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Workforce Investment Act; Interim Final Rule [04/15/99]

[PDF Version]

Volume 64, Number 72, Page 18661-18710

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Part II





Department of Labor





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Employment and Training Administration



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20 CFR Part 652, et al.



Workforce Investment Act; Interim Final Rule


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DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Part 652 and Parts 660 through 671

RIN 1205-AB20

 
Workforce Investment Act

AGENCY: Employment and Training Administration (ETA), Labor.

ACTION: Interim Final Rule; request for comments.

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SUMMARY: The Department of Labor (DOL) is issuing an Interim Final Rule 
implementing provisions of titles I, III and V of the Workforce 
Investment Act. Through these regulations, the Department implements 
the first major reform of the nation's job training system in more than 
15 years. Key components of this reform include streamlining services 
through a One-Stop service delivery, empowering individuals through 
information and access to training resources through Individual 
Training Accounts, providing universal access to core services, 
increasing accountability for results, ensuring a strong role for Local 
Boards and the private sector in the workforce investment system, 
facilitating State and local flexibility, and improving youth programs.

DATES: This Interim Final Rule will become effective on May 17, 1999.
    Comment Period: Comments must be submitted by July 14, 1999. The 
Department cannot guarantee that comments received after this date will 
be considered. Comments that are less than 10 pages in length may be 
transmitted via a facsimile at (202) 219-0323 provided that submission 
of written text follows. Commenters wishing acknowledgment of receipt 
of their comments must submit them by certified mail, return receipt 
requested. Also, comments may be sent electronically using the Internet 
web page at http://usworkforce.org.

ADDRESSES: Submit written comments to the Employment and Training 
Administration, Workforce Investment Act Implementation Taskforce, 200 
Constitution Avenue, NW, Room S5513, Washington, DC 20210, Attention: 
Eric Johnson.
    All comments will be available for public inspection and copying 
during normal business hours at the Employment and Training 
Administration, Workforce Investment Act Implementation Taskforce, 200 
Constitution Avenue, NW, Room S5513, Washington, DC 20210. Copies of 
the Interim Final Rule are available in alternate formats of large 
print and electronic file on computer disk, which may be obtained at 
the above-stated address. The Interim Final Rule is also available on 
the WIA website at http://usworkforce.org
    In compliance with 28 U.S.C. 2112(a), the Employment and Training 
Administration designates the Associate Solicitor for Employment and 
Training Services, Office of the Solicitor, U.S. Department of Labor, 
200 Constitution Avenue, NW, Room N-2101, Washington, DC 20210, as the 
recipient of petitions to review this Interim Final Rule.

FOR FURTHER INFORMATION CONTACT: Mr. Eric Johnson, Workforce Investment 
Act Implementation Taskforce Office, U.S. Department of Labor, 200 
Constitution Avenue, NW, Room S5513, Washington, DC 20210, Telephone: 
(202) 219-0316 (voice) (this is not a toll-free number) or 1-800-326-
2577 (TDD).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

    Certain sections of this Interim Final Rule, such as Secs. 667.300, 
667.900, 668.800, and 669.570 contain information collection 
requirements. As required by the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)), the Department of Labor has submitted a copy of these 
sections to the Office of Management and Budget for its review. 
Comments must be submitted by May 17, 1999 to: Desk Officer for the 
Department of Labor, Employment Training Administration, Office of 
Management and Budget, 725 17th Street, NW (Rm 10235), Washington DC 
20503. Affected parties do not have to comply with the information 
collection requirements in this document until DOL publishes in the 
Federal Register the control numbers assigned by the Office of 
Management and Budget (OMB). Publication of the control numbers 
notifies the public that OMB has approved this information collection 
requirement under the Paperwork Reduction Act of 1995. An OMB control 
number (1205-0398) was issued for the WIA state planning guidance 
authorized under 20 CFR 661.220, and published at 64 FR 9402 (Feb. 25, 
1999).

I. Background

A. WIA Principles

    On August 7, 1998, President Clinton signed the Workforce 
Investment Act of 1998 (WIA), comprehensive reform legislation that 
supersedes the Job Training Partnership Act (JTPA) and amends the 
Wagner-Peyser Act. The WIA also contains the Adult Education and Family 
Literacy Act (title II) and the Rehabilitation Act Amendments of 1998 
(title IV). Guidance or regulations implementing titles II and IV will 
be issued by the Department of Education.
    The WIA reforms Federal job training programs and creates a new, 
comprehensive workforce investment system. The reformed system is 
intended to be customer-focused, to help Americans access the tools 
they need to manage their careers through information and high quality 
services, and to help U.S. companies find skilled workers.
    This new law embodies seven key principles. They are:
    <bullet> Streamlining services through better integration at the 
street level in the One-Stop delivery system. Programs and providers 
will co-locate, coordinate and integrate activities and information, so 
that the system as a whole is coherent and accessible for individuals 
and businesses alike.
    <bullet> Empowering individuals in several ways. First, eligible 
adults are given financial power to use Individual Training Accounts 
(ITA's) at qualified institutions. These ITA's supplement financial aid 
already available through other sources, or, if no other financial aid 
is available, they may pay for all the costs of training. Second, 
individuals are empowered with greater levels of information and 
guidance, through a system of consumer reports providing key 
information on the performance outcomes of training and education 
providers. Third, individuals are empowered through the advice, 
guidance, and support available through the One-Stop system, and the 
activities of One-Stop partners.
    <bullet> Universal access. Any individual will have access to the 
One-Stop system and to core employment-related services. Information 
about job vacancies, career options, student financial aid, relevant 
employment trends, and instruction on how to conduct a job search, 
write a resume, or interview with an employer is available to any job 
seeker in the U.S., or anyone who wants to advance his or her career.
    <bullet> Increased accountability. The goal of the Act is to 
increase employment, retention, and earnings of participants, and in 
doing so, improve the quality of the workforce to sustain economic 
growth, enhance productivity and competitiveness, and reduce welfare 
dependency. Consistent with this goal, the Act identifies core 
indicators of performance that State and local entities managing the 
workforce investment system must meet--or suffer sanctions. However, 
State and local entities

