WIOA) Core Programs,'' May 10, 2023; https://www.dol.gov/agencies/eta/advisories/tegl-11-19-change-1; ED, OCTAE Program Memorandum 20-
2, ``Negotiations and Sanctions Guidance for the Workforce
Innovation and Opportunity Act (WIOA) Core Programs,'' May 10, 2023,
https://www2.ed.gov/about/offices/list/ovae/pi/AdultEd/octae-program-memo-20-2.pdf, ED, OCTAE Program Memorandum 20-2, Attachment
I ``Calculation--Overall State Indicator and Program Scores,'' May
10, 2023, https://www2.ed.gov/about/offices/list/ovae/pi/AdultEd/octae-program-memo-20-2-attachments.pdf; ED, RSA-TAC-20-02,
``Negotiations and Sanctions Guidance for the Workforce Innovation
and Opportunity Act (WIOA) Core Programs,'' May 10, 2023, https://rsa.ed.gov/sites/default/files/subregulatory/RSA-TAC-20-02_0.pdf
---------------------------------------------------------------------------
With regard to the concern that the definition of Retention with
the Same Employer only indirectly reflects the effectiveness in serving
employers and is not useful in informing strategic action to improve
performance, the Departments note that this metric does not prevent
States from including the information they feel is necessary in their
strategic plans. States should incorporate labor market information,
such as which occupations and industries are in demand, in their
strategic plans. The Departments believe that information such as
whether WIOA participants retain employment is important data to
consider when States strategically plan outreach, business services,
and participant service delivery design. Therefore, in terms of
strategic planning at the State or local level, this metric will
indicate the types of jobs participants are entering and retaining
employment with, which may provide some indication of job quality. If a
State's outcome results for the Retention with the Same Employer metric
are below target, strategic policies can be made to ensure participants
are entering long-term sustainable unsubsidized employment at a higher
rate.
With regard to concerns that the Retention with the Same Employer
indicator does not measure acuity of the WIOA participant's job
placement, the Departments continue to acknowledge that this metric is
one of many aspects of assessing effectiveness in serving employers. As
noted above, States are encouraged to measure effectiveness in serving
employers in other methods that are not required to be submitted to the
Departments for performance accountability.
Comments: Commenters also expressed concerns about implementing one
measure only and that one measure, or one data point, may not address
all the facets of the effectiveness in serving employers indicator.
Commenters also said that Retention with the Same Employer was not the
best indicator of a program's success in serving employers.
One commenter expressed opposition to the proposed definition,
asserting that it will be impacted by variables outside the control of
State workforce agencies, such as ``talent migration.'' Similarly,
another commenter asserted that many reasons that an employee might
choose to leave a position within two quarters have little to do with
how effectively the employer was served by the system.
One commenter asserted that the proposed measure is not a good
indicator of WIOA program performance because it is significantly
impacted by employers' choices as to wages, working conditions, and
workplace culture, over which WIOA programs have little control.
Another commenter expressed similar concerns, asserting that retention
depends on employers and employees learning to communicate effectively
and employees getting along, adapting to company culture, acquiring new
skills, and being satisfied with their job, which AJCs cannot control.
A third commenter echoed these concerns, adding that factors such as
labor shortages likely encourage employees to switch employers.
One commenter stated that long-term employee retention is not
solely about initial placement after exiting a program, asserting that
commitment is required by both the employee and employer, and
concluding that as a measure of effectiveness in serving employers,
Retention with the Same Employer would not be able to prove or disprove
the success of a program.
Another commenter asserted that the proposed measure could deter
local workforce development board and one-stop center staff from taking
a customer-based approach to career services and thus skew the results
of the statistical adjustment model.
Departments' Response: The Departments recognize that there are
many factors, beyond the control of the WIOA core programs, that can
impact a participant's Retention with the Same Employer. For that
reason, as discussed more fully in Section II.A. above, the Departments
considered other approaches during the 6-year pilot period and
encouraged States to devise their own State-specific approaches to
measuring effectiveness of serving employers. After considering all the
evidence, the Departments considered the options of implementing more
than one metric to measure effectiveness in serving employers, but
determined a single indicator approach was most logistically feasible,
aligned with the existing performance indicator structure, and resulted
in lowest burden to grantees; this single indicator is set forth in
this final rule at 20 CFR 677.155(a)(1)(vi) and (c)(6).
Single data point: The reason for selecting this one metric (and
not a combination of measures) is that it is most applicable across the
differing mandates and program designs of all six core programs, uses
existing joint PIRL data elements, and effectively illustrates the
broad impact of the workforce system's ability to serve employers by
reducing new employee turnover through effective job placement.
Commenters to the proposed rule have provided several alternatives to
the proposed measure, which are described in this document, and States
are encouraged to internally adopt any of those suggested metrics that
will provide feedback on the success of efficiently serving employers.
To reduce burden on States, and to ensure that all States can
accurately report on the data elements required, the Departments have
decided to use one measure for the effectiveness in serving employers
performance indicator, using existing common data elements across all
core programs.
The Departments acknowledge the challenges related to developing an
indicator that reflects the efforts of multiple programs, avoids
additional collection and reporting burden, and results in stable data
that can be assessed across programs. The Departments note that
Retention with the Same Employer has the benefit of aligning with two
of the three employment-related performance indicators, specifically
the employment in the second and fourth quarters after exit indicators
that measure the employment outcomes of program participants. As such,
it promotes the statutory purpose of WIOA to ``support the alignment of
workforce investment . . . in support of a comprehensive, accessible,
and high-quality workforce development system in the United States.''
WIOA sec. 2(2). The alignment of definitions, data elements, and
performance indicators with one another, as the Departments have done
with the Retention with the Same Employer metric for measuring the
effectiveness in serving employers indicator, improves the
comprehensiveness of the workforce development system in each State and
nationwide. Information such as whether WIOA participants are retained
in job placement is important data to
[[Page 13827]]
consider when States strategically plan outreach, business services,
and participant service delivery design to ensure that the workforce
system is matching employers with skilled workers to meet business
needs, thereby satisfying another purpose of WIOA, as set forth in WIOA
sec. 2(2), which is to ``provide America's employers with the skilled
workers the employers need to succeed in a global economy.''
Addressing all factors of effectiveness in serving employers: The
Departments agree that many circumstances affect an employer's
retention of employees, some of which may be outside the purview of
WIOA services, including the general economy and business landscape of
an area. However, an indication that an employee maintains employment
with the same employer in both the second and fourth quarters after
exiting from a WIOA program demonstrates a level of success for
employers (i.e., successfully preparing participants to fill jobs that
meet employers' needs). Retention of an employee reduces the costs to
the employer associated with employee turnover and retraining, which is
enhanced when participants are placed in jobs aligned to their skills
and career goals.
Commenters also said that Retention with the Same Employer was not
the best indicator of a program's success in serving employers.
Retention with the Same Employer is a measure of the workforce system's
alignment with employer needs and is measured during the second and
fourth quarters after a participant exits WIOA programs. The
Departments acknowledge that individuals may leave for higher wages
with a new employer, but there are a variety of ways in which States
can seek to address these concerns that are beneficial to both the
employer and the participant, such as striving to find quality job
placements or working with employers to develop career pathways and
good jobs that more effectively incentivize participants they have
hired to maintain their employment with the same employer.
The Departments acknowledge that the limitations for Retention with
the Same Employer could include the unintended consequence that this
approach may be at odds with an employee seeking a higher paying job or
employment benefits. It is possible that a significant percentage of
participants will not be counted in the numerator for this indicator.
However, many of those participants who have left their current
employer for another will contribute toward improved performance on
employment-based indicators, such as median earnings. Moreover, as
discussed above, the Departments believe that Retention with the Same
Employer accomplishes the goals of WIOA with the least burden on the
States.
Regarding the comment that service delivery approaches taken by
local workforce development boards and one-stop staff to assist
employers will skew the statistical adjustment model outcomes, the
Departments disagree and note that the model does in fact account for
results of these employer engagements.
Effectiveness in serving employers is one of six indicators of
performance under WIOA; it is the only shared indicator across core
programs, and the only indicator that is not designed to measure job
seeker outcomes. Local workforce development boards and one-stop center
staff delivering services solely focused on the effectiveness in
serving employers indicator without regard to job seeker needs would be
at risk of failing to meet other areas of program performance. The
statistical adjustment model will account for economic factors
affecting the Retention with the Same Employer indicator in the State
and local areas. Therefore, the Departments have concluded that States
will still focus on providing quality services to job seekers.
Questions and Requests for Clarifications About Calculations, Data
Sources, Wage Records, and External Factors That Impact the Measure
Comments: Commenters suggested that the calculation for the
Retention with the Same Employer measure be expanded to include
supplemental wage information. One commenter asserted that by relying
exclusively on wage records, the measure will produce an incomplete
picture of the effectiveness of the WIOA system because it would
obscure the ways WIOA programs serve employers by developing employees
with the skills to respond flexibly and creatively to changing working
challenges, whether for the same employer or a different one.
Some commenters were concerned that local providers do not know the
status of a participant's employment at exit. A few commenters stated
that workforce programs may not receive hiring outcome information and
may be unable to report information for Wagner-Peyser Act participants.
Another commenter asked how common exit would apply to this measure
and which programs' exit date will be used to determine this measure
when an individual participant is co-enrolled in more than one core
partner program.
One commenter recommended that the Departments explore methods of
capturing data that demonstrate employment success for self-employed
individuals and individuals employed by the Federal Government.
Relatedly, another commenter recommended not limiting the performance
indicator to individuals with wage records but rather expanding it to
include participants whose employment can be verified by other means,
specifically the same supplemental data sources as are permitted for
the other primary performance indicators, such as information provided
to case managers. Other commenters cautioned that wage records are not
readily available for Federal, military, and self-employment, asserting
that this would lead to negative performance results in States with
high proportions of individuals seeking these types of employment or
necessitate statistical adjustments. Similarly, another commenter
questioned if Federal agencies would provide additional wage data
sources on individuals employed by the military, Postal Service, or
Federal Government.
Some commenters discussed whether State Wage Interchange System
(SWIS) data could be used to collect and report on the proposed
measure, given that SWIS data show how many employees work across State
lines, a figure that becomes increasingly important in the post-
pandemic shift to remote work. Another commenter expressed concerns
about being able to match employers consistently in wage data and noted
that during the pilot period their concerns over the Retention with the
Same Employer measure caused them to choose the Repeat Business
Customer and Employer Penetration rates for reporting. The commenter
noted that the approach had the lowest adoption rate (per the Joint
WIOA Effectiveness in Serving Employers NPRM) of the three pilot
measures, suggesting that other States may have shared the commenter's
concerns about choosing it.
Departments' Response: The Departments agree that supplemental wage
information could play a vital role when wage records are either
unavailable for a participant or difficult to obtain. For this reason,
we revise Sec. 677.155(a)(1)(vi) and (c)(6) of this joint final rule
to remove the requirement that wage records be used to document a
participant's employment status for purposes of the effectiveness in
serving employers performance indicator. This change allows for the
effectiveness in serving employers indicator to include the same data
sources as the other
[[Page 13828]]
WIOA employment-based primary indicators of performance, including
supplemental wage information. The Departments also agree that core
programs will be able to obtain wage data for performance reporting
purposes through the SWIS Clearinghouse for those participants employed
across State lines.
Regarding the commenter's observation that the fewest number of
States selected Retention with the Same Employer measure for the pilot
and the commenter's interpretation that this lowest adoption rate
indicates that States did not think it was a useful measure, the
Departments did not inquire why States chose certain measures during
the pilot period, and note that there is no evidence that a lower
adoption rate correlates with a lack of usefulness in measuring
effectiveness in serving employers in the State. The Departments note
that Retention with the Same Employer was the easiest measure to
implement based on it being calculated from existing PIRL elements.
Therefore, it is plausible that fewer States chose to pilot this
measure because they already knew how to calculate this measure and
would not have needed to test how to implement it in their State. They
may have wanted to assess how the two other pilot measures would work.
The Departments cannot determine if this was the case, but it seems
reasonable that this possibility could have led to the lower adoption
rate for the Retention with the Same Employer measure.
Measuring only WIOA-funded programs: Regarding the comments that
stated measuring only WIOA core programs was not a reflection of the
effectiveness of the workforce system's services to employers, the
performance indicator under WIOA is intended to measure the
effectiveness of the WIOA core programs in serving employers. While
States and organizations may provide services to employers through
other programs, it is appropriate in this instance to limit the metric
to those participants who have exited from WIOA-funded programs.
Use of supplemental wage information: The Departments proposed that
the effectiveness in serving employers indicator only include
participants whose employment status is obtainable through wage records
because wage records are the least burdensome records to use; States
already have these records for other WIOA-required reporting purposes,
and they are the most standardized and statistically valid records
available. Most employers are covered through unemployment insurance
(UI) wage records and therefore wage records remain the most accurate
and least burdensome method of calculating this indicator.
However, the Departments acknowledge that certain categories of
employment, such as entrepreneurial employment, Federal employment,
employment with the U.S. Postal Service and the military, and farmwork,
are not reflected in State UI wage record databases. Additionally,
participants are not required to provide Social Security numbers, which
are needed to use wage records, to obtain services and some
participants may be reluctant to share this information. WIOA's
regulations and implementing guidance authorize the use of supplemental
wage information for the calculation of the median earnings indicator.
See TEGL No. 26-16.\28\
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\28\ The Departments issued joint guidance on June 1, 2017,
``Guidance on the use of Supplemental Wage Information to implement
the Performance Accountability Requirements under the Workforce
Innovation and Opportunity Act,'' TEGL No. 26-16, OCTAE Program
Memorandum 17-6, and RSA-TAC-17-04, that describes the Departments'
protocols on the use and reporting of supplemental wage information.
---------------------------------------------------------------------------
To ensure that effectiveness in serving these additional employers
is assessed, the Departments concur with commenters that the Retention
with the Same Employer measure should be expanded to include the number
of participants with wage records or supplemental wage information who
exit during the reporting period and were employed by the same employer
during the second quarter after exit and the fourth quarter after exit
DIVIDED by the number of participants with wage records or supplemental
wage information who exit and were employed during the second quarter
after exit. Organizations collecting supplemental wage information for
the purposes of calculating Retention with the Same Employer must be
able to ascertain that the participant's wage information reflects the
same establishment (which may include tax documents, payroll records,
employer records, and follow-up surveys from program participants) in
both the second and fourth quarters after exit.
Questions about program exit: Regarding commenters' concern about
local providers not knowing a participant's employment status at
program exit, the Departments note that States already report this
information to the Departments. Additionally, the Departments
understand that there are mechanisms in place that local providers use
to track participants' employment status after program exit. Local
providers interested in monitoring their performance in this area may
wish to leverage existing follow-up practices to identify if
participants who have exited services are employed, and to work with
cognizant State agencies to monitor their performance.
Regarding the commenter's question about common exit, the
implementation of this definition for the effectiveness in serving
employers performance indicator will not alter existing policy around
common exit dates. The Departments will release future guidance
regarding implementation of the common exit date for participants
enrolled in multiple core programs.
Comments: A commenter questioned how the proposed measure would
apply to employees changing positions to subsidiaries of the same
company, as well as how it would count individuals working part time in
order to maintain Social Security eligibility, because the commenter
interpreted the proposal as covering full-time employment only. Another
commenter similarly asserted that when determining whether a
participant is employed with the same employer in the second and fourth
quarters after exit, the Departments should take into account all
establishments and physical addresses of the employer, to ensure that
employees who move locations are still counted as being employed by the
same employer.
