I.Purpose

This communication provides guidance on the waiver authority to use adult and dislocated worker formula funds for an incumbent worker-training program. WIA administrative entities should convey this guidance to subrecipients and other entities that provide WIA activities.

II.Effective Date

July 1, 2005 through June 30, 2007

III.Background

The Workforce Investment Act, Public Law 105-220, dated August 7, 1998, Section 134 (a) (3) (A) (iv) (I) allows the use of statewide and Rapid Response funds for incumbent worker training (IWT) programs. WIA, 20 Code of Federal Regulations, Section 663.145 does not include authority for a local Workforce Investment Board (WIB) to use adult, dislocated worker and youth local formula fund allocations for an IWT program.

On July 25, 2005, the U.S. Department of Labor (DOL) granted Ohio a waiver to permit a local Workforce Investment Board (WIB) to request to use up to 10% of adult and dislocated worker formula funds to provide statewide employment and training activities identified in WIA Section 134.

IV.Guidance Statements

A.Goals

A WIB should keep in mind the following goals when designing and implementing an incumbent worker-training program.

• Allowing local area flexibility to offer incumbent worker services and enhancing services to businesses
• Increasing flexibility to engage and work with business improving skills of the employer's workforce
• Assisting employers in averting layoffs
• Improving employer satisfaction
• Helping workers continue their skill building and maximizing their potential
• Raising skill level of workers so that it leads to promotion of the workforce, providing a career progression that opens entry level positions to others
• Increasing retention in employment
• Increasing individuals' wages

B.Program Design

Even though DOL approved the waiver to allow up to 10% of adult and dislocated worker local formula funds to provide statewide employment and training activities identified in WIA Section 134, the state has restricted this waiver authority prohibiting other statewide activities using local formula funds, except for incumbent worker training.

A WIB has the discretion to request permission to use this waiver. If permission is granted by the state, the WIB may implement an incumbent worker-training program under this waiver. A WIB must determine the level of funding, up to 10% of their adult and dislocated worker formula funds, to provide only incumbent worker training services. Adult and dislocated worker funds appropriated for Program Years 2004, 2005, and 2006 may be used to fund an incumbent worker-training program.

Youth funds cannot be used for incumbent worker training under the Workforce Investment Act.

WIA general eligibility requirements, such as selective service and citizenship, apply to participants receiving incumbent worker training services under this waiver.

WIA incumbent worker training funds cannot be used for encouragement or inducement of a business. WIA incumbent worker training funds cannot be used to relocate a business or part of a business from any location in the United States, if the relocation results in any employee losing his or her job at the original location.

This guidance does not prescribe the local process for implementing incumbent worker services but encourages a WIB to tailor a program and process to meet the needs of your local area and customers. If a WIB chooses to offer incumbent worker services, you must set criteria to select employers and/or incumbent workers and define your local program requirements and application process.

An employer or employer association in conjunction with the administrative entity may design and implement an incumbent worker-training program. The administrative entity may also arrange incumbent worker training for an individual or group of individuals.

An administrative entity can arrange training using on-the-job training (OJT) and customized training contracts and an individual training account (ITA), or a combination of these training approaches. When the administrative entity arranges the training on behalf of an individual or group of individuals, consider customer choice. You must use the State Eligible Training Provider (ETP) list with an ITA. However, you may enter into a contract for services, rather than using an ITA, if there is an insufficient number of eligible training providers on the ETP list to conduct the proposed training.

As with other types of training, you must complete an Individual Employment Plan (IEP) for an incumbent worker participant identifying the individual's skill level, needs, and outcomes.

When a WIB designs an incumbent worker-training program, items to consider include, but are not limited to:

Business considerations:

• demonstrated financial viability
• commitment to the regional economy
• current on state tax obligations and environmental issues
• other sources of funds to support the training
• no federal or state debarment or suspension

Industry and training considerations:

• demonstrated skill shortages
• significant closure and/or layoff avoidance strategy
• high skill occupations leading to enhanced career pathways for employees
• portable, transferable, recognized industry or sector credentials for employees

Training services considerations:

• community colleges, school districts, area vocational-technical centers, state universities, licensed and certified private institutions, and other training institutions on the Eligible Training Provider (ETP) list
• business owned facility, training provider's facility or combination of sites
• full or part-time educators, professional trainers from the business community including staff from the employer applying for funds

C.Program Authority and Fund Request Process

A WIB may request to use Program Year 2004, Fiscal Year 2005, Program 2005 and Fiscal Year 2006 adult and dislocated worker formula funds for the incumbent worker-training program from July 1, 2005 through June 30, 2006.

A WIB may request to use Program Year 2006 and Fiscal Year 2007 funds for the incumbent worker-training program from July 1, 2006 to June 30, 2007.

A WIB may request the incumbent worker waiver at any time during the program year (July 1st - June 30^th), but is limited to such request oncea program year. A fiscal agent may request to draw cash throughout the program year from the Office of Fiscal Services.

The last page of this guidance letter is a sample letter showing a request to use adult and dislocated worker funds for a local incumbent worker-training program.

D.Fiscal and Program Reporting

Funds contracted to a subrecipient or vendor for an incumbent worker-training program are reported as program cost.

The fiscal agent must track funds used for incumbent worker training by funding stream and by the year of appropriation.

The administrative cost limit remains in effect. No separate amount may be set-aside for administration of the incumbent worker-training program. Because administrative dollars are combined for the adult and dislocated worker funding streams, you do not need to identify administrative costs for the incumbent worker program separately.