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exceeding the performance levels can receive incentive funds. Training 
providers and their programs also have to demonstrate successful 
performance to remain eligible to receive funds under the Act. And 
participants, with their ITA's, have the opportunity to make training 
choices based on program outcomes. To survive in the market, training 
providers must make accountability for performance and customer 
satisfaction a top priority.
    <bullet> Strong role for local workforce investment boards and the 
private sector, with local, business-led boards acting as ``boards of 
directors,'' focusing on strategic planning, policy development and 
oversight of the local workforce investment system. Business and labor 
have an immediate and direct stake in the quality of the workforce 
investment system. Their active involvement is critical to the 
provision of essential data on what skills are in demand, what jobs are 
available, what career fields are expanding, and the identification and 
development of programs that best meet local employer needs. Highly 
successful private industry councils under JTPA exhibit these 
characteristics now. Under WIA, this will become the norm.
    <bullet> State and local flexibility. States and localities have 
increased flexibility, with significant authority reserved for the 
Governor and chief elected officials, to build on existing reforms in 
order to implement innovative and comprehensive workforce investment 
systems tailored to meet the particular needs of local and regional 
labor markets.
    <bullet> Improved youth programs linked more closely to local labor 
market needs and community youth programs and services, and with strong 
connections between academic and occupational learning. Youth programs 
include activities that promote youth development and citizenship, such 
as leadership development through voluntary community service 
opportunities; adult mentoring and followup; and targeted opportunities 
for youth living in high poverty areas.
    Many States and local areas have already taken great strides in 
implementing these principles, supported by grants from the Department 
of Labor to build One-Stop service delivery systems and school-to-work 
transition systems. The Act builds on these reforms and ensures that 
they will be available throughout the country.
    The Department wishes to emphasize that it considers the reforms 
embodied in the Workforce Investment Act to be pivotal, and not 
``business as usual.'' This legislation provides unprecedented 
opportunity for major reforms that can result in a reinvigorated, 
integrated workforce investment system. States and local communities, 
together with business, labor, community-based organizations, 
educational institutions, and other partners, must seize this historic 
opportunity by thinking expansively as they design a customer-focused, 
comprehensive delivery system.
    The success of the reformed workforce investment system is 
dependent on the development of true partnerships and honest 
collaboration at all levels and among all stakeholders. While the 
Workforce Investment Act and these regulations assign specific roles 
and responsibilities to specific entities, for the system to realize 
its potential necessitates moving beyond current categorical 
configurations and institutional interests. Also, it is imperative that 
input is received from all stakeholders and the public at each stage of 
the development of State and local workforce investment systems.
    The cornerstone of the new workforce investment system is One-Stop 
service delivery which unifies numerous training, education and 
employment programs into a single, customer-friendly system in each 
community. The underlying notion of One-Stop is the coordination of 
programs, services and governance structures so that the customer has 
access to a seamless system of workforce investment services. It is 
envisioned that a variety of programs could use common intake, case 
management and job development systems in order to take full advantage 
of the One-Stops' potential for efficiency and effectiveness. A wide 
range of services from a variety of training and employment programs 
will be available to meet the needs of employers and job seekers. The 
challenge in making One-Stop live up to its potential is to make sure 
that the State and Local Boards can effectively coordinate and 
collaborate with the network of other service agencies, including TANF 
agencies, transportation agencies and providers, metropolitan planning 
organizations, child care agencies, nonprofit and community partners, 
and the broad range of partners who work with youth.

B. Early Implementation

    Many States have expressed interest in which features of WIA may be 
phased-in after approval of the State workforce investment plan, and 
how long they will have before they must be in full compliance.
    <bullet> The planning guidance (which was published in the Federal 
Register on February 25, 1999) and regulations specify that States may 
submit a State workforce investment plan to the Department for approval 
at any time between April 1, 1999 and April 1, 2000. For those States 
that plan to transition to WIA prior to July 1, 2000, and do not have 
all policies, procedures and systems fully developed, the State may 
submit a Transition Plan that outlines when the State expects to have 
each of the WIA components (for example, the One-Stop system, or the 
Individual Training Account system) fully operational. All components 
must be in place by July 1, 2000. Under this option, the Department 
will conditionally approve the State workforce investment plan. The 
State workforce investment plan will be fully approved once all of the 
WIA components are in place. This option provides some flexibility for 
early implementing States, while ensuring that full implementation is 
completed for all States by July 1, 2000.
    <bullet> States and local areas may use the current waiver 
authority and allowable activities under JTPA, to plan for and 
implement WIA reforms. Activities that are allowable during this phase 
include: (1) Strategic planning; (2) establishment of State and local 
workforce investment boards; (3) consultation with One-Stop partners; 
(4) establishment of ITA systems; and (5) establishment of consumer 
report systems.
    <bullet> Because JTPA title II youth funds are available for 
obligation on April 1, 1999, the Calendar Year 1999 Summer Youth 
Employment and Training Program, and JTPA title II-C youth program 
allocations have been made and are to be allocated by States to local 
areas under the JTPA rules. The Department will issue transition 
guidance which will provide further direction and specification.
    <bullet> A 90 percent hold harmless provision for within-State 
allocations for the youth and adult funding streams, that is based on 
allocations in the first two years of WIA operation, becomes effective 
in the third year a State operates under WIA. Structured to facilitate 
creation of new local areas by freeing States from allocation formulas 
established under JTPA, there is no hold harmless provision effective 
in the first two years of a state's WIA implementation that would cover 
the transition period from JTPA. The lack of a hold harmless provision 
during this period could result in some instability during the early 
stages of WIA implementation. However, Governors do have options 
available to promote stability. For program year 1999 only, the 
Governor may elect to utilize the

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JTPA hold harmless provision. However, in doing so, the two year hold 
harmless is delayed for one year. Therefore, if a State elects to use 
this option, the two year hold harmless would apply for PY 2000 and 
2001 unless Congress decides to address this area with a technical 
amendment. Also, Governors may use some of their 15 percent State 
reserve funds to assist local areas that are negatively impacted by the 
WIA funding formulas, or choose to adopt an adult or youth within-State 
allocation formula that incorporates additional targeting factors, 
provided for in sections 128 and 133 of WIA.