Departments' Response: The Departments clarify that employment is
not required to be full-time. The determination whether someone is
employed with the same employer will typically be based on an employer
identification number, such as the Federal Employer Identification
Number (FEIN) or tax ID found in the individual's wage record. For the
specific scenario raised by the commenter, a participant who is
employed by the same employer in a different physical location would
count positively in the numerator of the metric if the FEIN/tax ID is
the same. The Departments acknowledge that if the FEIN/tax ID is
different for a subsidiary of a given employer, the participant may not
be captured as a positive outcome by using wage records alone and would
require the collection of supplemental wage information to verify
Retention with the Same Employer.
Comments: One commenter recommended that individuals who maintained
employment with a different employer but at a higher wage be included
in the numerator in the calculation, as this indicates the success of
the employee and the quality of
[[Page 13829]]
training from their initial employer. The commenter also recommended
excluding from the Retention with the Same Employer performance measure
participants who have changed employers but increased their wages
between the second and fourth quarters after exit, because doing
otherwise would disincentivize upward mobility. Another commenter
recommended measuring retention within the same industry rather than
with the same employer.
Another commenter was concerned that retention of employees may
vary based on ``right-to-work'' rules, working conditions, pay and
benefits, production volumes, or any number of business factors that
occur well after interaction with the workforce system. Commenters also
voiced concerns that variations in economic conditions would impact
States' ability to meet targets for the effectiveness in serving
employers indicator because of downturns in the local economy and
specific industries that were in-demand and used by the system are
suddenly experiencing layoffs.
Departments' Response: The Departments acknowledge the alternatives
commenters presented. However, these alternatives do not reflect the
effectiveness of services to the employer that originally hired the
participant. Including individuals who moved from one employer to
another and obtained a higher wage does not demonstrate success in
serving the individual's employer in the second quarter as that
employer would need to repeat the process of recruitment and referrals
and undertake the cost of hiring and training a new employee.
Similarly, including individuals who are within the same industry in
the second and fourth quarters after exit but not with the same
employer, results in the same issue--the individual's first employer
needs to rehire and train a new employee.
The Departments recognize that there are numerous factors in a
participant's ability and willingness to remain employed with the same
employer, including those mentioned by the commenter, such as pay/
benefits, work volumes, temporary jobs, industry and economic
variations, and unexpected layoffs. Because of this, it is very likely
a State's suggested target from the statistical adjustment model will
never be 100 percent, just like the other five indicators of
performance.
As noted earlier, there are a variety of ways in which States can
seek to address these concerns that are beneficial to both the employer
and the participant, such as striving to find quality job placements or
working with employers to develop career pathways and good jobs that
more effectively incentivize participants they have hired to maintain
their employment with the same employer.
Regarding the comments on the effects of economic conditions, the
Departments agree that many circumstances affect an employer's
retention of employees, some of which may be outside the purview of
WIOA services, including the general economy and business landscape of
an area. The Departments acknowledge that different States experience
different economic conditions. As noted above, the statistical
adjustment model will account for economic factors impacting Retention
with the Same Employer outcomes for WIOA core programs, so that no
State is unfairly impacted by its economic conditions.
Comments: A commenter recommended shortening the amount of time
that the system tracks workers with the same employer or to
simultaneously track job quality to mitigate the potential consequence
that the proposed measure could trap workers in poor-quality jobs or
incentivize the WIOA system to push workers into any job instead of
high-quality jobs.
Another commenter recommended that the Departments consider labor
market trends or other relevant information in a State or region when
negotiating performance for individuals who leave a position for a
higher wage or better benefits. Several commenters similarly
recommended adjusting the performance indicator to count individuals
who leave positions and achieve higher wages, better benefits, or
better working conditions as successes.
One commenter raised cautions ``that [the Retention with the Same
Employer measure] is subject to variation in industry and sector
economic conditions, and that it may have a negative impact on
sensitivity to industry sectors targeted by State and local workforce
agencies.'' Another commenter stated that the proposed measure could
lead to employers ``cherry-picking'' employees who they believe could
lead to higher retention rates. The commenter suggested that to
mitigate this potential effect, the Departments could require States to
submit reports on the demographics of WIOA participants to ensure there
are no negative changes by race, ethnicity, or gender among workers
between reporting periods that do not correspond to similar changes in
the local labor market.
To avoid disincentivizing the use of WIOA funding for transitional
jobs, a commenter recommended excluding such jobs from the performance
indicator. The commenter cited studies showing that transitional job
programs have significant positive impacts for workers, families,
communities, and employers, such as reducing poverty rates
substantially, particularly for Black and Hispanic workers.
Another commenter recommended increasing access to and sharing of
information between workforce partners, to enable agencies to track
employer retention information, and developing best practices and a
unified reporting structure among WIOA agencies.
Departments' Response: The Departments will not be shortening the
amount of time for tracking participant outcomes in the Retention with
the Same Employer metric. Determining whether an individual is still
employed with the same employer in the second and fourth quarters after
exit allows the Departments to assess whether the individual stayed
with the employer, which leads to savings for the employer as the
employer would not need to undergo the rehiring and retraining process.
The second-and-fourth-quarter time frame allows the Departments to
assess whether employers benefit from the WIOA system. Additionally,
using information collected for other WIOA indicators of performance
under the same established time frames reduces reporting burden for the
States.
Additionally, as discussed throughout this document, the
Departments note that effectiveness in serving employers is oriented to
the employer experience rather than the participant experience. The
proposed metric may encourage promotional opportunities from within the
original employer.
For these reasons, the Departments believe the established time
frames are appropriate to demonstrate Retention with the Same Employer.
Regarding commenters' concerns about labor market trends, including
variations in industry and sector economic conditions, the Departments
are aware of external factors that influence the outcome of this
measure. The Departments will adjust for those external factors in the
statistical adjustment model, and those adjustments will play a key
role when the Departments determine they have sufficient data to
produce reliable results for assessing performance of the effectiveness
of serving employers indicator.
The Departments appreciate comments regarding participants who
leave positions for higher paying job opportunities. While this is a
benefit to
[[Page 13830]]
participants and should be encouraged, this also leaves employers with
the need to fill open vacancies. The Departments will continue to
evaluate wage growth after exit and the statistical adjustment model
will account for participants who leave a position for a higher-paying
job. This metric, like all WIOA indicators of performance, will never
be targeted at 100 percent for this reason.
The Departments considered the alternative definition of Retention
with the Same Employer commenters suggested--including as a success the
individuals who have higher wages in the fourth quarter after exit even
though they are working at a different employer. However, the
Departments decided not to adopt this definition because in these
situations, an employer still has a need to fill an open vacancy. The
Departments recognize that while this is a benefit to participants, it
is not assessing how the workforce system served employers. Therefore,
the Departments determined this is not an appropriate method of
assessing the effectiveness in serving employers.
Effectiveness in serving employers is measured after the
participants exit a program. Regarding potential exclusion of
participants placed in transitional jobs, the Departments note that
transitional jobs are a participant level service that would prevent a
participant from exiting, and therefore are not included in the
calculation of the measure. Therefore, this definition of the indicator
does not disincentivize use of transitional jobs as a service strategy.
Regarding other potential exclusions for the measure, consistent
with the Departments' rationale in Section II.A. above, the Departments
believe that simplicity in the measure calculation is important, both
in terms of collecting data that reflect the real world of employment,
and consistency with the other participant employment and earnings
indicators of performance. Therefore, the measure calculation will not
include exclusions other than those mentioned for existing WIOA
indicators of performance. Additionally, the commenter mentioned
benefits to the participant, but not to the employer who experiences
turnover and needs to re-fill a position. The Retention with the Same
Employer measure advocated for by business customers and employers in
stakeholder engagements, alignment with the other WIOA participant
employer performance measures/indicators, and support due to strengths
over weaknesses of the measures assessed in the Final Pilot Study
Report can best meet the system's goals for assessing and ensuring the
effectiveness in servicing employers, the workforce system's dual or
equal customer served by the workforce system.
Regarding analysis of this metric by race, ethnicity, or gender,
the Departments currently collect these data elements and will report
outcomes by each of these. The existing WIOA indicators of performance
are already reported by these data elements in the Departments'
respective annual reports.
After consideration of the comments, as discussed above the
Departments have decided to revise the definition of Retention with the
Same Employer in this final rule to remove reference to wage records,
thereby permitting States to include individuals in the metric who may
not have wage records but who are still employed with the same employer
in the second and fourth quarters after exit. This revision allows
States to use supplemental wage information to capture these
individuals.
Final Sec. 677.155(a)(1)(vi) and (c)(6) implement the changes as
outlined in the proposed rule with one modification to remove the term
``wage records,'' thereby allowing for the use of supplemental wage
information, and adds a clarification that participants tracked by this
performance measure are those in unsubsidized employment during the
second quarter who exit from the program. While the nature of wage
records would have limited this indicator to unsubsidized employment
without explicitly stating the requirement, the removal of the wage
record requirement, thereby enabling States to use supplemental wage
information for reporting purposes, necessitates the addition of
language limiting the indicator to those in unsubsidized employment in
order to align this indicator with the other employment-based
indicators, all of which track the percentage of participants in
unsubsidized employment at either the second or fourth quarter after
exiting from a program. In so doing, the Departments ensure that the
employment reported, for purposes of assessing the effectiveness in
serving employers, is that which is consistent with the purpose of WIOA
sec. 2 (e.g., to increase the prosperity of workers and employers, the
economic growth of communities, and the global competitiveness of the
United States).
C. Adjusted Levels of Performance for WIOA Core Programs--Changes to
Sec. 677.190
Sec. 677.190 When are sanctions applied for failure to achieve
adjusted levels of performance?
Currently, 20 CFR 677.190 details the circumstances under which
sanctions are applied when WIOA core programs fail to achieve adjusted
levels of performance. Paragraph (c) sets forth criteria the
Departments use to determine which States have met adjusted levels of
performance: (1) the overall State program score (Sec. 677.190(c)(1));
(2) the overall State indicator score (Sec. 677.190(c)(3)); and (3)
the individual indicator score (Sec. 677.190(c)(5)).
In this final rulemaking the Departments revise Sec. 677.190 to
include the effectiveness in serving employers performance indicator in
the criteria for determining if a State has failed to meet adjusted
levels of performance as part of the overall State indicator score.
Final Sec. 677.190 establishes conforming language regarding the
assessment of effectiveness in serving employers as a statewide
performance indicator, as expressed in the Joint WIOA Final Rule, and
the definition for effectiveness in serving employers proposed in Sec.
677.155(a)(1)(vi) and (c)(6). Final Sec. 677.190(c)(1) excludes the
effectiveness in serving employers performance indicator from the
calculation of an overall State program score, which compares a
program's results regarding the other primary indicators of performance
with the adjusted levels of performance for that program. This final
rulemaking adds two paragraphs to Sec. 677.190(c)(3) to ensure the
effectiveness in serving employers performance indicator's sole use as
a shared statewide indicator. Final Sec. 677.190(c)(3)(i) specifies
that the overall State indicator score is the average of the
percentages achieved of the adjusted levels of performance by all the
core programs on the performance indicator and would exclude the
effectiveness in serving employers performance indicator from this
calculation. Final Sec. 677.190(c)(3)(ii) adopts in regulations the
recommendation in the joint guidance that one core program report
performance data for the effectiveness in serving employers performance
indicator on behalf of all six core programs. Final Sec.
677.190(c)(3)(ii) also establishes that the indicator would be assessed
only as an overall State indicator score, the State indicator score for
effectiveness in serving employers is calculated as the statewide
percentage
[[Page 13831]]
achieved of the statewide adjusted level of performance, and includes
mention of guidance to signal to States that the Departments will
provide additional details and explanations for reporting on the
effectiveness in serving employers performance indicator in joint
guidance. Final Sec. 677.190(c)(5) specifies that the Departments will
not include the effectiveness in serving employers performance
indicator when calculating individual indicator scores. Finally, as the
Joint WIOA Effectiveness in Serving Employers NPRM explained,
consistent with how the Departments have implemented the provisions for
the other five performance indicators, the effectiveness in serving
employers performance indicator will not be included in sanctions
determinations until the Departments collect a minimum of 2 years of
performance data, develop a statistical adjustment model that yields
reliable estimates for the indicator, provide additional guidance
regarding the process for negotiating this joint indicator, and then
negotiate performance levels for the indicator.
The Departments received no comments on the proposed exclusion of
effectiveness in serving employers from the overall State program score
in Sec. 677.190(c)(1) and the proposed exclusion of effectiveness in
serving employers when calculating individual indicator scores in Sec.
677.190(c)(5). The Departments received several comments regarding
provisions for the statewide nature of the effectiveness in serving
employers performance indicator in Sec. 677.190(c)(3)(ii), application
of this indicator at the local level, performance level negotiation and
the statistical adjustment model, and inclusion of the effectiveness in
serving employers indicator in sanctions determinations. These comments
are discussed below. No changes are made to proposed Sec. 677.190; the
final rule implements Sec. 677.190 as proposed.
Support for the Implementation of a Shared Statewide Indicator
Comments: Several commenters expressed support for the proposed use
of a shared outcome for all core programs. One commenter stated that
the shared outcome measure supports the WIOA reporting goal and also
reduces the burden of collecting data.
Departments' Response: We appreciate commenters supporting
effectiveness in serving employers as a shared outcome for all WIOA
core partner programs. We agree that this definition best aligns with
WIOA employment performance indicators by utilizing already existing
PIRL elements and minimizes the burden on States and employers in
measuring the effectiveness in serving employers.
Comments: Several commenters opposed the provisions, urging that
Retention with the Same Employer should not be a shared outcome and
should be reported for each of the six core programs individually. A
few of these commenters discussed the difficulties of reporting the
measure as a shared outcome, particularly the specifics of creating and
implementing a unified statistical adjustment model that accounts for
program- and State-level differences. The commenters described the
particular challenge and burden for States that did not pilot the
proposed measure or do not currently have a shared data system across
core programs. One commenter noted that the different performance
indicators arise from different reporting systems, which further
complicates the process of unifying the reporting into a shared outcome
model. Another commenter described the issues of incorporating data
from the separate systems for title II and title IV, incorporating
other data from referrals placed by job seeker teams outside the State,
and a lack of Social Security number collection by the State agency
responsible for title II programs in the State. Other commenters noted
that while many States are reporting this measure, not all do so with
the coordination and full contribution of title II data, and asserted
that some States' title II programs that are not currently reporting
this data on title II students will need additional time to update data
match agreements and data reporting processes in order to participate
in State reporting. One different commenter noted that the performance
measure is not defined by statute as a shared system-wide measure and
suggested that sharing confidential data across State programs may not
be supported by State laws. The commenter further asserted that
complying with the varied reporting deadlines for different programs
might be difficult under a unified model. This commenter also expressed
concern about the costs and time associated with developing a system
that combines data across all programs. Further, the commenter said, to
successfully capture data from multiple agencies, States that are not
already doing so would need to establish a cross-agency data system or
statewide longitudinal data system (SLDS), which may require costs for
set-up, storage, management, and maintenance. The commenter cited a
recent evaluation that indicated that a comprehensive SLDS project
would take 3 years to establish and cost $1 million to $3 million for
staffing and technology.