However, if you contract funds to a subrecipient or vendor for the sole purpose of performing general administrative functions, such as payroll, accounting budgeting, cash management, for the incumbent worker-training program, those costs must be reported as administrative.

Because the request is not a transfer of funds, the fiscal agent will report incumbent worker expenditures using the incumbent worker code established by the Office of Fiscal Services. Coding will exist for both the adult and dislocated worker programs. The accrued expenditures charged to the incumbent worker code for the adult and dislocated worker programs must not exceed the amount authorized for the incumbent worker-training program. Costs reported against the incumbent worker-training program will be monitored.

Funds that are not used for the incumbent worker-training program may be expended on the adult and dislocated worker programs for program activities authorized by WIA respectively for those two programs.

The administrative entity will report incumbent worker trainees, incumbent worker activity, and outcomes under this waiver in the Sharing Career Opportunities and Training Information (SCOTI) client tracking system. Incumbent worker trainees in an incumbent worker-training program under this waiver are not subject to the WIA Performance Measures. Under this waiver co-enrollment is not permissible.

For evaluation of the incumbent worker-training program, outcomes to report include the following: remained with same employer, employed with different employer, skills upgrade, wage increase, did not complete program and other non-positive.

E.Definitions

For the purpose of this waiver, the following definitions apply.

Economic Development Activities

Economic development is any activity of regulating, promoting or assisting in relocation, expansion or development of business in a local area. (Defined by ODJFS)

Employed Worker

An employed worker is an individual who is employed, but earns a wage that has been determined below the self-sufficiency standard set by a WIB of a local workforce investment area. (WIA Federal Regulations, Subpart B, Section 663.220)

Employment Generating Activities

Employment generating activities are activities undertaken with grant funds for the sole purpose of generating employment.

Activities undertaken that directly benefit a WIA participant are not considered employment generating even though employment may be the end result of the activity. Activities not considered employment generating may include, but are not limited to:

• promoting the use of first source hiring agreements;
• vouchering services in support of enterprise zone efforts;
• marketing of services available through WIA with local economic development practitioners;
• advertising to industry clusters that match skill sets of WIA participants; and
• active participation with local business resource centers to provide technical assistance to small and new businesses to reduce the rate of business failure. (Defined by ODJFS)

Incumbent Worker

An incumbent worker is an individual who is employed, but earns a wage that is at or above the self-sufficiency standard set by a WIB of a local workforce investment area. (Defined by ODJFS)

Incumbent Worker Training Program

Incumbent worker training is generally developed with an employer or employer association to upgrade skills training of a particular workforce. The training usually takes place in the workforce or after work hours for employees of a specific employer or employer association. This training may include the establishment and implementation of an employer loan program to assist in skills upgrading. [WIA Section 134(a) (3) (A) (iv) (I), Federal Regulations, Subpart B, Subsection 665.210(d) (1) and 665.220]

F.Allowable Costs for Incumbent Worker Training Program

Allowable costs may include but are not limited to:

• instructors/trainers' salaries;
• curriculum development, textbooks/manuals, materials and supplies; and
• trainee wages when employees are not participating in economic development activities.

G.Unallowable Costs for Incumbent Worker Training Program

Unallowable costs include but are not limited to:

• normal employer payroll
• wages of incumbent employees during their participation in economic development activities
• employment generating activities
• economic development activities
• investment in revolving loan funds
• capitalization of businesses
• investment in contract bidding resource center
• activities that are not directly related to training for eligible individuals under Title I
• foreign travel
• purchase of capital equipment

H.Approval Process

The fiscal agent's authorized representative must sign and submit a letter (mail or fax) to:

Ohio Department of Job and Family Services

Office of Workforce Development

Bureau of Workforce Services

145 S. Front Street, 4^th floor

Columbus, OH 43215

Fax: (614) 738-5938

The letter must include:

• allocation for the funding stream
• dollar amount for incumbent worker services assignable by funding stream (adult and/or dislocated worker) and year of appropriation (such as program year and fiscal year);
• a statement that the WIB approved the request; and
• email address of fiscal agent authorized representative.

Within 15 business days, the Bureau of Workforce Services will notify the fiscal agent and/or administrative entity of the approval by email.

V.Technical Assistance

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

VI.Reference

Workforce Investment Act (WIA) of 1998, Public Law 105-220, August 7, 1998, Sections 129(b), 134, 181(e) and 189 (i) (4) (B);

WIA, 20 Code of Federal Regulations, Final Rules, August 11, 2000, Sections 661.400, 661.420(c) and (e), 663.245, 663.145, 665.220, 667.220, 667.262 and 667.264;

DOL Training and Employment Guidance Letter (TEGL) 14-00, Change 1, November 19, 2001;

Waiver Request Plan, May 9, 2005; and

U.S. DOL waiver approval letter, July 25, 2005

Sample Request Letter

Your Agency Letter Head

Date

Ohio Department of Job and Family Services

Office of Workforce Development

Bureau of Workforce Services

145 S. Front Street, 4^th Floor

Columbus, OH 43215

RE: Incumbent Worker Training Fund Request

Dear:

Local Workforce Investment Area # requests approval to use the following funds and amounts for an incumbent worker-training program under the waiver. The local Workforce Investment Board (WIB) approved this request on (date). The fiscal agent representative submitted this request.

You may email me at (email address). You may call me at (telephone #) if you have questions.

Sincerely,

Fiscal Agent Representative