C. Rule Format

    The format, as well as the substance, of the Interim Final Rule, 
reflects the Administration's commitment to regulatory reform and to 
writing regulations that are reader-friendly. The Department has 
attempted to make these regulations clear and easy to understand, as 
well as to anticipate issues that may arise and to provide appropriate 
direction. To this end, the regulatory text is presented in a 
``question and answer'' format. The Department has organized the 
regulations in a way that will help those who must implement the new 
system to recognize the various steps they must take as they develop 
the organization and services that make up the workforce investment 
system. In many cases, the provisions of WIA are not repeated in these 
regulations. As requested by some interested parties, however, in a 
number of instances, it was determined that the regulations would 
provide context and be more reader-friendly if the Act's provisions 
were included in an answer rather than merely cross-referencing the 
statute.
    Section 506(c)(1) of the Act requires the Secretary of Labor to 
issue this Interim Final Rule implementing provisions of the WIA under 
the Department's purview within 180 days of enactment. WIA also 
requires that final regulations be published by December 31, 1999. 
Under Secretary of Labor's Order No. 4-75, the Assistant Secretary for 
Employment and Training has been delegated the responsibility to carry 
out WIA policies, programs, and activities for the Secretary of Labor.
    Given the short time frame imposed, the Department has employed a 
variety of means to initiate extensive coordination with other Federal 
agencies that have roles and responsibilities under the Workforce 
Investment Act. In addition, the Department of Labor, the Department of 
Education, the Department of Health and Human Services, the Department 
of Transportation, and the Department of Housing and Urban Development 
continue to meet on a regular basis to resolve issues surrounding the 
development of the Interim Final Rule and WIA implementation.
    The Department also requested and received input from a broad range 
of sources regarding guidance on how to comply with a number of WIA 
statutory provisions. The Department solicited broad input on WIA 
implementation through a variety of mechanisms: establishing a website 
to encourage input; publishing a Federal Register notice on September 
15, 1998, conducting regional and national panel discussions in October 
1998; publishing a White Paper announcing goals and principles 
governing implementation; posting issues on the usworkforce.org 
website; sharing a discussion draft of regulatory issues with 
stakeholders; holding town hall meetings across the country in December 
1998; conducting several workgroups in December 1998; and issuing draft 
Planning Guidance in December 1998.
    A number of the suggestions received are discussed in the Summary 
and Explanation of the individual provisions of the Interim Final Rule. 
However, because of the large volume of suggestions received and the 
short time allowed for preparation of the regulations, as well as the 
fact that suggestions continue to be received, it was not possible to 
address each one. Where input has not been addressed, it will be 
considered along with comments on the Interim Final Rule before 
publication of the Final Rule. Also, the Department will ensure that 
there are other opportunities for public input and dialogue on the 
important issues surrounding implementation of the Workforce Investment 
Act prior to the publication of the Final Rule.
    The Department has determined that this Interim Final Rule, as 
promulgated, complies with the WIA statutory mandate and provides 
effective direction for the implementation of WIA programs. ETA will 
review all comments received in the development of and response to the 
Interim Final Rule, as well as the experience of early implementing 
States, in considering what further action is necessary in promulgating 
a Final Rule.

II. Summary and Explanation

    This section describes and explains the specific provisions of the 
Interim Final Rule. The explanatory text, in general, adheres closely 
to the corresponding WIA statutory and regulatory language. A 
supporting rationale is provided in those instances where the Rule 
promulgates specific provisions to fulfill the requirements of the WIA 
statute.
    The Department has set regulations only where they are necessary to 
clarify or to explain how the Department intends to interpret the WIA 
statute, to provide context for interpretations or to provide a clear 
statement of the Act's requirements. In several instances--for example, 
the Indian and Native American Programs, and Migrant and Seasonal 
Farmworker Programs--the regulations were developed in consultation 
with advisory councils and are more comprehensive in order to assist 
those grantees. Consistent with the Act, the Interim Final Rule 
provides the States and local governments with the primary 
responsibility to initiate and develop program implementation 
procedures and policy guidance regarding WIA administration. The 
Department has not defined what constitutes many of the activities 
under the Act in order to provide policy-making flexibility to States 
and local areas. Section 661.120 formalizes this flexibility in the 
regulations.

Description of Regulatory Provisions

    The Rule adds 12 new parts to the Code of Federal Regulations, and 
a new subpart to the existing Wagner-Peyser Act regulations. Parts 660-
672 are organized by subject matter; for example, 661 describes State 
and local system design, 667 contains administrative requirements 
applicable to WIA title I funds, and 669 describes requirements 
particularly applicable to Migrant and Seasonal Farmworker programs. 
This discussion section follows that organizational structure.

Part 660--Introduction to the Regulations for the Workforce 
Investment Systems Under Title I of the Workforce Investment Act

    Part 660 discusses the purpose of title I of the Workforce 
Investment Act, explains the format of the regulations governing title 
I, and provides definitions which are not found in the Act. Sections 
101, 142, 166(b), 167(h) 301 and 502 of the Act contain additional 
definitions. Among the regulatory definitions, the Department has 
defined the term ``register'' in order to clarify that programs do not 
need to register participants until they receive a core service beyond 
those that are self-service or informational. This point in time also 
corresponds to the point when the EEO data must be collected, when the 
eligibility definition begins, and when the participants are counted 
for performance measurement purposes.

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Part 661--Statewide and Local Governance of the Workforce 
Investment System Under Title I of the Workforce Investment Act

Introduction

    This part covers the critical underpinnings of how the workforce 
investment system is organized under WIA at the State and local levels. 
Specifically, it consists of four subparts--General Governance, State 
Governance, Local Governance Provisions and Waiver Provisions. The 
General Governance subpart broadly describes the WIA system and sets 
forth the roles of the governmental partners. The State and local 
subparts cover the State and local workforce investment boards and the 
designation process, including alternative entities, and the planning 
requirements. The waiver subpart discusses the processes for obtaining 
general and work-flex waivers.

Subpart A--General Governance Provisions

    1. Subpart A describes the workforce investment system, and sets 
forth the roles of the government partners in the system: the Federal 
government, State governments and local governments. The workforce 
investment system is the method of delivery of workforce investment 
activities to individuals under title I of WIA, and is composed of 
State and local workforce investment boards, local workforce investment 
areas, and the One-Stop system. Through the One-Stop system, the 
workforce investment system is a gateway to a wide variety of 
employment, training, educational and other human resource programs. In 
the Department's view, close cooperation and coordination among the 
Federal, State and local government partners are essential to the 
system's success in providing services to those who need them. Sections 
661.110 and 661.120, describe, in general terms, the roles of the 
government partners. The Department sees one of its roles as Federal 
partner as providing leadership, guidance and support to the system, so 
that State and local governmental partners can better respond to the 
needs of customers. To that end, the WIA regulations are intended to 
provide a framework in which States and local partners may design 
systems and deliver services in ways that best achieve the goals of WIA 
based on particular need. Thus, whenever possible, items such as design 
options and categories of service are not narrowly defined in the 
regulations. Section 660.120 provides authority to State and local 
governments to establish their own policies, interpretations, 
guidelines and definitions relating to program operations under title 
I, as long as they are not inconsistent with WIA or the regulations, 
and, in the case of local governments, not inconsistent with State 
policies. To assist with such interpretations, the Department, with the 
participation of other Federal agencies, as appropriate, will issue 
technical assistance guidance to help States and localities interpret 
WIA and the regulations. Such guidance is not intended to limit State 
flexibility, but rather is intended to provide helpful models on which 
States and local governments can rely to ensure that their own 
interpretations are not inconsistent with the Act and regulations.