Departments' Response: The Departments recognize that there are
challenges in coordinating the reporting of data across agencies, but
also note that reporting this indicator as a shared measure supports
closer alignment, increased coordination, and improved data sharing
across State agencies, which are important parts of the vision and
purpose of WIOA, and the Departments will work with States towards
realizing this vision. In fact, the Departments' guidance details the
requirements set forth in WIOA, specifically that closer alignment,
increased coordination, and improved data sharing across State agencies
in reporting on the WIOA core performance indicators are an important
part of the vision of WIOA. See TEGL No. 10-16, Change 1. Current and
further resources to provide technical assistance and guidance,\29\ and
community of practice tools \30\ will be provided to support States in
the collection of required performance data, as well as supplemental
data, and development of State plans \31\ to ensure accountability of
service provision.
---------------------------------------------------------------------------
\29\ ETA, ``WIOA Technical Assistance Resources and Tools,''
https://www.dol.gov/agencies/eta/Performance/resources (last visited
July 31, 2023).
\30\ S. Spaulding, et al., ``Measuring the Effectiveness of
Services to Employers: Options for Performance Measures under the
Workforce Innovation and Opportunity Act,'' Jan. 2021, https://wdr.doleta.gov/research/FullText_Documents/ETAOP2021-17%20Measures%20of%20Effectiveness%20in%20Serving%20Employers_Final%20Report.pdf.
\31\ ETA, ``WIOA Plans, Waivers, & Performance,'' https://www.dol.gov/agencies/eta/wioa/plans-waivers-performance (last
visited July 31, 2023).
---------------------------------------------------------------------------
Additionally, since this is an annual measure, with alignment of
performance accountability reporting to consolidate reporting across
WIOA core programs and alleviate variation in deadlines for common
reporting, the Departments do not consider individual program reporting
deadlines to be an issue. Finally, the Departments note that all
reporting is due to the agencies on the same date so that there should
not be issues with reporting deadline differences.
The Departments note that there will be challenges in developing a
statistical adjustment model for any definition of this measure and
there is no reason to believe the development would be any less
challenging if the Departments were to select an alternative definition
for this indicator or to assess this indicator by program.
States are not required to collect this information using an SLDS.
States are
[[Page 13832]]
not required to share confidential data across programs to report on
this measure. However, the sharing of confidential data across programs
is a permissible approach for reporting on the effectiveness in serving
employers performance indicator, if the State does so in accordance
with State and Federal law requirements. Performance accountability
reporting across WIOA core programs will continue to be conducted in
the current manner for all of the six primary WIOA core programs
indicators of performance and measures, including collection and
sharing of data as necessary to retain the integrity of the data
collected for the Retention with the Same Employer effectiveness in
serving employers performance indicator.
With regard to concerns about reporting by title II programs for a
single, statewide outcome for all WIOA core programs on the Retention
with the Same Employer measure, the State's title II program would be
expected to provide the data it has collected for title II participants
who were employed in the second and fourth quarters to the State agency
responsible for reporting on the effectiveness in serving employers
indicator. If the State's title II program does not have access to the
information required to determine Retention with the Same Employer
through a data match, the State agency responsible for reporting on the
indicator would use the data provided by the State's title II program
to determine Retention with the Same Employer.
Comments: A few commenters recommended that this measure be
reported and assessed just as the other five are reported and assessed:
across programs and indicator scores. The commenter stated that if
effectiveness in serving employers is measured only at the system level
using a single target, as the Departments proposed, programs that
achieved less than 90 percent of target on this one measure for 2 years
in a row would be sanctioned. The commenter asserted that such a result
would not be consistent with the Departments' original intent of
leveling sanctions in cases of ``catastrophic failures on a single
measure (<50% of target)'' or ``systemic performance issues in a
program or in a measure across programs (average of <90% of target).''
The commenter, expressing concern about the proposal resulting in
programs facing significantly greater risk of sanction, thus
recommended that the standard of 90 percent of target not be applied to
the effectiveness in serving employers measure if it is treated as a
shared outcome.
Departments' Response: The Departments agree that State performance
falling below 90 percent of the adjusted level of performance on this
measure for 2 consecutive years would be subject to sanctions. However,
at a systemic level, this is no different than it is for any other
primary indicator of performance where 2 consecutive years of averaging
below 90 percent of the adjusted level of performance across programs
for an indicator would be subject to sanctions. Since the Departments
are assessing this indicator as a shared outcome across all programs in
a State, the individual indicator score assessments do not apply.
Therefore, performance failure where an individual indicator score
falls below 50 percent does not apply. Additionally, because the
statistical adjustment model will be used to establish the adjusted
level of performance, the risks of failure due to low performance
resulting from external factors will be mitigated.
Comments: One commenter asserted measuring outcomes at the
individual program and workforce area levels does not discourage
statewide coordination and collaboration but rather provides for both
accountability for poor performance and credit for performance success,
which promotes coordination across programs and contributes to
continuous improvement.
Departments' Response: The Departments acknowledge that
coordination and collaboration are indeed occurring in many States.
However, the comments received on the proposed rule as well as feedback
during the pilot phase have underscored the need for increased
collaboration and coordination and highlighted the partnership benefits
that additional shared performance accountability incentives would
yield.
Comments: Several commenters stated that the effectiveness in
serving employers performance indicator should not be applied at the
local level and recommended restricting its application in that
context. Commenters discussed the restriction on including the
indicator in individual score calculations, asserting that States
should not be allowed to set and evaluate local operator targets for
the shared outcome indicator, to include effectiveness in serving
employers as part of the calculation to determine the individual
indicator scores for a local workforce area, or to assess these
indicators to determine sanctions on local areas or local operators.
The commenters expressed concern that sanctioned States might pass on
``punishments'' from the sanctions to local operators. Acknowledging
that State performance necessarily aggregates the performance of
individual local and State program operators, the commenters
nevertheless asserted that local operators would bear too high a cost
from the unintended consequences of performance failure if the measure
is applied as proposed. Another commenter suggested that the indicator
should only apply at the State level as local workforce development
areas that have administrative oversight for non-core programs cannot
rely on outcomes achieved by the title II program, Wagner-Peyser Act
programs (title III), and VR program (title IV) to help achieve
performance goals set for achieving the ``more robustly defined''
statewide performance target. The commenter requested further guidance
to States on this point.
Departments' Response: WIOA sec. 116(c)(1)(A)(i) requires that all
of the primary indicators of performance, including the effectiveness
in serving employers indicator, must be applied at the local level for
the WIOA title I programs (Adult, Dislocated Worker, and Youth).
Therefore, States must apply the effectiveness in serving employers
indicator at the local level. Furthermore, Sec. 677.205(a) provides
that ``[e]ach local area in a State under WIOA title I is subject to
the same primary indicators of performance for the core programs for
WIOA title I under Sec. 677.155(a)(1) and (c) that apply to the
State.'' The Departments are not changing this provision in this
rulemaking; therefore, the same definition and method of assessing
performance applies at the local level. The Departments will provide
updates to any guidance related to this as needed.
Sanctions Determinations
Comments: Several commenters supported the proposal to delay the
inclusion of the effectiveness in serving employers indicator in
sanctions determinations and suggested that the Departments should
consider an even longer time period than proposed to collect the data.
Commenters noted that not all States currently work with WIOA title I
data and that extra time might be required to facilitate the data
inclusion. Other commenters noted that this additional time would be
particularly helpful in determining targets. One commenter suggested a
specific extension of at least an additional year of data collection
and reasoned that the additional time frame would allow States to
implement the necessary methods of data collection, particularly if
they did not pilot the proposed measure; learn from other States that
have implemented the statewide
[[Page 13833]]
measure; and train personnel on implementing the data collection and
sharing requirements.
Departments' Response: The Departments will implement this
indicator similarly to how other indicators have been approached under
WIOA. This will include providing technical assistance to States to
ensure that they have the systems in place that are necessary to begin
reporting on this indicator according to timelines that the Departments
will establish and announce in guidance following the finalization of
this rulemaking.
The Departments note that sanctions only occur after 2 consecutive
years of performance failures for the same score. Furthermore, the
implementation of performance assessments requires a minimum of 2 years
of data before the Departments would use a statistical adjustment model
in the negotiations process, and any potential implementation of
performance assessments would be conditional upon having sufficient
data to produce an objective statistical adjustment model. The metric
uses existing data collected in the PIRL; States have been required to
collect this information since the inception of the jointly
administered performance accountability system established in WIOA sec.
116. The Departments believe there is sufficient time built into the
implementation process and are not extending the implementation time
frame currently.
Comments: One commenter questioned if an effectiveness in serving
employers indicator dropped below a certain threshold could trigger a
probation period for additional oversight by the Departments, possibly
including sanctions as well.
Departments' Response: The Departments appreciate the commenter's
suggestion and note that the first year of failure to meet 90 percent
of a State's adjusted level of performance on the effectiveness in
serving employers indicator would trigger required technical
assistance, including a corrective action plan, and the second
consecutive year of failure in this same manner would result in a
sanction against the Governor's Reserve for statewide activities under
the title I adult, dislocated worker, and youth formula programs under
WIOA sec. 116(f)(1)(B). The Departments reiterate that this indicator
will be treated similarly to how other indicators have been approached
under WIOA.
Comments: Several commenters questioned whether the sanctions would
be leveraged only against State set-aside title I allocations,
expressing concern that the penalty would be inequitable if it impacted
all six core programs.
Departments' Response: As is the case for each of the six primary
indicators of performance, WIOA sec. 116(f)(1)(B) requires that the
application of sanctions is against the Governor's Reserve for
statewide activities under the title I adult, dislocated worker, and
youth formula programs. The Departments recognize the commenters'
concerns regarding funding and sanctions being tied to individual
programs; however, WIOA sec. 116(f)(1)(B) makes clear that the
sanctions are imposed against the Governor's Reserve for statewide
activities under the title I adult, dislocated worker, and youth
formula programs regardless of which of the six core programs'
performance constitutes a failure giving rise to the sanction.
Therefore, given the explicit statutory requirement, the Departments do
not have the authority to do as these commenters suggest. No change to
the regulatory text was made in response to these comments.
Statistical Adjustment Model
Comments: Several commenters recommended ensuring that the
statistical adjustment model accounts for fluctuations in employment
rates caused by the seasonal and migrant workforces, particularly in
the construction, agriculture, and hospitality sectors. Similarly,
another commenter recommended that the statistical adjustment model
incorporate factors such as self-employment, temporary employment,
transitioning job seekers, and gig workers. The commenter further
recommended that the Departments consider external factors that would
cause measurement deviations, such as participants seeking immediate
employment to avoid hardship, participants accepting a better job offer
with sustainable wages or benefits, and participants seeking
opportunities to upgrade their skills.
One commenter stated that the proposed measure would require
additional statistical adjustments, that it would be subject to
variations based on sector and economic conditions, and that it would
not reflect current workforce trends like increases in self-employment.
Another commenter expressed similar concerns about the measure's
ability to accurately capture effectiveness in serving employers given
particular economic conditions and differences across industries. A
third commenter likewise asserted that the indicator would be subject
to fluctuating economic conditions.
One commenter recommended that the Departments consider additional
factors in the final rule, including: factors that can affect the
median tenure of workers, which is lower for younger people; difficulty
in accounting for differences among regions, such as areas with
relatively greater or fewer employment opportunities; inconsistencies
among reporting platforms; differences in tracking timelines and
reporting requirements among workforce partners; and the possibility
that employer retention rates can increase or decrease without changes
in levels of employer services being provided.
Departments' Response: The Departments thank the commenters for
these recommendations. The Departments acknowledge the commenters'
recommendations and note that the statistical adjustment model will
address the commenters' concerns. The Departments will conduct a
thorough development process for the statistical adjustment model for
this indicator, as has been and continues to be done in the development
of the model for the other five primary indicators of performance. The
Departments will provide updates to the appropriate performance
guidance and technical assistance for reporting on this indicator.
Request for Guidance
Comments: Commenters requested that the Departments provide
grantees with defined methods for gathering and reporting the relevant
data to ensure that all programs collect and report the data
consistently. Another commenter asked for guidance on how performance
negotiations would be handled in States without centralized
organization into one agency, specifically if the designated State
workforce agency will complete the negotiations for this statewide
measure in such cases. Another commenter noted that retention with
employers during the second and fourth quarters after exit is reported
on the RSA 911 and the PIRL and suggested that the Departments use
State ETA 9169 reports to collect the percentage of retention, a
practice that it said would reduce any duplicate reporting. Another
commenter asked multiple questions related to implementation of the
Retention with the Same Employer measure, namely how it would affect
the reporting requirements outlined in TEGL No. 10-16, Change 2,
Attachment IV, Table B; what the impacts would be for the defined
services to business since those measures would no longer be required
to be reported; and how
[[Page 13834]]
employer establishments would be reported.
Departments' Response: The Departments appreciate these comments
and note that the Departments will provide detailed information on
these requirements through ICRs, guidance, instructions, and technical
assistance relating to definitions, data collection and reporting,
negotiations, and local level application of this primary indicator of
performance.
The Departments made no changes to proposed Sec. 677.190; the
final rule implements Sec. 677.190 as proposed.
III. Regulatory Analysis and Review
A. Executive Orders 12866 (Regulatory Planning and Review), 13563
(Improving Regulation and Regulatory Review), and 14094 (Modernizing
Regulatory Review) and Subtitle E of the Small Business Regulatory
Enforcement Fairness Act of 1996
Under Executive Order (E.O.) 12866, the Office of Information and
Regulatory Affairs (OIRA) determines whether a regulatory action is
significant and, therefore, subject to the requirements of the E.O. and
review by OMB. See 58 FR 51735 (Oct. 4, 1993). Section 1(b) of E.O.
14094 amends section 3(f) of E.O. 12866 to define a ``significant
regulatory action'' as an action that is likely to result in a rule
that may: (1) have an annual effect on the economy of $200 million or
more (adjusted every 3 years by the Administrator of OIRA for changes
in gross domestic product), 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, territorial, or
Tribal governments or communities); (2) create a serious inconsistency
or otherwise interferes 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 legal or policy issues for which
centralized review would meaningfully further the President's
priorities or the principles set forth in the E.O. See 88 FR 21879
(Apr. 11, 2023). This final rule is a significant regulatory action
under section 3(f) of E.O. 12866, as amended by E.O.14094.
E.O. 13563 directs agencies to propose or adopt a regulation only
upon a reasoned determination that its benefits justify its costs; the
regulation is tailored to impose the least burden on society,
consistent with achieving the regulatory objectives; and, in choosing
among alternative regulatory approaches, the agency has selected those
approaches that maximize net benefits. E.O. 13563 recognizes that some
benefits are difficult to quantify and provides that, where appropriate
and permitted by law, agencies may consider and discuss qualitatively
values that are difficult or impossible to quantify, including equity,
human dignity, fairness, and distributive impacts.
1. Outline of the Analysis
Section III.A.2 provides a summary of the results of the RIA.
Section III.A.3 describes the need for the final rule, and Section
III.A.4 describes the process used to estimate the costs and cost
savings of the final rule and the general inputs used, such as wages
and number of affected entities. Section III.A.5 explains how the
provisions of the final rule will result in quantified costs and cost
savings and presents the calculations the Departments used to estimate
them. In addition, Section III.A.5 describes the qualitative benefits
of the final rule. Section III.A.6 summarizes the estimated first-year
and 10-year total and annualized costs, cost savings, and net costs of
the final rule. Finally, Section III.A.7 describes the regulatory
alternatives considered when developing the final rule.
