I.Purpose

To clarify the reporting requirements for Individual Training Account (ITA) obligations.

II.Effective Date

Immediately.

III.Background

Training and Employment Guidance Letter No 16-99, Change 1 was issued by the United States Department of Labor (USDOL) to provide clarification for WIA financial reporting. In this guidance, USDOL defined "Unliquidated Obligation" as an obligation incurred against local area funds, for which an outlay (accrued expenditure) has not yet been recorded in the local entities' official accounting records. This amount should include the unexpended portion of awards to subgrantees and contractors. In addition, "Total Obligations" are defined as the sum of net outlays and the unliquidated obligations. Total obligations should include the aggregate of legal commitments made by local grant recipients to pay for future program activities. Legal commitments made by local grant recipients are considered an obligation at the local level at the time of the legal execution of applicable agreement(s).

For reporting purposes, the term "Unliquidated Obligation" is referred to as an "Obligation," and is defined in the WIA regulations (20 CFR 660.300) as "amounts of orders placed, contracts and subgrants awarded, goods and services received, and similar transactions during a funding period that will require payment by the recipient or subrecipient during the same or a future period."

The timing of the reporting of obligations for ITAs has been subject to much discussion in local areas, and this guidance provides additional explanation of when and what to report as obligations for ITAs.

IV.Guidance Statement

As of the effective date of this guidance, the following guidelines apply:

A.ITAs must be obligated at the time when a participant is enrolled in a training program, not when an ITA is established or approved. The planning and/or approval of training activities alone do not constitute an obligation, the individual must be enrolled in a training program for an obligation to be reported. As an example, enrollment can occur when a participant agrees to attend a specific training program (as defined in 20 CFR 663.508), and the school has accepted the enrollment application and signed off on the ITA.

B.ITAs may be obligated for the costs that will be incurred during the training program. However, if the training period exceeds two years, only that portion of the costs to be paid in the two-year period can be reported as an obligation. Thus, for multiple-year ITAs, obligations may only be reported for up to 24 months of training.

C.Local areas may impose additional requirements for reporting of ITA obligations, and must also comply with all local regulations and practices.

D.Local areas are advised to enter into a contract with training providers in order to set the terms, conditions, duration and payment responsibility for the ITA.

E.The oldest funds should be obligated and expended first.

Additional Considerations

Appropriate fiscal management practices will be especially important for areas that will report ITA obligations for a full two-year training period. In order to ensure the most effective use of training funds, local areas are advised to analyze past training completion and drop-out rates so as to determine the acceptable level of over obligation, and to regularly deobligate funds when individuals drop out or do not complete the training program. Deobligation of funds will allow training to be available to other WIA participants. With proper deobligation practices, local areas can avoid situations where funds are under-spent due to individuals leaving the training prior to completion.

V.Technical Assistance

For additional information, you may send your questions to the Bureau of Employer Services-WIA: WIAQNA@JFS.OHIO.GOV.

VI.References

USDOL, Training and Employment Guidance Letter No. 16-99, Change 1, Workforce Investment Act Financial Reporting, November 6, 2002

WIA, 20 Code of Federal Regulations, Final Rules, August 11, 2000, Sections 660.300, 663.508

Workforce Investment Act (WIA) of 1998, Public Law 105-220, August 7,1998