Subpart B--State Governance Provisions

    1. State Workforce Investment Board: Sections 661.200--661.210 
describe the membership requirements and responsibilities of the State 
Workforce Investment Board (State Board) and procedures regarding 
designation of an alternative entity to perform the functions of the 
State Board. The role of the State Board is to assist the Governor in 
the development of the State workforce investment plan (State Plan) and 
to carry out the additional functions described in WIA section 111(d). 
Section 661.200 describes the membership requirements of the State 
Board. This section clarifies that State Boards must contain two or 
more members from each of the representative categories described in 
sections 111(b)(1)(C)(iii)-(v) of WIA. These categories are labor 
organizations, individuals and organizations that have experience with 
youth activities, and individuals and organizations that have 
experience and expertise in the delivery of workforce investment 
activities. The Rule requires that, in appointing representatives with 
experience in workforce investment activities, special consideration be 
given to chief executive officers of community colleges and community-
based organizations in the State. The Department acknowledges the 
special expertise that the community college system brings to the 
workforce investment system. The Department foresees a strong role for 
community colleges across states and in local areas and encourages 
states and local areas to appoint presidents and executive officers of 
the state community college system and local community colleges to the 
State and Local Workforce Investment Boards. The Department also 
emphasizes the importance of including the director of the state agency 
responsible for TANF on the State Board, in order to foster linkages 
between WIA and TANF, and to facilitate participation of TANF in One-
Stop systems in the state.
    The Department also received suggestions concerning the 
representation of the State Vocational Rehabilitation Services program, 
a required One-Stop partner, on the State Board. Individuals with 
disabilities represent a large untapped potential workforce, and the 
workforce needs of this group is of significant importance to the 
Department and other Federal agencies. To signal the importance of this 
issue, the Presidential Taskforce on Employment of Adults with 
Disabilities was formed in 1998. In light of this emphasis on 
increasing the employment rate for individuals with disabilities as 
well as the complexity of the organizational requirements applicable to 
this program, the director of the designated State unit under section 
101(a)(2)(B)(ii)(II) of the Rehabilitation Act, if a State has such a 
unit, should be considered the lead State agency official with 
responsibility for the State's vocational rehabilitation program and, 
therefore, should serve on the State Board. In addition, a program 
operated by a State agency for the blind or by a designated State unit 
for the blind should be considered a separate program for purposes of 
appointing members to the State Board under WIA section 111. Among the 
contributions the unit head(s) would make as a member of the State 
Board is assisting in the development of the State performance 
measures. The expertise of the unit head(s) would be particularly 
useful since the Department, in coordination with the Department of 
Education, will be working on the development of an additional 
performance indicator focusing on individuals with disabilities that 
may be used by States under title I of WIA. The Department of Labor and 
the Department of Education will work with the States as they develop 
and implement their State plans to ensure the effective delivery of 
services under the WIA to individuals with disabilities. The Department 
will also be conducting a study of WIA implementation that will include 
a review of the manner and extent to which Vocational Rehabilitation 
programs are integrated in the workforce investment system, and how 
effectively the system serves individuals with disabilities.
    As discussed below, regarding local workforce investment board 
(Local Board) membership requirements, the

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Department received substantial input expressing concern that the 
statutory membership requirements relating to the State and local 
boards will lead to large, unmanageable State and Local Boards. In 
contrast, others thought larger boards would be better in representing 
a wider array of interests. The Department recognizes this concern, 
and, although constrained by the statutory requirements that each 
category of membership contain more than one representative and a 
business majority, the Department has avoided adding additional 
requirements relating to the number of members required. The Department 
believes that problems associated with large board size can be 
addressed in a number of ways, such as the use of committees. The 
Department will be providing technical assistance on creative 
approaches State and Local Boards may wish to consider in addressing 
this issue.
    2. Alternative Entities: The Department believes that changing from 
existing JTPA boards and councils to State Boards meeting the 
requirements of WIA section 111(b) is essential to the reforms of WIA. 
The Department encourages all States to create new, fully functional 
State Boards as early as possible, and is committed to providing 
assistance to States to make such changes. In order to accommodate 
States that have already begun to reform their boards prior to the 
enactment of WIA, the statute provides an option to use an existing 
entity to carry out the functions of the State Board. Section 661.210 
describes the requirements relating to the appointment of this 
alternative entity. Because of questions regarding the application of 
these requirements, paragraph (b) of Sec. 661.210 makes clear that an 
alternative entity must meet each of the three criteria set forth in 
WIA section 111(e). The three criteria are that the entity: (1) Was in 
existence on December 31, 1997; (2)(a) was established pursuant to 
section 122 or title VII of the Job Training Partnership Act, as in 
effect on December 31, 1997, or (b) is substantially similar to the 
State Board as described in subsections (a), (b), and (c) of WIA 
section 111; and (3) includes representatives of business in the state 
and representatives of labor organizations in the state. An entity 
which fails to meet any one of the criteria is not eligible to perform 
the functions of the State Board. A key requirement for an alternative 
entity that was not created under JTPA, is that it be substantially 
similar to the Boards required under WIA. The Department considered 
various ways to define the term ``substantially similar'' but, in the 
end, decided to leave the term undefined. All groups required for 
membership on Workforce Investment Boards are equally important and the 
Department sees alternative entities as a transitional phase during 
which states can operate until a new Board is appointed.
    While an alternative entity need not contain the identical 
membership structure required of State Boards, in the Department's view 
it is important that each of the groups listed in WIA section 111(b) 
have a role in the workforce investment system if the system is to be 
successful. Therefore, the Rule requires that if the Governor 
identifies an alternative entity, the State Plan must explain how the 
State will ensure the ongoing participation of any omitted membership 
groups in the functions of State workforce investment system. While 
this Rule does not mean that omitted groups must be seated on an 
alternative entity, it does require that the State Plan describe how 
these groups will have an opportunity for meaningful input into 
decisions made by the State Board.
    Paragraph (d) of Sec. 661.210 amplifies the requirement that an 
alternative entity must have been established by and in existence on 
December 31, 1997. Because of this requirement, modifications to the 
alternative entity are not allowed; a change to the membership 
structure after December 31, 1997 will invalidate the entity's 
eligibility as an alternative entity. The membership structure is not 
considered to be changed when an existing member leaves the board and a 
replacement member is appointed. However, the membership structure is 
considered to be changed when a change is made to the organizational 
structure of the State Board that requires a change (whether the change 
is formally made or not) in the State Board's charter or to a similar 
document that defines the organizational structure of the State Board, 
such as appointing members of a category not previously represented. In 
such a case, the entity would no longer be eligible to perform the 
functions of the State Board and a new entity, meeting all the 
requirements of section 111 of WIA must be created. This prevents 
piecemeal modification of alternative entities that would add certain 
section 111(b) membership categories but not others.
    3. State Workforce Investment Plan Requirements: Sections 661.220 
and 661.230, describe the requirements for submission, approval and 
modification of the State workforce investment plan. The State Plan 
must be submitted in accordance with planning guidelines to be issued 
by the Secretary, and must be developed through an open public comment 
process. The State Plan must document the timeline and the steps taken 
to ensure the opportunity for meaningful public comment. The Department 
intends that the information contained in the State Plan be subject to 
the broadest possible stakeholder involvement in policy development and 
the broadest possible range of public comment. The planning guidelines 
set forth the information needed for the Secretary to make an informed 
judgment as to whether a State Plan is consistent with WIA. The Rule 
restates the statutory language regarding the process for State Plan 
approval. All plans must be approved within 90 days unless the 
Secretary determines in writing that the State Plan is inconsistent 
with the provisions of title I of WIA and its implementing regulations 
or it does not satisfy the State Plan approval requirements of the 
Wagner-Peyser Act and its implementing regulations. This reflects 
changes made by the technical corrections added in the Omnibus 
Appropriations Act for FY 1999, which clarified that the State plan 
will not be approved if it fails to meet the requirements of either WIA 
or the Wagner-Peyser Act rather than only when it fails to meet both. 
Failure to have completed negotiations with the Secretary of Labor on 
performance measures means the plan is not consistent with title I of 
WIA. A state's failure to have an effective strategy in place to ensure 
the development of a fully operational One-Stop delivery system in the 
state also means the state plan is not consistent with WIA title I. An 
important part of this strategy is an impasse procedure designed to 
facilitate collaboration and coordination between One-Stop partners at 
the local level.
    4. State Plan Modifications: Section 661.230 provides the approval 
process for State Plan modifications. It clarifies that modifications 
may be made at any time during the life of the State Plan, and must be 
made upon certain conditions. Because the State Plan is a five year 
strategic plan and designed to be a living document, it is likely that 
assumptions based upon such things as State or Federal policy, economic 
conditions, performance goals, State and local organizational 
structures and/or State and local needs may change during the course of 
the State Plan. The provision for a five year State Plan was intended 
to reduce paperwork burdens on the States. Accordingly, only 
significant changes require a modification. Examples are: changes in 
performance indicators, changes in the