2. Analysis Summary
The Departments estimate that the final rule will result in costs
and cost savings. As shown in Exhibit 2, the final rule is expected to
have an annualized quantified cost of $44,208 and a total 10-year
quantifiable cost of $310,497 at a discount rate of 7 percent.\32\ The
final rule is estimated to have annualized quantified cost savings of
$2.30 million and total 10-year quantifiable cost savings of $16.13
million at a discount rate of 7 percent.\33\ The Departments estimate
that the final rule will result in an annualized net quantified cost
savings of $2.25 million and a total 10-year net cost of $15.82
million, both at a discount rate of 7 percent and expressed in 2022
dollars.\34\
---------------------------------------------------------------------------
\32\ The final rule would have an annualized cost of $38,607 and
a total 10-year cost of $329,323 at a discount rate of 3 percent in
2022 dollars.
\33\ The final rule would have an annualized cost savings of
$2.21 million and a total 10-year cost savings of $18.85 million at
a discount rate of 3 percent in 2022 dollars.
\34\ The final rule would have an annualized net cost savings of
$2.17 million and a total 10-year cost of $18.52 million at a
discount rate of 3 percent in 2022 dollars.
Exhibit 2--Estimated Monetized Costs, Cost Savings, and Net Cost Savings of the Final Rule
[2022 $millions]
----------------------------------------------------------------------------------------------------------------
Net cost
Costs Cost savings savings
----------------------------------------------------------------------------------------------------------------
Undiscounted 10-Year Total...................................... $0.35 $21.46 $21.11
10-Year Total with a Discount Rate of 3%........................ 0.33 18.85 18.52
10-Year Total with a Discount Rate of 7%........................ 0.31 16.13 15.82
10-Year Average................................................. 0.03 2.15 2.11
Annualized at a Discount Rate of 3%............................. 0.04 2.21 2.17
Annualized at a Discount Rate of 7%............................. 0.04 2.30 2.25
----------------------------------------------------------------------------------------------------------------
The cost of the final rule is associated with rule familiarization
and the requirement to calculate and report Retention with the Same
Employer for the effectiveness in serving employers performance
indicator for 57 States and 78 VR agencies.\35\ No longer requiring
States to collect, calculate, and report for two alternative
definitions of the effectiveness in serving employers performance
indicator and instead requiring States to calculate and report only the
Retention with the Same Employer definition of the indicator will
contribute to the cost savings of the final rule. See the costs and
cost savings subsections of Section III.A.5 (Subject-by-Subject
Analysis) below for a
[[Page 13835]]
detailed explanation. To be clear, however, the Departments' decision
with respect to this final rule was not based on the cost savings but
rather on the programmatic and data benefits described previously in
Sections II.A and II.B above.
---------------------------------------------------------------------------
\35\ Consistent with WIOA sec. 3(56) and 20 CFR 677.150(d), the
use of the term ``States'' in this RIA refers to the 50 States; the
District of Columbia; Puerto Rico; and the outlying areas of
American Samoa, Guam, the Commonwealth of the Northern Mariana
Islands, and the U.S. Virgin Islands; and the Republic of Palau, a
country in free association with the United States. See also
footnote 8 supra.
---------------------------------------------------------------------------
The Departments cannot quantify the benefits of the final rule;
therefore, Section III.A.5 (Subject-by-Subject Analysis) describes the
benefits qualitatively.
Comments that the Departments received regarding the RIA set forth
in the proposed rule are summarized and responded to below.
Comments: A commenter expressed concern about the costs and time
associated with developing a system that combines data across all
programs. Further, the commenter said, to successfully capture data
from multiple agencies, States that are not already doing so would need
to establish a cross-agency data system or SLDS, which may require
costs for set-up, storage, management, and maintenance. The commenter
cited a recent evaluation that indicated that a comprehensive SLDS
project would take 3 years to establish and cost $1 million to $3
million for staffing and technology.
Departments' Response: The Departments estimate the costs of the
requirements of the final rule, which are to calculate and report the
Retention with the Same Employer indicator. Those costs include the
time for programming and reporting. Currently, States report on two of
the three pilot measures for effectiveness in serving employers.
Therefore, States are already reporting effectiveness in serving
employers measures that include data across all core programs in the
State. In other words, this is not a new approach for reporting data
for this indicator and, thus, is familiar to States. The Retention with
the Same Employer measure is not requiring the establishment of a
cross-agency data system.
Comments: A commenter said that although using the proposed
measure, Retention with the Same Employer, may require less
administrative costs than the other piloted alternatives, meeting the
performance goals would be difficult and thus negate the cost savings.
Departments' Response: Retention with the Same Employer supports
meeting performance goals as it is a valid measure of WIOA's core
programs' effectiveness in serving employers with lesser administrative
costs. As discussed in the qualitative benefits section of the RIA,
Retention with the Same Employer demonstrates a continued relationship
between the employer and participants who have exited WIOA core
programs. While many circumstances can have an impact on an employer's
retention of employees, an indication that an employee is still working
for the same employer in both the second and fourth quarters after
exiting from a WIOA program demonstrates a level of success for both
parties, as retention of an employee reduces the costs to the employer
associated with employee turnover and retraining (see also the
Departments' Responses to comments in Section II.B). In terms of
meeting the performance goals, the Departments disagree that meeting
the target for this measure will be more difficult compared to the
other piloted alternatives. As would be true for all the piloted
measures and like the other primary indicators of performance, the
statistical adjustment model will adjust based on actual values from
the States, and therefore the Departments do not believe this
definition of the indicator will be more difficult to achieve success
than any of the other indicators.
3. Need for Regulation
In the Joint WIOA Final Rule, the Departments described a phased
approach, which included a pilot study, to defining in regulation the
sixth statutory performance indicator--effectiveness in serving
employers--required by WIOA. This final rulemaking is necessary to
complete implementation of the performance accountability requirements
as discussed in the Joint WIOA Final Rule and required by statute.
Specifically, States, under the Departments' joint guidance, piloted
the following definitions for the effectiveness in serving employers
performance indicator:
Retention with the Same Employer: Percentage of
participants with wage records who exit from WIOA core programs and
were employed by the same employer in the second and fourth quarters
after exit.
Repeat Business Customer: Percentage of employers who have
used WIOA core program services more than once during the last three
reporting periods.
Employer Penetration: Percentage of employers using WIOA
core program services out of all employers in the State.
The Departments are establishing Retention with the Same Employer
as the standard definition of the effectiveness in serving employers
performance indicator to complete implementation of the WIOA
performance accountability requirements to assess the effectiveness of
States and local areas in achieving positive outcomes.
4. Analysis Considerations
a. WIOA Core Programs
The Departments estimated the costs and cost savings of the final
rule relative to the existing baseline (i.e., the current practices for
complying with the joint WIOA performance accountability regulations
and the Departments' joint guidance). WIOA sec. 116 establishes the
requirement for performance indicators and performance reporting
requirements to assess the effectiveness of the WIOA core programs
enumerated in WIOA sec. 116(b)(3)(A)(ii) in serving employers. The core
programs include adult, dislocated worker, and youth programs under
title I of WIOA; the AEFLA program under title II; programs authorized
under the Wagner-Peyser Act as amended by WIOA title III; and the VR
program authorized under title I of the Rehabilitation Act as amended
by WIOA title IV. The analysis refers to the WIOA title I and Wagner-
Peyser Act programs jointly as the DOL programs.
The baseline consists of the combination of piloted approaches for
effectiveness in serving employers that States collected in 2021 and
would be expected to continue to report in the absence of this final
rule. The baseline uses DOL historical data on the number of States
that report each combination of the three piloted approaches for the
effectiveness in serving employers performance indicator. Exhibit 3
displays DOL data from 2017 through 2021 on the existing effectiveness
in serving employers approach combinations. The Departments used the
most recent year of State data reported for PY 2021 to define the
existing baseline of States reporting combinations of approaches to the
effectiveness in serving employers performance indicator.
[[Page 13836]]
Exhibit 3--State Reporting Combinations of Effectiveness in Serving Employers Definitions
----------------------------------------------------------------------------------------------------------------
Retention with
Retention with the same Repeat All three
the same employer + business effectiveness Total states
employer + repeat customer + in serving reporting
employer business employer employers
penetration customer penetration approaches
----------------------------------------------------------------------------------------------------------------
2017............................ 12 5 17 10 44
2018............................ 10 10 17 15 52
2019............................ 9 11 18 14 52
2020............................ 9 12 20 15 56
2021............................ 10 9 22 16 57
----------------------------------------------------------------------------------------------------------------
In accordance with the RIA guidance articulated in OMB's Circular
A-4 and consistent with the Departments' practices in previous
rulemakings, this RIA focuses on the likely consequences of the final
rule (i.e., costs and cost savings that accrue to entities affected).
The analysis covers 10 years (from 2024 through 2033) to ensure it
captures major costs and cost savings that accrue over time. The
Departments express all quantifiable impacts in 2022 dollars and use
discount rates of 3 and 7 percent, pursuant to OMB Circular A-4.
Exhibit 4 presents the number of entities that are expected to be
affected by the final rule. The Departments provide these estimates and
use them throughout this analysis to estimate the costs and cost
savings of the final rule.
Exhibit 4--WIOA Core Programs--Number of Affected Entities by Type
------------------------------------------------------------------------
Entity type Number
------------------------------------------------------------------------
DOL Programs:
States.............................................. 57
Local Workforce Development Boards (WDBs)........... 580
AEFLA Program:
States.............................................. 57
Local AEFLA providers \36\.......................... 1,719
VR Program:
VR agencies......................................... 78
------------------------------------------------------------------------
b. Compensation Rates
In Section III.A.5 (Subject-by-Subject Analysis), the Departments
present the costs, including labor, associated with the implementation
of the provisions of the final rule. Exhibits 5a through 5c present the
hourly compensation rates for the occupational categories expected to
experience a change in level of effort (workload) due to the final
rule. We used the BLS mean hourly wage rate for State and local
employees.37 38 We also used the wage rate from the Office
of Personnel Management's Salary Table for the 2022 General Schedule
for Federal employees in the management analyst occupation (Grade 14,
Step 5).\39\ To reflect total compensation, wage rates include nonwage
factors, such as overhead and fringe benefits (e.g., health and
retirement benefits). For all labor groups (i.e., local, State, and
Federal governments), we used an overhead rate of 17 percent.\40\ For
the State and local sectors, we used a fringe benefits rate of 62
percent, which represents the ratio of average total compensation to
average wages for State and local government workers in March 2022.\41\
For the Federal Government, we used a fringe benefits rate of 63
percent.\42\ We then multiplied the sum of the loaded wage factor and
overhead rate by the corresponding occupational category wage rate to
calculate an hourly compensation rate.\43\
---------------------------------------------------------------------------
\36\ Local AEFLA providers include local educational agencies;
community-based organizations; faith-based organizations; libraries;
community, junior, and technical colleges; 4-year colleges and
universities; correctional institutions; and other agencies and
institutions.
\37\ BLS, ``May 2022 National Industry-Specific Occupational
Employment and Wage Estimates: NAICS 999200--State Government,
excluding schools and hospitals (OEWS Designation),'' https://www.bls.gov/oes/current/naics4_999200.htm (last updated April 25,
2023).
\38\ BLS, ``May 2022 National Industry-Specific Occupational
Employment and Wage Estimates: NAICS 999300--Local Government,
excluding schools and hospitals (OEWS Designation),'' https://www.bls.gov/oes/current/naics4_999300.htm (last updated April 25,
2023).
\39\ Office of Personnel Management, ``Salary Table 2022,''
https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2022/GS_h.pdf (last visited Aug. 29, 2023).
\40\ Cody Rice, U.S. Environmental Protection Agency, ``Wage
Rates for Economic Analyses of the Toxics Release Inventory
Program,'' June 10, 2002, https://www.regulations.gov/document?D=EPA-HQ-OPPT-2014-0650-0005.
\41\ BLS, ``Employer Costs for Employee Compensation--March
2022,'' June. 16, 2022, https://www.bls.gov/news.release/archives/ecec_06162022.pdf. Calculated using Table 1. Employer Costs for
Employee Compensation by ownership.
\42\ DOL, ``Workforce Innovation and Opportunity Act (WIOA)
Common Performance Reporting'' OMB Control No. 1205-0526, https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202012-1205-003 (last
visited Aug. 29, 2023).
\43\ The hourly compensation rates presented in Exhibit 5a,
Exhibit 5b, and Exhibit 5c are rounded. Calculations used throughout
the RIA use the unrounded value. Therefore, numbers may not sum due
to rounding for the convenience of the reader.
Exhibit 5a--Compensation Rates for Local Employees
[2022$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly
Position Grade level Base hourly Loaded wage factor Overhead costs compensation
wage rate rate
(a) (b) (c) d = a + b + c
--------------------------------------------------------------------------------------------------------------------------------------------------------
Management Analyst.......................................... N/A $43.61 $27.04 ($43.61 x 0.62) $7.41 ($43.61 x $78.06
0.17)
Database Administrator...................................... N/A $49.01 $30.39 ($49.01 x 0.62) $8.33 ($49.01 x $87.73
0.17)
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 13837]]
Exhibit 5b--Compensation Rates for State Employees
[2022$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly
Position Grade level Base hourly Loaded wage factor Overhead costs compensation
wage rate rate
(a) (b) (c) d = a + b + c
--------------------------------------------------------------------------------------------------------------------------------------------------------
Management Analyst.......................................... N/A $35.31 $21.89 ($35.31 x 0.62) $6.00 ($35.31 x $63.20
0.17)
Staff Trainer............................................... N/A $39.31 $24.37 ($39.31 x 0.62) $6.68 ($39.31 x $70.36
0.17)
Rehabilitation Counselor.................................... N/A $27.31 $16.93 ($27.31 x 0.62) $4.64 ($27.31 x $48.88
0.17)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Exhibit 5c--Compensation Rates for Federal Employees
[2022$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly
Position Grade level Base hourly Loaded wage factor Overhead costs compensation
wage rate rate
(a) (b) (c) d = a + b + c
--------------------------------------------------------------------------------------------------------------------------------------------------------
Management Analyst.......................................... GS-14, Step $52.12 $32.84 ($52.12 x 0.63) $8.86 ($52.12 x $93.82
5 0.17)
--------------------------------------------------------------------------------------------------------------------------------------------------------
5. Subject-by-Subject Analysis
The Departments' analysis below covers the estimated costs and cost
savings of the final rule.
c. Costs
The following sections describe the costs of the final rule.\44\
---------------------------------------------------------------------------
\44\ Numbers may not sum due to rounding for the convenience of
the reader.
---------------------------------------------------------------------------
(1) WIOA Core Programs Rule Familiarization
State- and local-level DOL programs, State- and local-level AEFLA
programs, and State VR agencies will need to familiarize themselves
with the new regulations. Consequently, this will impose a one-time
cost in the first year.
To estimate the first-year cost of rule familiarization at the
State level, the Departments multiplied the estimated number of
management analysts (1) by the time required to read and review the
rule (1 hour), and by the applicable hourly compensation rate ($63.20/
hour). We multiplied this result by the sum of the number of States
(57) for the DOL programs, the number of States (57) for the AEFLA
programs, and the number of VR agencies (78). This calculation yields
$12,135 in one-time labor costs, which is equal to an average annual
cost of $1,214 over the 10-year analysis period.
At the local level for the DOL programs, the Departments multiplied
the estimated number of management analysts (1) by the time required to
read and review the rule (1 hour), by the applicable hourly
compensation rate ($78.06/hour), and by the number of local WDBs (580).
This calculation yields $45,276 in one-time labor costs, which is equal
to an average annual cost of $4,528 over the 10-year analysis
period.\45\
---------------------------------------------------------------------------
\45\ Numbers may not sum due to rounding for the convenience of
the reader.
