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WIATL 26 (WIA Funds Rescission Policy)
Workforce Investment Act Transmittal Letter No. 26
January 8, 2007
TO: Local Elected Officials, WIA Local Workforce Investment Boards (WIBs), Fiscal Agents, Administrative Entities, and One-Stop Operators
FROM: Barbara E. Riley, Director
SUBJECT: WIA Funds Rescission Policy

I.Purpose

This communication provides guidance on ODJFS's methodology in determining the amount of statewide and local WIA funds that will be subject to rescission when the United States Department of Labor (USDOL) requires a rescission from the state.

II.Effective Date

Immediately.

III.Background

The state of Ohio has been subject to rescission of WIA funds in the past. During these past rescissions, the amount of funds that was requested for the federal rescission was small enough that the state was able to absorb the rescission request in its entirety through the statewide funds, thus leaving local areas unaffected. It is ODJFS's policy to continue to absorb future rescissions at the state level to the maximum extent possible. This policy was developed in order to better prepare the state's response to future rescissions that may require more funds than what the statewide funds would be able to cover.

IV.Guidance Statement

Once the state has received a rescission from USDOL, state staff will determine the level of cuts necessary to comply with the rescission. The amount of funds that will be rescinded will be determined separately in accordance with applicable federal requirements for each funding stream and will be subject to the same methodology. The state will rescind funds utilizing a tiered approach. The tiered reduction in funding will occur in four steps, with each tier incorporating a larger total reduction of funds. However, once the first step in the rescission process is completed, the next step, and any subsequent steps will be utilized only if they are necessary to reach the amount of funds that USDOL requires to be rescinded from the state. For example, if after the first step the state has reached the amount of funds that are necessary for the rescission, the process will stop, and the second step will not be taken. If after the first step the state has not reached the desired amount, the second step will be taken, and the process may stop here only if the second step makes available all of the required funds. This process is designed to reduce the probability of having involuntary recapturing of funds from the local WIBs.

The state recognizes that steps 3 and 4 could have significant impact on local service delivery. Therefore, it is the state's intention to do everything possible to ensure that rescissions do not go beyond steps 1 and 2. However, should the need arise to advance to steps 3 and 4 in the rescission process, WIBs affected as a result of either step may need to assess current obligations with their service providers, WIA participants currently enrolled in training, and other phases of service delivery and determine the best strategy to provide continued services to participants to the fullest extent possible.

The rescission process will be implemented while ensuring that the allocation distributions required by WIA and 20 CFR Section 667.130 are met. In other words, after the rescission, funds allocated to local areas will retain their mandated share of the total funds. Statewide funds will also be subject to rescission, and may be subject to a greater share. For instance, after the rescission process, statewide funds may be reduced to an amount that would constitute less than the 15% that is normally reserved for statewide activities.

Some of the steps described in the process below rely on expenditure rates of the local areas. The expenditure rate for each WIB will be the rate that is reported by the local areas to the ODJFS Office of Fiscal Services as of the latest completed quarter when the rescission notice is issued. Definitions of expenditure and expenditure rate are provided later in this document. Upon notice of a Congressional decision to rescind WIA funds, transfers between funding streams will not be approved.

If at any step the amount to be rescinded from local areas exceeds the rescission, the local amount will be adjusted proportionally to the amount needed to be taken back. Please see the rescission examples in Attachments A and B.

The tiered process for the rescission is described below:

1.The first step in the rescission process of WIA funds will take place at the state level and will include only statewide funds. All available funds intended for statewide projects and other state activities will be reviewed first. At this point the state will assess the funds that could be rescinded without seriously affecting critical services.

2.The second step in the rescission process will involve voluntary de-obligation of funds from WIBs. The voluntarily returned funds will be those funds that WIBs cannot reasonably expect to expend. The level of rescission will be determined by the WIB and will be reported to the state.

3.The third step in the rescission process will be based on the expenditure rate of the funding stream subject to rescission. Areas with an expenditure rate of seventy percent of these funds or greater will be held harmless for at least ninety percent. When less than seventy percent of these funds have been expended, the hold-harmless rate will be at least seventy-five percent. The expenditure rate will be pro-rated based upon the timing of the rescission as follows:

70% Expenditure Rate Adjustment Factor
1st Quarter Funds25% x 70% = 17.5%
2nd Quarter Funds50% x 70% = 35.0%
3rd Quarter Funds75% x 70% = 53.0%
4th-8th Quarter Funds100% x 70% = 70.0%

4.The fourth step in this process will involve across the board rescissions. The cuts from each area will be based on the balance of funds after step 3 and each area's share (percentage) of allocation of the funds identified in the rescission. This final step will be used only if it is necessary to cover any remainder of funds that are needed to comply with the USDOL rescission.

In the event that the rescission will affect the service delivery in the local one-stop system, or a WIA partner contribution to the one stop system, an amended business plan may need to be submitted for state approval.

Definitions

Accrued expenditures are the charges incurred by the grantee during a given period requiring the provision of funds for (1) goods and other tangible property received; (2) services performed by employees, contractors, subgrantees, subcontractors, and other payees; and (3) other amounts becoming owed (by the grantee) under programs for which no current services or performance is required, such as annuities, insurance claims, and other benefit payments. [29 CFR 97.3]

The expenditure rate is amount of funds that are expended by a local area and its subgrantees when compared to the total allocation. The expenditure rate is expressed as a percentage of the total allocation.

V.Technical Assistance

For additional information, you may send your questions to the Bureau of Workforce Services: wiaqna@odjfs.state.oh.us.

VI.References

DOL, Training and Employment Guidance Letter 22-05, March 30, 2006.

DOL, Training and Employment Guidance Letter 25-05, April 11, 2006.

DOL, Training and Employment Guidance Letter 35-05, June 13, 2006.

DOL, Training and Employment Guidance Letter 25-05 Change 1, August 10, 2006.

WIA, 20 Code of Federal Regulations, Final Rules, August 11, 2000, Section 667.150.

Workforce Investment Act (WIA) of 1998, Public Law 105-220, August 7,1998, Sections: 132(c),127(c).

Attachment A

Example of a WIA funding rescission scenario through step 3 and proportional adjustment

Click here to view the Example of a WIA funding rescission scenario through step 3 and proportional adjustment

Attachment B

Example of a WIA funding rescission scenario using all 4 steps

Click here to view the WIA funding rescission scenario using all 4 steps