[[Page 18667]]

methodology used to determine local allocation of funds, or changes to 
the membership structure of the State Board or alternative entity. 
Modifications triggered by significant changes will be subject to the 
same review process as the original State Plan. While it is impossible 
to foresee all such changes that may occur during a five year period, 
through timely modifications of the State Plan, State strategies can 
continue to guide Local Board policy development. The Secretary must 
approve all State Plan modifications unless the disapproval criteria in 
Sec. 661.220 are met.
    5. Local Workforce Investment Area Designation Requirements: 
Sections 661.250 through 661.280 discuss the requirements applicable to 
the designation of local workforce investment areas. The Rule tracks 
the statutory language regarding the State Board recommendation and 
Governor's approval process for designation. It refers to the statutory 
provisions regarding automatic designation of areas with a population 
of 500,000 or more (that request designation) at section 116(a)(2) of 
WIA and temporary and subsequent designation of JTPA service delivery 
areas meeting certain performance criteria (that request designation) 
at section 116(a)(3) of WIA. The statute prohibits the Department from 
further regulating on the standards and criteria for temporary and 
subsequent designation and requires the Department to provide the 
States with technical assistance to make the designations. The 
regulations restate the statutory language regarding the rights of 
areas to appeal the denial of a request for automatic or temporary and 
subsequent designation as a local workforce investment area.
    6. Regional Planning Activities: Section 661.290 describes the 
circumstances in which the State may require Local Boards to take part 
in regional planning activities. This provision permits States to 
undertake methods to improve performance across area boundaries by 
requiring local areas to engage in a regional planning process to share 
employment-related information and to coordinate the provision of local 
services pursuant to that regional planning. The regulation follows the 
statutory language regarding the requirements for regional planning, 
and permits regional planning to occur across State boundaries. Section 
661.290 clarifies that Local Boards which are part of State-designated 
regional planning areas must participate in regional planning 
activities. However, to strike a balance, the regulation also provides 
that regional planning and performance requirements may not substitute 
for the local planning and performance requirements unless the affected 
chief elected officials and the Governor agree to that substitution.

Subpart C--Local Governance Provisions

    This Subpart covers the designation of local workforce investment 
areas and the responsibilities and membership requirements of local 
boards.
    1. Role of the Local Workforce Investment Board: Under WIA, the 
Local Board, in partnership with the chief elected official, is 
responsible for setting policy and overseeing workforce investment 
programs for a workforce investment area. Sections 661.300 and 661.305 
reiterate the roles and responsibilities of Local Boards. There was 
some concern expressed that the Local Board activities be carried out 
in an open manner which encourages public comment and participation. 
The Department responds to these concerns by restating the WIA section 
117(e) ``sunshine provision'' in Sec. 661.305(d).
    2. Local Boards as Service Providers: Section 117(f)(1) of WIA 
places limitations on Local Boards' direct provision of core services, 
intensive services, or training services. In response to requests for 
clarification, Sec. 661.310(c) specifies that the prohibition related 
to providing core, intensive and training services by the Local Board 
also applies to the staff of the Local Board. This regulation also 
cites the statutory provision allowing a Local Board to be designated 
or certified as a One-Stop operator only with the agreement of the 
chief elected official and the Governor.
    3. Membership Requirements: Section 661.315 of the regulations 
addresses the membership requirements for the Local Board that are 
contained in section 117(b) of WIA. There were suggestions on several 
issues related to the required membership of the Local Board, 
particularly as to how the terms ``representatives'' and ``including'' 
would be defined.
    Representatives: Some parties expressed the view that the term 
``representatives,'' as used in section 117(b)(2)(A) (ii)-(v) of WIA, 
requires that there be multiple representatives from each of the 
specified entities. While others wanted a more restrictive definition, 
the regulations specify that the Local Board must contain two or more 
members representing the categories described in section 117(b)(2)(A) 
(ii)-(v) of WIA. These categories cover different types of local 
educational entities, labor organizations, community-based 
organizations (including those representing individuals with 
disabilities and veterans), and economic development agencies.
    Including: There also were many questions on the meaning of the 
term ``including'' as it is used in WIA section 117(b). Some expressed 
the view that each of the entities following the word ``including'' in 
section 117(b)(2)(A)(ii), (iv), and (v) of WIA must be a required 
member of the Local Board, while others disagreed with this 
interpretation. The regulations address this issue by requiring that 
special consideration be given to including representatives of 
community colleges in the selection of members representing local 
educational entities; to including representatives of organizations 
representing individuals with disabilities and veterans, in selection 
of members representing community-based organizations; and 
representatives of private sector economic development entities in 
selecting representatives of economic development agencies. The 
regulations do not mandate a membership seat for each such entity.
    Board Size: The Department heard many concerns that the statutory 
membership requirements relating to Local Boards will lead to large, 
unwieldy, and unmanageable Local Boards. The Department recognizes this 
concern, and while the Department is constrained by the statutory 
requirements that each category of membership contain more than one 
representative and that the board contain a business majority, the 
Department has not added additional regulatory requirements on the 
number of members required. The Department believes that problems 
associated with large board size can be addressed in a number of ways, 
such as through the use of committees. The Department will provide 
technical assistance on creative approaches State and Local Boards may 
wish to consider in addressing this issue.
    4. Alternative Entity: The Department believes that changing from 
existing JTPA Private Industry Councils to local workforce investment 
boards is essential to the reforms of WIA. The Department strongly 
encourages all eligible areas to create new, fully functional Local 
Boards as early as possible, and is committed to providing assistance 
to facilitate such changes. However, the Department recognizes that the 
statute provides an option to use an existing entity to carry out the 
functions of the Local Board. Section 661.330 describes the 
requirements relating to the appointment of such an alternative entity. 
Because of questions regarding