---------------------------------------------------------------------------
At the local level for the AEFLA programs, the Departments
multiplied the estimated number of management analysts (1) by the time
required to read and review the rule (1 hour), by the applicable hourly
compensation rate ($78.06/hour), and by the number of local AEFLA
providers (1,719). This calculation yields $134,188 in one-time labor
costs, which is equal to an average annual cost of $13,419 over the 10-
year analysis period.
The sum of these costs yields a total one-time labor cost of
$191,600 for State- and local-level DOL programs, State- and local-
level AEFLA programs, and State VR agencies to read and review the new
rule. Over the 10-year period of analysis, these estimated one-time
costs result in an average annual cost of $19,160 undiscounted, or
$22,461 and $27,279 at discount rates of 3 and 7 percent, respectively.
Exhibit 6 summarizes the above calculations.
Exhibit 6--WIOA Core Programs, Rule Familiarization One Time Cost
----------------------------------------------------------------------------------------------------------------
Number of
Agency Management management Loaded wage Population \1\ Total \2\
analyst hours analysts rate
----------------------------------------------------------------------------------------------------------------
State-level DOL................. 1 1 $63.20 57 $3,602
Local-level DOL................. 1 1 78.06 580 45,276
State-level AEFLA............... 1 1 63.20 57 3,602
Local-level AEFLA............... 1 1 78.06 1,719 134,188
State-level VR.................. 1 1 63.20 78 4,930
-------------------------------------------------------------------------------
Total Initial Cost.......... .............. .............. .............. .............. 191,600
----------------------------------------------------------------------------------------------------------------
\1\ Population figures represent States (57) and VR agencies (78).
\2\ Numbers may not sum due to rounding for the convenience of the reader.
[[Page 13838]]
(2) Calculating and Reporting Retention With the Same Employer
WIOA sec. 116(b)(2)(A)(i)(VI) provides that the sixth primary
indicator of performance will be an indicator that measures program
effectiveness in serving employers, which WIOA sec. 116(b)(2)(A)(iv)
directs the Departments to establish. Currently, under the Departments'
joint guidance, States must report at least two of the following three
approaches to measuring effectiveness in serving employers: Retention
with the Same Employer, Employer Penetration, and Repeat Business
Customer. All States will be required to adopt the same approach to
measure effectiveness in serving employers: Retention with the Same
Employer. Seventeen States do not currently report the Retention with
the Same Employer approach to the effectiveness in serving employers
performance indicator.\46\ These 17 States will have new costs
associated with setting up procedures to calculate and report Retention
with the Same Employer and annual costs associated with continuing to
calculate and report Retention with the Same Employer. To estimate the
cost of establishing Retention with the Same Employer as the
effectiveness in serving employers performance indicator, the
Departments followed the assumptions used to estimate the pilot cost of
the Retention with the Same Employer approach to effectiveness in
serving employers in the 2016 Joint WIOA Final Rule. However, we
updated those assumptions for this analysis by removing the cost of
collecting data (4 hours) because all States are already collecting the
required data in the baseline. We then increased the number of hours we
assume State-level DOL programs require for one-time costs of
programming (from 4 to 6 hours) based on the Departments' experience
with initial costs for programming following the Joint WIOA Final Rule.
The assumptions and costs are summarized as follows:
---------------------------------------------------------------------------
\46\ Thirty-five States report Retention with the Same Employer
according to DOL data. DOL collects data on 52 of 57 States defined
in this analysis. DOL assumes the remaining 5 States report the
cheapest combination of pilot approaches (Retention with the Same
Employer + Employer Penetration), resulting in the RIA assuming 40
States report Retention with the Same Employer.
---------------------------------------------------------------------------
At the Federal level for the DOL core programs, the Departments
estimate the one-time labor cost associated with calculating and
reporting Retention with the Same Employer by multiplying the estimated
number of GS-14, Step 5 management analysts (one) by the time required
for technical assistance development (8 hours) and by the hourly
compensation rate ($93.82/hour). This calculation results in a one-time
labor cost of $751.
The Departments estimated DOL's annual labor costs for calculating
and reporting Retention with the Same Employer by multiplying the
estimated number of GS-14, Step 5 management analysts (one) by the time
required for technical assistance delivery (4 hours) and by the hourly
compensation rate ($93.82/hour). This calculation results in an annual
labor cost of $375.
At the State level for the DOL core programs, the Departments
estimated the one-time labor cost associated with calculating and
reporting Retention with the Same Employer by multiplying the estimated
number of management analysts (one) by the time required for
programming (6 hours) and by the hourly compensation rate ($63.20/
hour). We multiplied the labor cost ($379) by the number of States (57)
to estimate this one-time cost at $21,616.
The Departments estimated the State-level DOL core programs' annual
labor cost associated with calculating and reporting Retention with the
Same Employer by multiplying the estimated number of management
analysts (one) by the time required for Federal reporting (4 hours) and
by the hourly compensation rate ($63.20/hour). We multiplied the labor
cost ($253) by the number of States (57) to estimate this annual cost
at $14,411.
At the Federal level for the AEFLA program, the Departments
estimated the one-time labor cost associated with calculating and
reporting Retention with the Same Employer by multiplying the estimated
number of GS-14, Step 5 management analysts (one) by the time required
for technical assistance development (8 hours) and by the hourly
compensation rate ($93.82/hour). This calculation results in a one-time
labor cost of $751.
The Departments estimated AEFLA's annual labor cost for calculating
and reporting Retention with the Same Employer at the Federal level by
multiplying the estimated number of GS-14, Step 5 management analysts
(one) by the time required for technical assistance delivery (4 hours)
and by the hourly compensation rate ($93.82/hour). This calculation
results in an annual labor cost of $375.
At the State level for the AEFLA program, the Departments estimated
the one-time labor cost associated with calculating and reporting
Retention with the Same Employer by multiplying the estimated number of
management analysts (one) by the time required for programming and data
collection (6 hours) and by the hourly compensation rate ($63.20). We
multiplied the labor cost ($379) by the number of States (57) to
estimate this one-time cost at $21,616.\47\
---------------------------------------------------------------------------
\47\ Numbers may not sum due to rounding for the convenience of
the reader.
---------------------------------------------------------------------------
The Departments estimated the State-level AEFLA program's annual
labor cost associated with calculating and reporting Retention with the
Same Employer by multiplying the estimated number of management
analysts (one) by the time required for Federal reporting (4 hours) and
by the hourly compensation rate ($63.20/hour). We multiplied the labor
cost ($53) by the number of States (57) to estimate this annual cost at
$14,411.
At the Federal level for the VR program, the Departments estimated
the one-time labor cost associated with calculating and reporting
Retention with the Same Employer by multiplying the estimated number of
GS-14, Step 5 management analysts (one) by the time required for
technical assistance development (8 hours) and by the hourly
compensation rate ($93.82/hour). This calculation results in a one-time
labor cost of $751.
The Departments estimated the annual labor costs associated with
calculating and reporting Retention with the Same Employer at the
Federal level for the VR program by multiplying the estimated number of
GS-14, Step 5 management analysts (one) by the time required for
technical assistance delivery (4 hours) and by the hourly compensation
rate ($93.82/hour). This calculation results in an annual labor cost of
$375.
At the State level for the VR program, the Departments estimated
the one-time labor cost associated with calculating and reporting
Retention with the Same Employer by multiplying the estimated number of
management analysts (one) by the time required for programming (6
hours) and by the hourly compensation rate ($63.20/hour). We multiplied
the labor cost ($379) by the number of VR agencies (78) to estimate
this one-time cost at $29,580.
The Departments estimated the State-level VR program's annual labor
cost associated with calculating and reporting Retention with the Same
Employer by multiplying the estimated number of management analysts
(one) by the time required for Federal reporting (4 hours) and by the
hourly compensation rate ($63.20/hour). We multiplied the labor cost
($253) by the number of VR agencies (78) to estimate this annual cost
of $19,720.
[[Page 13839]]
The sum of these one-time costs of the retention measure yields
$75,064 for individuals from the Federal- and State-level DOL core
programs, AEFLA program, and VR program. In addition, the sum of the
annual costs associated with calculating and reporting Retention with
the Same Employer for these entities yields $49,667 per year. Exhibits
7a and 7b summarize the above calculations.
Exhibit 7a--Retention With the Same Employer, Initial Cost
----------------------------------------------------------------------------------------------------------------
Management Number of
Agency analyst hours management Loaded wage Population \2\ Total \3\
\1\ analysts rate
----------------------------------------------------------------------------------------------------------------
Federal-level DOL............... 8 1 $93.82 NA $751
State-level DOL................. 6 1 63.20 57 21,616
Federal-level AEFLA............. 8 1 93.82 NA 751
State-level AEFLA............... 6 1 63.20 57 21,616
Federal-level VR................ 8 1 93.82 NA 751
State-level VR.................. 6 1 63.20 78 29,580
-------------------------------------------------------------------------------
Total Initial Cost.......... .............. .............. .............. .............. 75,064
----------------------------------------------------------------------------------------------------------------
\1\ Management analysts on the Federal level are GS-14, Step 5.
\2\ Population figures represent States (57) and VR agencies (78).
\3\ Numbers may not sum due to rounding for the convenience of the reader.
Exhibit 7b--Retention With the Same Employer, Annual Cost
----------------------------------------------------------------------------------------------------------------
Management Number of
Agency analyst hours management Loaded wage Population \2\ Total \3\
\1\ analysts rate
----------------------------------------------------------------------------------------------------------------
Federal-level DOL............... 4 1 $93.82 NA $375
State-level DOL................. 4 1 63.20 57 14,411
Federal-level AEFLA............. 4 1 93.82 NA 375
State-level AEFLA............... 4 1 63.20 57 14,411
Federal-level VR................ 4 1 93.82 NA 375
State-level VR.................. 4 1 63.20 78 19,720
-------------------------------------------------------------------------------
Total Annual Cost........... .............. .............. .............. .............. 49,667
----------------------------------------------------------------------------------------------------------------
\1\ Management analysts on the Federal level are GS-14, Step 5.
\2\ Population figures represent States (57) and VR agencies (78).
\3\ Numbers may not sum due to rounding for the convenience of the reader.
The costs in Exhibits 7a and 7b represent the costs for all 57
States to report the Retention with the Same Employer approach to the
effectiveness in serving employers performance indicator. Currently, 40
States already report Retention with the Same Employer. The remaining
17 States will face costs with having to start reporting Retention with
the Same Employer. We therefore multiply the total one-time costs
($75,064) and annual costs ($49,667) by the 29.8 percent of States not
currently reporting the retention measure (17 out of 57) yielding
$22,387 in one-time costs and an additional $14,813 in annual costs to
increase the number of States reporting the retention measure from 40
to all 57.
The estimated total cost from requiring all States to report
Retention with the Same Employer over the 10-year period is $155,704
undiscounted, or $137,723 and $118,898 at discount rates of 3 and 7
percent, respectively, with an annualized cost over the 10-year period
of $16,145 and $16,928 at discount rates of 3 and 7 percent,
respectively.
d. Cost Savings
The following sections describe the cost savings of the final rule.
(1) Summary of Approach
The pilot program announced in the 2016 Joint WIOA Final Rule
required States to report two of the three approaches for measuring
effectiveness in serving employers. Under this final rule States will
no longer face costs associated with collecting the information
required to calculate the Employer Penetration or Repeat Business
Customer approaches to the effectiveness in serving employers
performance indicator. To estimate the cost savings, we first update
the costs associated with collecting each of these pilot approaches
following the assumptions used to estimate the cost of the Retention
with the Same Employer pilot approach in the 2016 Joint WIOA Final
Rule. We then estimate the cost savings under the final rule associated
with the proportion of States that will no longer report the various
combinations of the pilot approaches that States report in the
baseline.
Currently, 15 States report Retention with the Same Employer and
Employer Penetration, 9 States report Retention with the Same Employer
and Repeat Business Customer, 22 States report Employer Penetration and
Repeat Business Customer, and 16 States report all 3 approaches to
defining the effectiveness in serving employers performance indicator.
To estimate cost savings, we first estimate the annual cost of all 57
States collecting data for, calculating, and reporting the percentage
of employers using services out of all employers in the State (Employer
Penetration) and the percentage of repeat employers using services
within the previous 3 years (Repeat Business Customer). We then
multiply the annual cost by the percentage of States currently using
the pilot approach to estimate the cost savings. Below, we present the
updated costs associated with all 57 States reporting each pilot
approach, and then present the cost savings associated with the
proportion of States no longer reporting them.
[[Page 13840]]
(2) Employer Penetration: Percentage of Employers Using Services Out of
All Employers in the State
Under the pilot program, States must use two of three specified
approaches to measure effectiveness in serving employers. The final
rule will only require States to collect data for, calculate, and
report the first approach (Retention with the Same Employer). This
section calculates the cost for all 57 States to collect data,
calculate, and report Employer Penetration and then uses these costs to
estimate cost savings for the proportion of States that will no longer
report Employer Penetration under the final rule.
At the Federal level for the DOL core programs, the Departments
estimated the annual labor cost associated with Employer Penetration by
multiplying the estimated number of GS-14, Step 5 management analysts
(one) by the time required for technical assistance delivery (4 hours)
and by the hourly compensation rate ($93.82/hour). This calculation
results in an annual labor cost of $375.
At the State level for the DOL core programs, the Departments
estimated Employer Penetration's annual labor cost by multiplying the
estimated number of management analysts (one) by the sum of time
required for data collection (4 hours), providing training and
technical assistance to Local WDBs (3 hours), and Federal reporting (4
hours) and by the hourly compensation rate ($63.20/hour). We multiplied
the labor cost ($695) by the number of States (57) to estimate this
annual cost at $39,629.
For local-level DOL core programs, the Departments estimated the
annual labor cost for Employer Penetration by multiplying the estimated
number of management analysts (one) by the time required for data
collection (4 hours) and by the hourly compensation rate ($78.06/hour).
We multiplied the labor cost ($312) by the number of Local WDBs (580)
to estimate this annual cost at $181,104.
At the Federal level for the AEFLA program, the Departments
estimated the annual labor cost associated with Employer Penetration by
multiplying the estimated number of GS-14, Step 5 management analysts
(one) by the time required for technical assistance delivery (4 hours)
and by the hourly compensation rate ($93.82/hour). This calculation
results in an annual labor cost of $375.
At the State level for the AEFLA program, the Departments estimated
Employer Penetration's annual labor cost by multiplying the estimated
number of management analysts (one) by the sum of time required for
data collection (4 hours), providing training and technical assistance
to local AEFLA providers (3 hours), and Federal reporting (4 hours) and
by the hourly compensation rate ($63.20/hour). We multiplied the labor
cost ($695) by the number of States (57) to estimate this annual cost
at $39,629.
For the local-level AEFLA program, the Departments estimated the
annual labor cost for Employer Penetration by multiplying the estimated
number of management analysts (one) by the time required for data
collection (4 hours) and by the hourly compensation rate ($78.06/hour).
We multiplied the labor cost ($312) by the number of local AEFLA
providers (1,719) to estimate this annual cost at $536,754.\48\
---------------------------------------------------------------------------
\48\ Numbers may not sum due to rounding for the convenience of
the reader.
---------------------------------------------------------------------------
At the Federal level for the VR program, the Departments estimated
the annual labor cost associated with Employer Penetration by
multiplying the estimated number of GS-14, Step 5 management analysts
(one) by the time required for technical assistance delivery (4 hours)
and by the hourly compensation rate ($93.82/hour). This calculation
results in an annual labor cost of $375.
At the State level for the VR program, the Departments estimated
Employer Penetration's annual labor cost by multiplying the estimated
number of management analysts (one) by the time required for Federal
reporting (4 hours) and by the hourly compensation rate ($63.20/hour).
In addition, we added the estimated number of rehabilitation counselors
(62 assistants) by the time required for data collection (1 hour each)
and by the hourly compensation rate ($48.88/hour). We summed the labor
cost for both categories and multiplied it ($3,284) by the number of VR
agencies (78) to estimate this annual cost at $256,127.
Summing these annual costs for all 57 States to calculate and
report Employer Penetration yields $1,054,369 per year for the Federal-
, State-, and local-level DOL core programs and AEFLA programs and the
State-level VR programs. The Departments used the updated costs in
Exhibit 8 to estimate the cost savings for States that will no longer
report this pilot approach.
Exhibit 8--Employer Penetration, Annual
--------------------------------------------------------------------------------------------------------------------------------------------------------
Loaded wage
Agency Labor category \1\ Hours Workers rate Population \2\ Total \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Federal-level DOL......................... Management Analyst.......... 4 1 $93.82 NA $375
State-level DOL........................... Management Analyst.......... 11 1 63.20 57 39,629
Local-Level DOL........................... Management Analyst.......... 4 1 78.06 580 181,104
Federal-level AEFLA....................... Management Analyst.......... 4 1 93.82 NA 375
State-level AEFLA......................... Management Analyst.......... 11 1 63.20 57 39,629
Local-Level AEFLA......................... Management Analyst.......... 4 1 78.06 1,719 536,754
Federal-level VR.......................... Management Analyst.......... 4 1 93.82 NA 375
State-level VR............................ Management Analyst.......... 4 1 63.20 78 19,720
State-level VR............................ Rehab Counselor............. 1 62 48.88 78 236,407
-------------------------------------------------------------------------------
Annual Total.......................... ............................ .............. .............. .............. .............. 1,054,369
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Management analysts on the Federal level are GS-14, Step 5.
\2\ Population figures represent States (57), VR agencies (78), and AEFLA providers (1,719).
\3\ Numbers may not sum due to rounding for the convenience of the reader.
[[Page 13841]]
(3) Repeat Business Customer: Percentage of Repeat Employers Using
Services Within the Previous 3 Years
This section calculates the cost for all 57 States to collect data,
calculate, and report the Repeat Business Customer approach to the
effectiveness in serving employers performance indicator. The
Departments use these costs to estimate cost savings for the proportion
of States that will no longer report this pilot approach under the
final rule.
At the Federal level for the DOL core programs, the Departments
estimated the annual labor cost associated with Repeat Business
Customer by multiplying the estimated number of GS-14, Step 5
management analysts (one) by the time required for technical assistance
delivery (4 hours) and by the hourly compensation rate ($93.82/hour).
This calculation results in an annual labor cost of $375.
At the State level for the DOL core programs, the Departments
estimated Repeat Business Customer's annual labor cost by multiplying
the estimated number of management analysts (one) by the sum of time
required for data collection (4 hours), providing training and
technical assistance to Local WDBs (3 hours), and Federal reporting (4
hours) and by the hourly compensation rate ($63.20/hour). We multiplied
the labor cost ($695) by the number of States (57) to estimate this
annual cost at $39,629.
For the local-level DOL core programs, the Departments estimated
the annual labor cost for Repeat Business Customer by multiplying the
estimated number of management analysts (one) by the time required for
data collection (6 hours) and by the hourly compensation rate ($78.06/
hour). We multiplied the labor cost ($468) by the number of Local WDBs
(580) to estimate this annual cost at $271,655.
At the Federal level for the AEFLA program, the Departments
estimated the annual labor cost associated with Repeat Business
Customer by multiplying the estimated number of GS-14, Step 5
management analysts (one) by the time required for technical assistance
delivery (4 hours) and by the hourly compensation rate ($93.82/hour).
This calculation results in an annual labor cost of $375.
At the State level for the AEFLA program, the Departments estimated
Repeat Business Customer's annual labor cost by multiplying the
estimated number of management analysts (one) by the sum of time
required for data collection (4 hours), providing training and
technical assistance to local AEFLA providers (3 hours), and Federal
reporting (4 hours) and by the hourly compensation rate ($63.20/hour).
We multiplied the labor cost ($695) by the number of States (57) to
estimate this annual cost at $39,629.
For the local-level AEFLA program, the Departments estimated the
annual labor cost for Repeat Business Customer by multiplying the
estimated number of management analysts (one) by the time required for
data collection (6 hours) and by the hourly compensation rate ($78.06/
hour). We multiplied the labor cost ($468) by the number of local AEFLA
providers (1,719) to estimate this annual cost at $805,130.
At the Federal level for the VR program, the Departments estimated
the annual labor cost associated with Repeat Business Customer by
multiplying the estimated number of GS-14, Step 5 management analysts
(one) by the time required for technical assistance delivery (4 hours)
and by the hourly compensation rate ($93.82/hour). This calculation
results in an annual labor cost of $375.
At the State level for the VR program, the Departments estimated
Repeat Business Customer's annual labor cost by multiplying the
estimated number of management analysts (one) by the time required for
Federal reporting (4 hours) and by the hourly compensation rate
($63.20/hour). In addition, we added the estimated number of
rehabilitation counselors (62 counselors) by the time required for data
collection (1 hour each) and by the hourly compensation rate ($48.88/
hour). We summed the labor cost for both categories ($3,284) and
multiplied it by the number of VR agencies (78) to estimate this annual
cost of $256,127.
Summing these annual costs for all States to calculate and report
Repeat Business Customer yields $1,413,298 per year for the Federal-,
State-, and local-level DOL core programs and AEFLA programs and the
State-level VR programs. The Departments used the updated costs in
Exhibit 9 to estimate the cost savings for States to no longer report
this pilot approach.
Exhibit 9--Repeat Business Customer, Annual
--------------------------------------------------------------------------------------------------------------------------------------------------------
Loaded wage
Agency Labor category \1\ Hours Workers rate Population \2\ Total \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Federal-level DOL......................... Management Analyst.......... 4 1 $93.82 NA $375
State-level DOL........................... Management Analyst.......... 11 1 59.70 57 39,629
Local-Level DOL........................... Management Analyst.......... 6 1 73.67 580 271,655
Federal-level AEFLA....................... Management Analyst.......... 4 1 93.82 NA 375
State-level AEFLA......................... Management Analyst.......... 11 1 59.70 57 39,629
Local-Level AEFLA......................... Management Analyst.......... 6 1 73.67 1,719 805,130
Federal-level VR.......................... Management Analyst.......... 4 1 93.82 NA 375
State-level VR............................ Management Analyst.......... 4 1 59.70 78 19,720
State-Level VR............................ Rehab Counselor............. 1 62 47.94 78 236,407
-------------------------------------------------------------------------------
Annual Total.......................... ............................ .............. .............. .............. .............. 1,413,298
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Management analysts on the Federal level are GS-14, Step 5.
\2\ Population figures represent States (57), VR agencies (78), and AEFLA providers (1,719).
\3\ Numbers may not sum due to rounding for the convenience of the reader.
[[Page 13842]]
(4) Summary of Cost Savings
Under the final rule, the 15 States that currently report only the
Retention with the Same Employer and Employer Penetration pilot
approaches will have cost savings from no longer having to collect data
for, calculate, and report Employer Penetration. Multiplying the annual
cost for all 57 States to collect data for, calculate, and report
Employer Penetration ($1,054,369) by the 26.3 percent of States
reporting these two pilot approaches only (15 out of 57) yields annual
cost savings of $277,466.
The 9 States currently reporting only the Retention with the Same
Employer and Repeat Business Customer pilot approaches will have cost
savings from no longer collecting data for, calculating, and reporting
Repeat Business Customer. Multiplying the annual cost for all 57 States
to collect data for, calculate, and report Repeat Business Customer
($1,413,298) by the 15.8 percent of States reporting these two pilot
approaches only (9 out of 57) yields annual cost savings of $223,152.
The 22 States currently reporting only Employer Penetration and
Repeat Business Customer and the 16 States currently reporting all
three pilot approaches to the effectiveness in serving employers
performance indicator will have cost savings from no longer collecting
data for, calculating, and reporting both Employer Penetration and
Repeat Business Customer. Multiplying the sum of annual costs for all
57 States to collect data for, calculate, and report both Employer
Penetration and Repeat Business Customer ($2,467,667) by the 38.6
percent of States reporting Employer Penetration and Repeat Business
Customer only and by the 28.1 percent of States reporting all three
approaches yields annual cost savings of $952,433 and $692,679,
respectively.
Summing these annual cost savings yields total annual cost savings
for all 57 States of $2,145,729 from the final rule. The Departments
estimate total cost savings over the 10-year period at $21,457,293
undiscounted, or $18,852,612 and $16,125,654 at discount rates of 3 and
7 percent, respectively. At discount rates of 3 and 7 percent, the 10-
year period results in annualized cost savings of $2,210,101 and
$2,295,930, respectively.
e. Qualitative Benefits Discussion
(1) General Benefits of Measuring Effectiveness in Serving Employers
The Departments cannot quantify the final rule's benefits
associated with improving the WIOA core programs' effectiveness in
serving employers. Measuring effectiveness in serving employers allows
the DOL, AEFLA, and VR programs to set goals, monitor, and learn how to
serve employers more effectively.\49\ Reporting a measure of
effectiveness in serving employers also helps Federal, State, and local
policymakers evaluate program performance and inform future policy
changes to better meet program goals, particularly providing employers
with skilled workers and other services.
---------------------------------------------------------------------------
\49\ S. Spaulding, et al., ``Measuring the Effectiveness of
Services to Employers: Options for Performance Measures under the
Workforce Innovation and Opportunity Act,'' Jan. 2021, https://wdr.doleta.gov/research/FullText_Documents/ETAOP2021-17%20Measures%20of%20Effectiveness%20in%20Serving%20Employers_Final%20Report.pdf.
---------------------------------------------------------------------------
The Departments cannot quantify these estimated benefits because we
do not have quantitative data on how the effectiveness in serving
employers performance measure has influenced program implementation and
how much it will influence future policies.
(2) Specific Benefits of Reporting Retention With the Same Employer
Requiring all States to calculate and report Retention with the
Same Employer as the effectiveness in serving employers performance
indicator will make it easier to compare WIOA core programs'
effectiveness in serving employers performance across States and ensure
all States have an indicator of job turnover and match quality between
workers exiting WIOA core programs and employers. Retention with the
Same Employer demonstrates a continued relationship between the
employer and participants who have exited WIOA core programs. While
many circumstances can have an impact on an employer's retention of
employees, an indication that an employee is still working for the same
employer in both the second and fourth quarters after exiting from a
WIOA program demonstrates a level of success for both parties, as
retention of an employee reduces the costs to the employer associated
with employee turnover and retraining. Thus, reporting Retention with
the Same Employer can help inform design and implementation of program
services to reduce job turnover and improve employer-employee match
quality. Improved matching and reduced turnover allow employees and
employers to operate closer to their productive potential and can make
it more worthwhile for employers to invest in training their employees
and for employees to invest in learning employer-specific skills.
6. Summary of the Analysis
Exhibit 10 summarizes the estimated total costs and cost savings of
the final rule over the 10-year analysis period. Discontinuing
reporting of Employer Penetration and Repeat Business Customer has the
largest effect as a cost savings. The Departments estimate the total
net cost savings of the final rule at $16,125,654 at a discount rate of
7 percent.
Exhibit 10--Estimated 10-Year Monetized Costs and Cost Savings of the Final Rule by Provision
[2022 $millions]
----------------------------------------------------------------------------------------------------------------
Total net cost
Provision Cost Cost savings savings
----------------------------------------------------------------------------------------------------------------
Rule Familiarization............................................ $0.13 .............. ..............
Reporting Retention with the Same Employer...................... 0.16 .............. ..............
No Longer Reporting Other Measures.............................. .............. $21.46 ..............
Undiscounted.................................................... 0.35 21.46 $21.11
With a Discount Rate of 3%...................................... 0.33 18.85 18.52
With a Discount Rate of 7%...................................... 0.31 16.13 15.82
----------------------------------------------------------------------------------------------------------------
The Departments estimate the annualized costs of the final rule at
$44,208 and the annualized cost savings at $2,295,930, at a discount
rate of 7 percent. The Departments estimate the final rule will result
in an annualized net quantifiable cost savings of $2,251,723 and a
total 10-year net cost savings of $15,815,157, both at a
[[Page 13843]]
discount rate of 7 percent and expressed in 2022 dollars. Exhibit 11
summarizes the estimated total costs and cost savings of the final rule
over the 10-year analysis period.
Exhibit 11--Estimated Monetized Costs, Cost Savings, and Net Cost Savings of the Final Rule
[2022$]
----------------------------------------------------------------------------------------------------------------
Year/total Costs Costs savings Net cost savings
----------------------------------------------------------------------------------------------------------------
2024................................................... $213,987 $2,145,729 $1,931,742
2025................................................... 14,813 2,145,729 2,130,916
2026................................................... 14,813 2,145,729 2,130,916
2027................................................... 14,813 2,145,729 2,130,916
2028................................................... 14,813 2,145,729 2,130,916
2029................................................... 14,813 2,145,729 2,130,916
2030................................................... 14,813 2,145,729 2,130,916
2031................................................... 14,813 2,145,729 2,130,916
2032................................................... 14,813 2,145,729 2,130,916
2033................................................... 14,813 2,145,729 2,130,916
Undiscounted 10-Year Total............................. 347,304 21,457,293 21,109,989
10-Year Total with a Discount Rate of 3%............... 329,323 18,852,612 18,523,289
10-Year Total with a Discount Rate of 7%............... 310,497 16,125,654 15,815,157
10-Year Average........................................ 34,730 2,145,729 2,110,999
Annualized with a Discount Rate of 3%.................. 38,607 2,210,101 2,171,495
Annualized with a Discount Rate of 7%.................. 44,208 2,295,930 2,251,723
----------------------------------------------------------------------------------------------------------------
7. Regulatory Alternatives
The Departments considered two alternatives to the proposed
definition of the effectiveness in serving employers performance
indicator. First, the Departments considered requiring use of the
Employer Penetration pilot approach, which reports the percentage of
employers using services out of all employers in the State. This
approach would have required counts of services provided to employers,
requiring States and local areas to report unique counts of individual
employers receiving services through WIOA's programs. Employer
Penetration would require a more data-intensive analysis than the
proposed approach of Retention with the Same Employer. Employer
Penetration would have the benefit of capturing the extent to which
employers within a State are engaged with WIOA-funded services and
would provide State programs an incentive to work with additional
employers. As discussed earlier in Section II.A (Pilot Programs for
WIOA Core Programs), on behalf of the Departments, DOL commissioned an
examination of State experiences with the various approaches through a
third-party contractor (the Final Pilot Study Report discussed
elsewhere in this final rule), which found weaknesses in this pilot
approach, including (1) an emphasis on quantity rather than quality or
intensity of the employer service provided; (2) reliability issues
associated with data entry and the process to count unique
establishments; (3) measurement of program output rather than outcome;
(4) potential for creation of perverse incentives to prioritize program
breadth rather than depth in service and delivery; and (5) a lack of
sensitivity to industry sectors targeted by State and local workforce
agencies.\50\ The Departments estimated the costs and cost savings of
this alternative using the same method as the proposed approach. That
is, the Departments used the estimated cost of collecting data,
calculating, and reporting Employer Penetration, and then estimated the
cost for the proportion of States that would need to start using this
approach to reporting effectiveness in serving employers (4 States).