[[Page 18668]]

the application of these requirements, paragraph (a) of Sec. 661.330 
makes clear that an alternative entity must meet each of the four 
criteria set forth in WIA section 117(i), including the requirement 
that the alternative entity must have been established by December 31, 
1997. An entity which fails to meet any one of these criteria is not 
eligible to perform the functions of the Local Board.
    While an alternative entity need not contain the identical 
membership structure as that required of Local Boards, section 
117(i)(1)(c)(ii) does require the alternative entity to be 
substantially similar to the Local Boards. In the Department's view it 
is extremely important that each of the groups listed in section 
117(b)(2) have an active role in the workforce investment system if the 
system is to be successful. Therefore, the Rule requires that the 
alternative entity be identified in the State Plan and the local 
workforce investment plan, and that these workforce investment plans 
explain the manner in which the Local Board will ensure the ongoing 
participation of any omitted membership groups in the local workforce 
investment area. While this Rule does not require that such groups be 
seated on the Board, it does require the State and local workforce 
investment plans to describe the means by which such groups will have 
periodic regular meaningful opportunities for input into decisions made 
by the Local Board.
    Paragraph (c) of Sec. 661.330 amplifies the requirement that an 
alternative entity must have been established by and in existence on 
December 31, 1997. Because of this requirement, modifications of the 
alternative entity are not allowed; any change to the membership 
structure will invalidate the entity's eligibility as an alternative 
entity. The membership structure is not considered to be changed when 
an existing member leaves the Local Board and a replacement member is 
appointed. However, it is considered to be changed when a change is 
made to the organizational structure of the Local Board that requires a 
change (whether the change is formally made or not) in the Local 
Board's charter or to a similar document that defines the 
organizational structure of the Local Board, such as appointing members 
of a category not previously represented. In that case, the entity is 
no longer eligible to perform the functions of the Local Board and a 
new entity, meeting all the requirements of section 117 of WIA must be 
created. This prevents piecemeal modification of alternative entities 
that would add certain WIA section 117(b)(2) membership categories, but 
not others.
    5. Youth Council: Section 117(h) of WIA establishes youth councils 
as a subgroup of the Local Boards. Youth councils are an innovative new 
entity intended to broaden participation in the design and delivery of 
youth services at the local level. Section 661.335 describes the 
relationship of the youth council to the Local Board as well as the 
membership requirements and Sec. 661.340 explains the responsibilities 
of the youth council, as described in section 117(h) of WIA.
    6. Local Workforce Investment Plan: Sections 661.345 and 661.350 
describe the requirements for the submission of the local workforce 
investment plan (Local Plan) and the contents of the Local Plan. 
Section 661.350 enumerates the Local Plan components outlined in WIA 
section 118(b). The Local Plan also must include information on the 
process for directing the One-Stop operators to give priority to low-
income individuals and recipients of public assistance in the event 
that adult funds are limited, as required by WIA section 134(d)(4)(E). 
This priority is discussed in more detail under Sec. 663.600.
    Section 118 of WIA indicates that Local Plans cover a five year 
period. Some parties suggested that modifications to the local plan 
will likely be needed within the five year span. The Department 
concurs, and the regulations permit the Governor to require local plan 
modifications and, at Sec. 661.355, offer a few examples of when such 
modifications might be required by the Governor. Section 661.355 states 
that the Governor must establish procedures for Local Plan 
modifications.

Subpart D--Waivers and Workflex

    Subpart D indicates the elements of WIA and the Wagner-Peyser Act 
that may and may not be waived under either the General Waiver 
Authority or the Work Flex provision. The purpose of the general 
statutory and regulatory waiver authority provided by section 189(i)(4) 
and workforce flexibility waiver authority provided at section 192 is 
to give flexibility to States and local areas in the design and 
implementation of consolidated workforce development programs under 
WIA. The regulations specify that the Secretary does not intend to 
waive any of the key elements of the reform principles embodied in the 
Act (listed in the background section of this preamble and in 
Sec. 661.400), except in extremely unusual circumstances. It also 
specifies that the provisions that incorporate the reform principles 
embodied in the Act may not be waived under the Work Flex authority.

Part 662--Description of the One-Stop System Under Title I of the 
Workforce Investment Act

Introduction

    The establishment of a One-Stop delivery system for workforce 
development services is a cornerstone of the reforms contained in title 
I of WIA. This delivery system streamlines access to numerous workforce 
investment and educational and other human resource services, 
activities and programs. The Act's requirements build on reform efforts 
that are already underway in all States through the Department's One-
Stop grant initiative. Rather than requiring individuals and employers 
to seek workforce development information and services at several 
different locations, which is often costly, discouraging and confusing, 
WIA requires States and communities to integrate multiple workforce 
development programs and resources for individuals at the ``street 
level'' through a user friendly One-Stop delivery system. This system 
will simplify and expand access to services for job seekers and 
employers.
    The Act specifies nineteen required One-Stop partners and an 
additional five optional partners to streamline access to a range of 
employment and training services. WIA requires coordination among all 
Department of Labor funded programs as well as other workforce 
investment programs administered by the Departments of Education, 
Health and Human Services, and Housing and Urban Development. WIA also 
encourages participation in the One-Stop delivery system by other 
relevant programs, such as those administered by the Departments of 
Agriculture, Health and Human Services, and Transportation, as well as 
the Corporation for National and Community Service. In addition, local 
areas are authorized to add additional partners as local needs may 
require. All of these Federal Agencies will continue to work together 
to ensure effective communication and collaboration at the Federal 
level in support of One-Stop service delivery.