Exhibit 12 summarizes these calculations below.
---------------------------------------------------------------------------
\50\ S. Spaulding, et al., ``Measuring the Effectiveness of
Services to Employers: Options for Performance Measures under the
Workforce Innovation and Opportunity Act,'' Jan. 2021, page 68,
https://wdr.doleta.gov/research/FullText_Documents/ETAOP2021-17%20Measures%20of%20Effectiveness%20in%20Serving%20Employers_Final%20Report.pdf.
Exhibit 12--Summary of Regulatory Alternative 1 Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted cost Adjusted cost
estimates: estimates:
Number of Updated 2016 cost Updated 2016 cost updated cost updated cost
Non-reported measure states estimates: initial estimates: annual estimates x (# estimates x (#
cost cost states / 57), states / 57),
initial cost annual cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Employer Penetration......................................... 4 $264,215 $1,054,369 $18,541 $73,991
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs include calculating and reporting Employer Penetration and
rule familiarization for WIOA core programs. The Departments estimate
the total cost of the first alternative over the 10-year period at
$876,059 undiscounted, or $786,242 and $692,209 at discount rates of 3
and 7 percent, respectively, and an annualized cost of the 10-year
period at $92,172 and $98,555 with discount rates of 3 and 7 percent,
respectively.
To calculate cost savings the Departments used the estimated cost
of collecting data for, calculating, and reporting the two other
effectiveness in serving employers approaches (Retention with the Same
Employer and
[[Page 13844]]
Repeat Business Customer), and then estimated the cost savings for the
proportion of States that would transition from their existing
reporting combination of two or three effectiveness in serving
employers approaches to the single Employer Penetration approach to the
performance indicator. Exhibit 13 summarizes these calculations below.
Exhibit 13--Summary of Regulatory Alternative 1 Cost Savings
----------------------------------------------------------------------------------------------------------------
Adjusted cost
savings estimates:
Number of Updated 2016 cost updated cost
Reported measures states estimates: annual estimates x (#
cost savings states / 57):
annual cost savings
----------------------------------------------------------------------------------------------------------------
Employer Penetration + Retention with the Same 15 $49,667 $13,070
Employer.............................................
Employer Penetration + Repeat Business Customer....... 22 1,413,298 545,483
Retention with the Same Employer + Repeat Business 9 1,462,965 230,994
Customer (No Employer Penetration)...................
All Three............................................. 16 1,462,965 410,657
----------------------------------------------------------------------------------------------------------------
The Departments estimated the total cost savings associated with
the first alternative over the 10-year period at $12,002,050
undiscounted, or $10,545,132 and $9,019,820 at discount rates of 3 and
7 percent, respectively, with an annualized cost savings associated
with the first alternative over the 10-year period at $1,236,211 and
$1,284,219 with discount rates of 3 and 7 percent, respectively.
We estimate the first regulatory alternative to result in total net
cost savings over the 10-year period of $11,125,992 undiscounted, or
$9,758,890 and $8,327,611 at discount rates of 3 and 7 percent,
respectively, with an annualized net cost savings of the 10-year period
at $1,144,040 and $1,185,664 with discount rates of 3 and 7 percent,
respectively.
The Departments considered a second regulatory alternative that
would require the use of the Repeat Business Customer approach to the
effectiveness in serving employers performance indicator, which reports
the percentage of employers receiving services in a year who also
received services within the previous 3 years. This approach to the
effectiveness in serving employers measure requires counts of services
provided to employers through WIOA's core programs. Repeat Business
Customer requires a more data-intensive analysis than the proposed
approach of Retention with the Same Employer. Repeat Business Customer
captures the extent to which employers within a State can find workers
and the employer's level of satisfaction with the public workforce
system services. The Departments, in the Final Pilot Study Report,
found weaknesses in this pilot approach, including that it (1) may
provide a disincentive to reach out to new employers; (2) is subject to
variation in industry and sector economic conditions; and (3) may
require a statistical adjustment model to mitigate the weaknesses and
improve implementation and interpretation.\51\ The Departments
estimated the costs and cost savings of this alternative using the same
method as the proposed approach. That is, the Departments used the
estimated cost of collecting data, calculating, and reporting Repeat
Business Customer, and then estimated the cost for the proportion of
States that would need to start using this approach to reporting
effectiveness in serving employers (10 States). Exhibit 14 summarizes
these calculations below.
---------------------------------------------------------------------------
\51\ S. Spaulding, et al., ``Measuring the Effectiveness of
Services to Employers: Options for Performance Measures under the
Workforce Innovation and Opportunity Act,'' Jan. 2021, page 67,
https://wdr.doleta.gov/research/FullText_Documents/ETAOP2021-17%20Measures%20of%20Effectiveness%20in%20Serving%20Employers_Final%20Report.pdf.
Exhibit 14--Summary of Regulatory Alternative 2 Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted cost Adjusted cost
estimates: estimates:
Number of Updated 2016 Updated 2016 cost updated cost updated cost
Non-reported measure states cost estimates: estimates: annual estimates x (# estimates x (#
initial cost cost states / 57), states / 57),
initial cost annual cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Repeat Business Customer........................................ 10 $260,613 $1,413,298 $45,722 $247,947
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs include the cost of calculating and reporting Repeat Business
Customer and the cost of rule familiarization for WIOA core programs.
The Departments estimated the total cost of the second alternative over
the 10-year period at $2,468,844 undiscounted, or $2,167,864 and
$1,852,753 at discount rates of 3 and 7 percent, respectively, with an
annualized cost of the 10-year period at $254,140 and $263,790 with
discount rates of 3 and 7 percent, respectively.
To calculate cost savings, the Departments used the estimated cost
of collecting data for, calculating, and reporting the two other
effectiveness in serving employers approaches (Retention with the Same
Employer and Employer Penetration), and then estimated the cost savings
for the proportion of States that would transition from their existing
reporting combination of two or three effectiveness in serving
employers approaches to the single Repeat Business Customer approach to
the performance indicator. Exhibit 15 summarizes these calculations
below.
[[Page 13845]]
Exhibit 15--Summary of Regulatory Alternative 2 Cost Savings
----------------------------------------------------------------------------------------------------------------
Adjusted cost
savings estimates:
Number of Updated 2016 cost updated cost
Reported measures states estimates: annual estimates x (#
cost savings states / 57):
annual cost savings
----------------------------------------------------------------------------------------------------------------
Repeat Business Customer + Retention with the Same 9 $49,667 $7,842
Employer.............................................
Repeat Business Customer + Employer Penetration....... 22 1,054,369 406,950
Employer Penetration + Retention with the Same 15 1,104,036 290,536
Employer (No Repeat Business Customer)...............
All Three............................................. 16 1,104,036 309,905
----------------------------------------------------------------------------------------------------------------
The Departments estimated total cost savings associated with the
second alternative over the 10-year period is $10,152,326 undiscounted,
or $8,919,944 and $7,729,709 at discount rates of 3 and 7 percent,
respectively with an annualized cost savings associated with the second
alternative over the 10-year period is $1,045,690 and $1,086,299 with
discount rates of 3 and 7 percent, respectively.
The Departments estimate the second regulatory alternative to
result in total net cost savings over the 10-year period of $7,683,482
undiscounted, or $6,752,081 and $5,776,955 at discount rates of 3 and 7
percent, respectively, with an annualized net cost savings of the 10-
year period at $791,550 and $822,508 with discount rates of 3 and 7
percent, respectively.
Exhibit 16 summarizes the estimated net cost savings associated
with the three considered approaches to the effectiveness in serving
employers performance indicator (i.e., the three piloted approaches).
The Departments prefer the proposed approach of requiring the use of
Retention with the Same Employer because it has data more readily
available, and, therefore, is less burdensome. The Retention with the
Same Employer approach better aligns with workforce system goals of
supporting employer-employee job match quality and reducing turnover
without the weaknesses associated with the other two approaches to
defining the effectiveness in serving employers performance indicator.
Exhibit 16--Estimated Monetized Costs of the Final Rule and Regulatory Alternatives
[2021 $millions]
----------------------------------------------------------------------------------------------------------------
Regulatory Regulatory
Final rule alternative 1 alternative 2
----------------------------------------------------------------------------------------------------------------
Total 10-Year Net Cost Savings.................................. $21.1 $11.1 $7.7
Total with 3% Discount.......................................... 18.5 9.8 6.8
Total with 7% Discount.......................................... 15.8 8.3 5.8
Annualized with 3% Discount..................................... 2.17 1.14 0.79
Annualized with 7% Discount..................................... 2.25 1.19 0.82
----------------------------------------------------------------------------------------------------------------
B. Regulatory Flexibility Act, Small Business Regulatory Enforcement
Fairness Act, and Executive Order 13272 (Proper Consideration of Small
Entities in Agency Rulemaking)
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq.,
as amended by the Small Business Regulatory Enforcement Fairness Act of
1996, Public Law 104-121 (Mar. 29, 1996), requires Federal agencies
engaged in rulemaking to consider the impact of their proposals on
small entities, consider alternatives to minimize that impact, and
solicit public comment on their analyses. The RFA requires the
assessment of the impact of a regulation on a wide range of small
entities, including small businesses, not-for-profit organizations, and
small governmental jurisdictions. Agencies must perform a review to
determine whether a proposed or final rule would have a significant
economic impact on a substantial number of small entities. 5 U.S.C. 603
and 604. The RFA permits an agency, in lieu of preparing such an
analysis, to certify that the rulemaking is not expected to have a
significant economic impact on a substantial number of small entities.
5 U.S.C. 605.
The Departments determined that the final rule will not have a
significant economic impact on a substantial number of small entities
because any impacted small entities are already receiving financial
assistance under the WIOA program and likely would continue to do so.
The Departments have certified this to the Chief Counsel for Advocacy,
Small Business Administration, pursuant to the RFA. 5 U.S.C. 605.
1. Affected Small Entities
The WIOA title I adult, dislocated worker, and youth program
grantees, the WIOA title II State-level AEFLA grantees, Wagner-Peyser
Act grantees (under the Wagner-Peyser Act as amended by WIOA title
III), and VR program grantees (under the Rehabilitation Act as amended
by WIOA title IV), are State government agencies and, therefore, are
not considered small entities. However, the final rule could have a
minimal impact on a variety of AEFLA local providers, some of which are
small entities by U.S. Small Business Administration (SBA) size
standards: \52\ (1) local educational agencies (NAICS 611710; $24.0
million); (2) community-based organizations (NAICS 813410; $9.5
million); (3) faith-based organizations (NAICS 813110; $13.0 million);
(4) libraries (NAICS 519210; $21.0 million); (5) community, junior
(NAICS 611210; $32.5 million), and technical colleges (NAICS 611519;
$21.0 million); (6) 4-year colleges and universities (NAICS 611310;
$34.5
[[Page 13846]]
million); (7) correctional institutions (NAICS 922410; NA \53\); (8)
other institutions, such as medical and special institutions not
designed for justice-involved individuals (NAICS 623210; $19.0
million); and (9) other public or private nonprofit agencies or
institutions (NAICS 813319; $18.0 million).
---------------------------------------------------------------------------
\52\ SBA, ``Table of size standards,'' effective March 17, 2023,
https://www.sba.gov/document/support-table-size-standards (last
visited September 13, 2023). Dollar values provided in parentheses
are the SBA average annual receipts small entity threshold (2022
dollars) for the relevant NAICS code.
\53\ There is no SBA size standard for this NAICS code.
---------------------------------------------------------------------------
Comments: Some commenters stated that the proposed rule assumes the
only small entities affected by the rule would be AEFLA local program
operators. However, the commenters said, in Michigan, local program
operators of title I adult, dislocated worker, and youth programs,
title II AEFLA programs, and title III Wagner-Peyser Act programs all
meet the definition of small entities.
Departments' Response: This RFA section includes a discussion of
the multiple types of small entities that may be affected by the rule,
including local educational agencies (NAICS 611710), community-based
organizations (NAICS 813410), public or private non-profit agencies or
institutions (NAICS 813319), and additional local AEFLA provider
classifications discussed in the RFA that might be implicated. The only
cost of the final rule to these entities is $73.67 for rule
familiarization, which would pose a de minimis cost for even the
smallest entity.
2. Impact on Small Entities
The final rule definition of the effectiveness in serving employers
performance indicator will have a minimal impact on AEFLA local
providers. Each local AEFLA provider is expected to incur a $78.06 cost
to review the rule. The $78.06 cost to review the rule is a de minimis
burden on the entities incurring the cost, including the smallest
entities subject to the rule. For example, the smallest category of
community-based organization (NAICS 813410--civic and social
organizations) has annual revenue of $58,521 in 2022 dollars.\54\ They
would therefore spend only 0.13 percent of their annual revenue on this
cost. Amongst the smallest category of libraries (NAICS 519120--
libraries and archives) this cost would also be 0.13 percent of the
average entity's annual revenue of $58,581 in 2022 dollars.\55\
---------------------------------------------------------------------------
\54\ The smallest category are entities with less than $100,000
in annual revenue. Revenue data from U.S. Census Bureau ``Statistics
of U.S. Businesses,'' http://www.census.gov/programs-surveys/susb/data.html (last updated May 10, 2022).
\55\ Ibid.
---------------------------------------------------------------------------
Local AEFLA providers are not estimated to incur any new costs,
beyond the cost to review the rule, to report Retention with the Same
Employer. Some local AEFLA providers may incur net cost savings if they
currently report Employer Penetration or Repeat Business Customer.
Local AEFLA providers that currently report Employer Penetration will
incur cost savings of $312 and local AEFLA providers that currently
report Repeat Business Customer will incur cost savings of $468.
Therefore, some local AEFLA providers would have net cost savings of
between $233.94 (= $312-$78.06) and $389.94 (= $468-$78.06) depending
on the measure they currently report. For these local AEFLA providers
the net cost savings would still be less than 1% of revenue (0.40% and
0.67% respectively for the smallest categories of entities in NAICS
813410 and NAICS 519120).\56\ Federal transfer payments to States would
fully finance the minor WIOA program cost burdens on grantees that
would result from the final rule. Therefore, the Departments hereby
certify that the final rule will not have a significant economic impact
on a substantial number of small entities.
---------------------------------------------------------------------------
\56\ For NAICS 813410 average revenue is $58,521 for entities
with less than $100,000 in revenue and for NAICS 519120 average
revenue is $58,581 for entities with less than $100,000 in revenue.
0.4% and 0.67% is based on either net savings of $233.94 or $389.94
(0.40 = 233.94 / 58,521; 0.67 = 389.94 / 58,521).
---------------------------------------------------------------------------
C. Paperwork Reduction Act of 1995
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 their continuing efforts to reduce paperwork and
respondent burden, the Departments conduct a preclearance consultation
program 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
Departments' collection instructions; (2) respondents can provide the
requested data in the desired format; (3) reporting burden (time and
financial resources) is minimized; (4) collection instruments are
clearly understood; 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 that require any party to obtain, maintain,
retain, report, or disclose information. The information collection
requirements also must be submitted to OMB for approval.
A Federal agency may not conduct or sponsor a collection of
information unless it is approved by OMB under the PRA and displays a
currently valid OMB control number. The public also is 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. See
44 U.S.C. 3512.
The final rule revises ETA 9169, WIOA Statewide and Local
Performance Report Template approved under OMB Control Number 1205-
0526. The revision requires ``Retention with the Same Employer'' as the
only definition of the effectiveness in serving employers performance
indicator in the WIOA Common Performance Reporting ICR by an entity
that reports to the Departments on behalf of the State. Data elements
for the collection and calculation for the two other piloted
definitions of the effectiveness in serving employers performance
indicator--Repeat Business Customer and Employer Penetration--are
removed from the ICR, along with the corresponding breakouts of the
employer services that comprise them. No other changes were proposed
for this ICR in the Joint WIOA Effectiveness in Serving Employers NPRM.
In accordance with the PRA, the Departments submitted the associated
ICR to OMB in concert with the publishing of the proposed rule, and
provided the public with a 60-day opportunity to submit comments on the
ICR, either directly to the Departments or to OMB, which began with the
submission of the ICR to OMB. The Departments and OMB received no
comments on the proposed changes.
Agency: DOL-ETA.
Title of Collection: Workforce Innovation and Opportunity Act
(WIOA) Common Performance Reporting.
Type of Review: Revision of an approved ICR.
OMB Control Number: 1205-0526.
[[Page 13847]]
Description: The final rule requires Retention with the Same
Employer as the only definition of the effectiveness in serving
employers performance indicator in ETA 9169, WIOA Statewide and Local
Performance Report Template by an entity that reports to the
Departments on behalf of the State. Data elements for the collection
and calculation for the two other piloted definitions of the
effectiveness in serving employers performance indicator--Repeat
Business Customer and Employer Penetration--are to be removed from the
ICR, along with the corresponding breakouts of the employer services
that comprise them. This package is unchanged except to remove the data
elements discussed above. The final rule makes no other changes to this
ICR.
Affected Public: State Governments.
Obligation to Respond: Required to Obtain or Retain Benefits.
Frequency: Annually.
Estimated Total Annual Respondents: 19,114,129.
Estimated Total Annual Responses: 38,216,054.
Estimated Total Annual Burden Hours: 9,863,057.
Estimated Total Annual Other Burden Costs: $34,594,532.
Authority for the Information Collection: 20 CFR 677.155(a)(1)(vi),
and 34 CFR 361.155(a)(1)(vi) and 463.155(a)(1)(vi).
D. Executive Order 13132 (Federalism)
E.O. 13132 aims to guarantee the division of governmental
responsibilities between the Federal Government and the States and to
further the policies of the Unfunded Mandates Reform Act of 1995
(UMRA). Accordingly, E.O. 13132 requires executive departments and
agencies to ensure that the principles of federalism guide them in the
formulation and implementation of policies. Further, agencies must
adhere to constitutional principles, examine the constitutional and
statutory authority supporting a regulation that would limit the
policymaking discretion of the States, and assess the need for such a
regulation. To the extent practicable, agencies must consult State and
local officials before implementing any such regulation.
E.O. 13132 further provides that agencies must implement a
regulation that limits the policymaking discretion of the States only
where there is constitutional and statutory authority for the
regulation, and it addresses a problem of national significance. For a
regulation administered by the States, the Federal Government must
grant the States the maximum administrative discretion possible to
avoid intrusive Federal oversight of State administration, and agencies
must adhere to special requirements for a regulation that pre-empts
State law. E.O. 13132 also sets forth the procedures agencies must
follow for certain regulations with federalism implications, such as
preparation of a summary impact statement.
Accordingly, the Departments reviewed this WIOA-required final rule
for federalism implications and have concluded that none exist in this
rulemaking. This joint final rule does not contain any 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 concluded that this final rule does not have a sufficient
federalism implication to warrant the preparation of a summary impact
statement.
E. Unfunded Mandates Reform Act of 1995
UMRA 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.
Following the consideration of the above factors, the Departments
concluded this joint final rule contains no unfunded Federal mandates,
as defined in 2 U.S.C. 658(6) to include either a ``Federal
intergovernmental mandate'' or a ``Federal private sector mandate.''
Reporting Retention with the Same Employer as the effectiveness in
serving employers performance indicator as proposed does not place any
additional burdens on State, local, and Tribal governments because the
WIOA core programs already collect and report the necessary
information. Furthermore, Federal program funding triggers the
reporting requirement; therefore, the Departments provide funding for
any associated reporting mandate. Private training entities participate
as a provider under a WIOA core program on a purely voluntary basis,
and voluntarily assume the information collection.
F. Executive Order 13175 (Indian Tribal Governments)
The Departments reviewed this final rule under the terms of E.O.
13175 and DOL's Tribal Consultation Policy and have determined that it
would have Tribal implications, because the proposed regulations would
have substantial direct effects on: one or more Indian Tribes; the
relationship between the Federal Government and Indian Tribes; or the
distribution of power and responsibilities between the Federal
Government and Indian Tribes. Therefore, DOL has prepared a Tribal
summary impact statement. Because the Tribal implications of this final
rule relate only to DOL Indian and Native American (INA) program
grantees, DOL has printed the requisite Tribal summary impact statement
in the DOL-specific effectiveness in serving employers final rule
published elsewhere in this issue of the Federal Register, which
proposes related changes for effectiveness in serving employers to
DOL's INA program regulations.
List of Subjects
20 CFR Part 677
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.
For the reasons discussed in the preamble, the Employment and
Training Administration amends 20 CFR part 677 as follows:
PART 677--PERFORMANCE ACCOUNTABILITY UNDER TITLE I OF THE WORKFORCE
INNOVATION AND OPPORTUNITY ACT
0
1. The authority citation for part 677 continues to read as follows:
Authority: Secs. 116, 189, and 503 of Pub. L. 113-128, 128 Stat.
1425 (Jul. 22, 2014).
Subpart A--State Indicators of Performance for Core Programs
0
2. Amend Sec. 677.155 by revising paragraphs (a)(1)(vi) and (c)(6) to
read as follows:
Sec. 677.155 What are the primary indicators of performance under the
Workforce Innovation and Opportunity Act?
(a) * * *
(1) * * *
(vi) The percentage of participants in unsubsidized employment
during the second quarter after exit from the program who were employed
by the same employer in the second and fourth
[[Page 13848]]
quarters after exit. For the six core programs, this indicator is a
statewide indicator reported by one core program on behalf of all six
core programs in the State, as described in guidance.
* * * * *
(c) * * *
(6) The percentage of participants in unsubsidized employment
during the second quarter after exit from the program who were employed
by the same employer in the second and fourth quarters after exit. For
the six core programs, this indicator is a statewide indicator reported
by one core program on behalf of all six core programs in the State, as
described in guidance.
Subpart B--Sanctions for State Performance and the Provision of
Technical Assistance
0
3. Amend Sec. 677.190 by revising paragraph (c) to read as follows:
Sec. 677.190 When are sanctions applied for failure to achieve
adjusted levels of performance?
* * * * *
(c) Whether a State has failed to meet adjusted levels of
performance will be determined using the following criteria:
(1) The overall State program score, which is expressed as the
percent achieved, compares the actual results achieved by a core
program on the primary indicators of performance, except for the
effectiveness in serving employers indicator described in Sec.
677.155(a)(1)(vi), to the adjusted levels of performance for that core
program. The average of the percentages achieved of the adjusted level
of performance for each of the primary indicators, except for the
effectiveness in serving employers indicator described in Sec.
677.155(a)(1)(vi), by a core program will constitute the overall State
program score.
(2) However, until all indicators for the core program have at
least 2 years of complete data, the overall State program score will be
based on a comparison of the actual results achieved to the adjusted
level of performance for each of the primary indicators that have at
least 2 years of complete data for that program.
(3) The overall State indicator score, which is expressed as the
percent achieved, compares the actual results achieved on a primary
indicator of performance by all core programs in a State to the
adjusted levels of performance for that primary indicator.
(i) The average of the percentages achieved of the adjusted level
of performance by all of the core programs on that indicator will
constitute the overall State indicator score, except for the
effectiveness in serving employers indicator described in Sec.
677.155(a)(1)(vi).
(ii) The overall State indicator score for effectiveness in serving
employers, as reported by one core program on behalf of all six core
programs in the State, as described in guidance, is a statewide
indicator that reflects the performance for all core programs. It is
calculated as the statewide percentage achieved of the statewide
adjusted level of performance.
(4) However, until all indicators for the State have at least 2
years of complete data, the overall State indicator score will be based
on a comparison of the actual results achieved to the adjusted level of
performance for each of the primary indicators that have at least 2
years of complete data in a State.
(5) The individual indicator score, which is expressed as the
percent achieved, compares the actual results achieved by each core
program on each of the individual primary indicators to the adjusted
levels of performance for each of the program's primary indicators of
performance, except for the effectiveness in serving employers
indicator described in Sec. 677.155(a)(1)(vi).
* * * * *
For the reasons stated in the preamble, the Department of Education
amends 34 CFR parts 361 and 463 as follows:
PART 361--STATE VOCATIONAL REHABILITATION SERVICES PROGRAM
Subpart E--Performance Accountability Under Title I of the
Workforce Innovation and Opportunity Act
0
4. The authority citation for part 361, subpart E continues to read as
follows:
Authority: Secs. 116, 189, and 503 of Pub. L. 113-128, 128
Stat. 1425 (Jul. 22, 2014).
0
5. Amend Sec. 361.155 by revising paragraphs (a)(1)(vi) and (c)(6) to
read as follows:
Sec. 361.155 What are the primary indicators of performance under the
Workforce Innovation and Opportunity Act?
(a) * * *
(1) * * *
(vi) The percentage of participants in unsubsidized employment
during the second quarter after exit from the program who were employed
by the same employer in the second and fourth quarters after exit. For
the six core programs, this indicator is a statewide indicator reported
by one core program on behalf of all six core programs in the State, as
described in guidance.
* * * * *
(c) * * *
(6) The percentage of participants in unsubsidized employment
during the second quarter after exit from the program who were employed
by the same employer in the second and fourth quarters after exit. For
the six core programs, this indicator is a statewide indicator reported
by one core program on behalf of all six core programs in the State, as
described in guidance.
0
6. Amend Sec. 361.190 by revising paragraph (c) to read as follows:
Sec. 361.190 When are sanctions applied for failure to achieve
adjusted levels of performance?
* * * * *
(c) Whether a State has failed to meet adjusted levels of
performance will be determined using the following criteria:
(1) The overall State program score, which is expressed as the
percent achieved, compares the actual results achieved by a core
program on the primary indicators of performance, except for the
effectiveness in serving employers indicator described in Sec.
361.155(a)(1)(vi), to the adjusted levels of performance for that core
program. The average of the percentages achieved of the adjusted level
of performance for each of the primary indicators, except for the
effectiveness in serving employers indicator described in Sec.
361.155(a)(1)(vi), by a core program will constitute the overall State
program score.
(2) However, until all indicators for the core program have at
least 2 years of complete data, the overall State program score will be
based on a comparison of the actual results achieved to the adjusted
level of performance for each of the primary indicators that have at
least 2 years of complete data for that program.
(3) The overall State indicator score, which is expressed as the
percent achieved, compares the actual results achieved on a primary
indicator of performance by all core programs in a State to the
adjusted levels of performance for that primary indicator.
(i) The average of the percentages achieved of the adjusted level
of performance by all of the core programs on that indicator will
constitute the overall State indicator score, except for the
effectiveness in serving employers indicator described in Sec.
361.155(a)(1)(vi).
(ii) The overall State indicator score for effectiveness in serving
employers, as reported by one core program on
[[Page 13849]]
behalf of all six core programs in the State, as described in guidance,
is a statewide indicator that reflects the performance for all core
programs. It is calculated as the statewide percentage achieved of the
statewide adjusted level of performance.
(4) However, until all indicators for the State have at least 2
years of complete data, the overall State indicator score will be based
on a comparison of the actual results achieved to the adjusted level of
performance for each of the primary indicators that have at least 2
years of complete data in a State.
(5) The individual indicator score, which is expressed as the
percent achieved, compares the actual results achieved by each core
program on each of the individual primary indicators to the adjusted
levels of performance for each of the program's primary indicators of
performance, except for the effectiveness in serving employers
indicator described in Sec. 361.155(a)(1)(vi).
* * * * *
PART 463--ADULT EDUCATION AND FAMILY LITERACY ACT
Subpart I--Performance Accountability Under Title I of the
Workforce Innovation and Opportunity Act
0
7. The authority citation for part 463, subpart I continues to read as
follows:
Authority: Secs. 116, 189, and 503 of Pub. L. 113-128, 128
Stat. 1425 (Jul. 22, 2014).
0
8. Amend Sec. 463.155 by revising paragraphs (a)(1)(vi) and (c)(6) to
read as follows:
Sec. 463.155 What are the primary indicators of performance under the
Workforce Innovation and Opportunity Act?
(a) * * *
(1) * * *
(vi) The percentage of participants in unsubsidized employment
during the second quarter after exit from the program who were employed
by the same employer in the second and fourth quarters after exit. For
the six core programs, this indicator is a statewide indicator reported
by one core program on behalf of all six core programs in the State, as
described in guidance.
* * * * *
(c) * * *
(6) The percentage of participants in unsubsidized employment
during the second quarter after exit from the program who were employed
by the same employer in the second and fourth quarters after exit. For
the six core programs, this indicator is a statewide indicator reported
by one core program on behalf of all six core programs in the State, as
described in guidance.
0
9. Amend Sec. 463.190 by revising paragraph (c) to read as follows:
Sec. 463.190 When are sanctions applied for failure to achieve
adjusted levels of performance?
* * * * *
(c) Whether a State has failed to meet adjusted levels of
performance will be determined using the following criteria:
(1) The overall State program score, which is expressed as the
percent achieved, compares the actual results achieved by a core
program on the primary indicators of performance, except for the
effectiveness in serving employers indicator described in Sec.
463.155(a)(1)(vi), to the adjusted levels of performance for that core
program. The average of the percentages achieved of the adjusted level
of performance for each of the primary indicators, except for the
effectiveness in serving employers indicator described in Sec.
463.155(a)(1)(vi), by a core program will constitute the overall State
program score.
(2) However, until all indicators for the core program have at
least 2 years of complete data, the overall State program score will be
based on a comparison of the actual results achieved to the adjusted
level of performance for each of the primary indicators that have at
least 2 years of complete data for that program.
(3) The overall State indicator score, which is expressed as the
percent achieved, compares the actual results achieved on a primary
indicator of performance by all core programs in a State to the
adjusted levels of performance for that primary indicator.
(i) The average of the percentages achieved of the adjusted level
of performance by all of the core programs on that indicator will
constitute the overall State indicator score, except for the
effectiveness in serving employers indicator described in Sec.
463.155(a)(1)(vi).
(ii) The overall State indicator score for effectiveness in serving
employers, as reported by one core program on behalf of all six core
programs in the State, as described in guidance, is a statewide
indicator that reflects the performance for all core programs. It is
calculated as the statewide percentage achieved of the statewide
adjusted level of performance.
(4) However, until all indicators for the State have at least 2
years of complete data, the overall State indicator score will be based
on a comparison of the actual results achieved to the adjusted level of
performance for each of the primary indicators that have at least 2
years of complete data in a State.
(5) The individual indicator score, which is expressed as the
percent achieved, compares the actual results achieved by each core
program on each of the individual primary indicators to the adjusted
levels of performance for each of the program's primary indicators of
performance, except for the effectiveness in serving employers
indicator described in Sec. 463.155(a)(1)(vi).
* * * * *
Julie Su,
Acting Secretary of Labor.
Miguel A. Cardona,
Secretary of Education.
[FR Doc. 2024-03278 Filed 2-22-24; 8:45 am]
BILLING CODE 4510-FN-P; 4000-01-P