Subpart A--One-Stop Delivery System

    1. Structure: Subpart A describes the structure of a One-Stop 
delivery system. The regulation, at Sec. 662.100, describes the One-
Stop system as a seamless system of service delivery that is created 
through the collaboration of entities responsible for separate 
workforce development funding streams. The One-Stop system is designed 
to enhance access to services and improve outcomes for individuals 
seeking

[[Page 18669]]

assistance. The regulation specifically defines the system as 
consisting of one or more comprehensive, physical One-Stop centers in a 
local area that provides the core services specified in WIA section 
134(d)(2) and that provide access to the other activities and programs 
provided under WIA and by each One-Stop partner. In locating each 
comprehensive center, Local Boards should coordinate with the broader 
community, including transportation agencies, to ensure that the 
centers are accessible to their customers. In addition to the 
comprehensive centers, the regulation notes that WIA allows for three 
other arrangements to supplement the comprehensive center. These 
supplemental arrangements include: (1) A network of affiliated sites 
that provide one or more of the programs, services and activities of 
the partners; (2) a network of One-Stop partners through which the 
partners provide services linked to an affiliated site and through 
which all individuals are provided information on the availability of 
core services in the local area; and (3) specialized centers that 
address specific needs. In essence, this structure may be described as 
a ``one right door and no wrong door'' approach. One-Stop partners have 
an obligation to ensure that core services that are appropriate for 
their particular populations are made available at one comprehensive 
center. If an individual enters the system through one of the network 
sites rather than the comprehensive One-Stop center, the individual may 
still obtain certain services at the network site and information about 
how and where all the other services provided through the One-Stop 
system may be obtained.

Subpart B--One Stop Partners

    1. Responsibilities: Subpart B identifies the One-Stop partners and 
their responsibilities in the One-Stop delivery system. The required 
partners are entities that carry out the workforce development 
programs. They are specifically identified in section 121(b)(1) of WIA 
and Sec. 662.200. The regulation at Sec. 662.200(a)(1)(i through vii) 
separately specifies the funding streams under title I that are 
included as required partners. The regulations also identify the other 
required programs, with some clarification of the particular sections 
of certain Acts (for example, the Vocational Rehabilitation Act and the 
Carl D. Perkins Act) that authorize the program that must participate. 
Section 662.210 identifies additional partners that may be a part of 
the One-Stop system at local option.
    Entities--The regulation at Sec. 662.220 provides a general 
definition of the ``entity'' that carries out the specified programs 
and serves as the partner. In light of the responsibilities of the 
partners, which are described below and include decisions regarding the 
use and administration of program resources, the regulation defines the 
entity as the grant recipient or other entity or organization 
responsible for administering the program's funds in the local area. 
The term ``entity'' does not include service providers that contract 
with or are subrecipients of the local entity. The regulation notes 
that for programs that do not have local administrative entities, the 
responsible State agency may be the One-Stop partner. In addition, the 
regulation specifies the appropriate entity to serve as partner for the 
Adult Education and Vocational Rehabilitation programs. Entities that 
serve as the partner under the Indian and Native American, Migrant and 
Seasonal Farmworker, Job Corps, and Youth programs are identified in 
the sections of the regulations applicable to those programs.
    Partner Responsibilities--This subpart also describes and 
elaborates on the statutory responsibilities of the partners. The 
regulation at Sec. 662.230 identifies the five provisions of the Act 
that describe these responsibilities. One of the key responsibilities 
of each partner is to make available at the comprehensive center 
through the One-Stop system appropriate core services that are 
applicable to the partner's program. The regulation at Sec. 662.240 
lists the core services that are described in section 134(d)(2) of WIA, 
and defines ``applicable'' to mean the services from that list that are 
authorized and provided under the partner programs. The extent to which 
core services are applicable to a partner program, as well as the 
manner in which services are provided, are determined by the program's 
authorizing statute.
    Availability of Services--The regulation at Sec. 662.250 describes 
where and to what extent the One-Stop partners must make available the 
applicable core services. Since section 134(c) of WIA requires that 
core services be provided, at a minimum, at one comprehensive physical 
center, the regulation requires that the applicable core services 
attributable to the partner's program be made available by each partner 
at that comprehensive center. To avoid duplication of services 
traditionally provided under the Wagner-Peyser Act, this requirement is 
limited to those applicable core services that are in addition to the 
basic labor exchange services traditionally provided in the local area 
under the Wagner-Peyser program. While a partner would not, for 
example, be required to duplicate an assessment provided under the 
Wagner-Peyser Act, the partner would be expected to be responsible for 
any needed assessment that includes additional elements specifically 
tailored to participants under the partner's program. However, the 
adult and dislocated worker program partners are required to make all 
of the core services available at the center.
    Flexibility--The regulations also provide significant flexibility 
regarding how the core services are to be made available at the One-
Stop center by allowing for services to be provided through appropriate 
technology at the center, through co-location of personnel, cross-
training of staff, or through contractual or other arrangements between 
the partner and the service providers at the center.
    2. Proportional Responsibility: The regulation also provides that 
the responsibility for the provision of and financing for applicable 
core services is to be proportionate to the use of services at the 
center by individuals attributable to the partners' programs. The 
regulation further provides that the individuals attributable to a 
partners' program may include individuals referred through the center 
and enrolled in the partner's program after the receipt of core 
services, individuals enrolled prior to the receipt of core services, 
individuals who meet the eligibility criteria for the partner's program 
and who receive an applicable core service, or individuals who meet an 
alternative definition described in the Memorandum of Understanding 
(MOU), described in subpart C. This ``proportionate responsibility'' 
provision is intended to provide an equitable principle for sharing 
responsibility among the partners. The regulation provides that the 
specific method for determining proportionate responsibility (for 
example, surveys) must be described in the MOU.
    Additional Sites--The regulation provides that core services may be 
provided at sites in addition to the comprehensive center under the 
MOU. Therefore, it is not required that partners provide applicable 
core services exclusively at a One-Stop center. If an individual seeks 
core services at the One-Stop center rather than at the partner's site, 
they should be made available to him or her without referral to another 
location, but a partner is not required to route all of its 
participants through the comprehensive One-Stop center.
    Access to Services--The regulation at Sec. 662.260 provides that, 
in addition to the provision of core services, the One-

[[Page 18670]]

Stop partners must use the One-Stop system to provide access to the 
partners' other activities and programs. This access must be described 
in the MOU. This requirement is essential to ensuring a seamless, 
comprehensive workforce development system that identifies the service 
options available to individuals and takes the critical next step of 
facilitating access to these services.
    3. Cost Sharing: The regulation at Sec. 662.270 provides that the 
particular arrangements for funding the services provided through the 
One-Stop system and the operating costs of the One-Stop system must be 
described in the MOU. Each partner must contribute a fair share of the 
operating costs based on the use of the One-Stop delivery system by 
individuals attributable to the partner's program. This is an equitable 
principle and there are a number of methods that may be used for 
allocating costs among partners that are consistent with this principle 
and the OMB circulars. To promote efficiency and optimal performance, 
partner contributions for the administrative costs of the system may be 
re-evaluated annually through the memorandum of understanding process. 
The regulation identifies a number of methodologies, including cost 
pooling, indirect cost allocation, and activity based cost allocation 
plans, that may be used. The Department, in consultation with other 
affected Federal agencies, intends to issue guidance or technical 
assistance relating to cost allocation methods to assist in this area.
    Allocation Process--The regulation at Sec. 662.280 clarifies that 
the requirements of each partner's authorizing legislation continue to 
apply under the One-Stop system. Therefore, while the overall effect of 
linking One-Stop partners in the One-Stop system is to create universal 
access to core services, the resources of each partner may only be used 
to provide services that are authorized and provided under the 
partner's program to individuals who are eligible under the program.
    As noted above, consistent with this principle, there are a variety 
of methods for allocating costs among programs. In sum, this regulation 
is intended to clarify that participation in the One-Stop delivery 
system is a requirement that is in addition to, rather than in lieu of, 
the other requirements applicable to the partner program under each 
authorizing law.

Subpart C--Memorandum of Understanding

    Subpart C describes the operation of the local One-Stop system. 
Section 662.300 addresses the Memorandum of Understanding (MOU) that 
must be executed between the Local Board and the One-Stop partners. 
Section 662.310 states that the local areas may develop a single 
umbrella MOU covering all partners and the Local Board, or separate 
MOU's between partners and the Local Board. In many areas, the umbrella 
approach may be the preferred means to facilitate a comprehensive and 
equitable resolution of the operational issues relating to the One-
Stop. The regulation also emphasizes that it is a legal obligation for 
the partners and the Local Board to engage in good faith negotiation 
and reach agreement on the MOU. The partners and the Local Boards may 
seek the assistance of the appropriate State agencies, the Governor, 
State Board or the appropriate parties in reaching agreement. The State 
agencies, the State Board, and the Governor may also consult with the 
appropriate Federal agencies to address impasse situations after 
exhausting other alternatives. If an impasse has not been resolved, 
parties that fail to execute an MOU may not be permitted to serve on 
the Local Board. In addition, if a Local Board has not executed an MOU 
with all required parties, the local area is not eligible for State 
incentive grants awarded for local coordination.

Subpart D--One-Stop Operator

    This subpart addresses the role and selection of One-Stop 
operators. The operators are responsible for administering the One-Stop 
centers and their role may range from simply coordinating service 
providers in the center to being the primary provider of services at 
the center. The role is determined by the Local Board. In areas where 
there is more than one comprehensive One-Stop center, there may be 
separate operators for each center or one operator for multiple 
centers. The operator may be selected by the Local Board through a 
competitive process, or the Local Board may designate a consortium that 
includes three or more required One-Stop partners as an operator. The 
Local Board itself may serve as a One-Stop operator only with the 
consent of the chief elected official and the Governor. This subpart 
also addresses the ``grandfathering'' of existing One-Stop operators. 
The regulations provide some continuity for areas that have already 
established One-Stop systems while ensuring that fundamental features 
of the new One-Stop system are incorporated. A local area does not have 
to comply with the One-Stop operator selection procedures if the One-
Stop delivery system, of which the operator is a part, existed before 
August 7, 1998 (the date of the WIA's enactment); if the One-Stop 
system includes all of the required One-Stop partners; and if an MOU is 
executed consistent with the requirements of the Act.

Part 663--Adult and Dislocated Worker Activities Under Title I of 
the Workforce Investment Act

Introduction

    This part of the regulations describes requirements relating to the 
services that are available for adults and dislocated workers. Along 
with Wagner-Peyser labor exchange services, the required adult and 
dislocated worker services, described as core, intensive, and training 
services, form the backbone of the One-Stop delivery system. The WIA 
goal of universal access to core services is achieved through close 
integration of services provided by the Wagner-Peyser, WIA adult and 
dislocated worker partners and other partners in the One-Stop center 
and system. Intensive and training services are available to 
individuals who meet the eligibility requirements for the funding 
streams and who are determined to need these services to achieve 
employment, or in the case of employed individuals, to obtain or retain 
self-sufficient employment. Supportive services, to enable individuals 
to participate in these other activities, including needs-related 
payments for individuals in training, may also be provided.
    These regulations also introduce the Individual Training Account 
(ITA), which is a key reform element of the Workforce Investment Act. 
Individuals are expected to take a proactive role in choosing the 
training services which meet their needs. They will be provided with 
quality information on providers of training and, armed with effective 
case management and an ITA as the payment mechanism, they will have the 
opportunity to choose the training provider that best meets their 
needs.

Subpart A--One-Stop System

    1. Role of the Adult and Dislocated Worker Program in the One-Stop 
System: The regulation at Sec. 663.100 provides that the One-Stop 
system is the basic delivery system for services to adults and 
dislocated workers. The concept of a single system that provides 
universal access to certain services to all individuals age 18 or older 
is a key tenet of the Workforce Investment Act. The regulation reflects 
the emphasis in WIA to consolidate and coordinate services. The grant 
recipient(s) for the adult and dislocated worker program is a required 
partner and is subject to Sec. 662.210

[[Page 18671]]

regarding required partner responsibilities. Access to services through 
the One-Stop system ensures that individual needs are identified and, 
to the extent possible, met. The consolidation of and access to 
services will result in improved services for both adults and 
dislocated workers.
    2. Registration and Eligibility: Sections 663.105 through 663.120 
address registration and basic eligibility requirements. In response to 
concerns regarding the timing of eligibility determination for services 
in a One-Stop system, the Department has provided general guidance in 
the regulation at Sec. 663.105 on when adults and dislocated workers 
must be registered. Sections 663.110 and 663.120 contain the basic 
eligibility criteria for adults and dislocated workers, respectively.
    Individuals who are primarily seeking information and do not seek 
direct, one-on-one staff assistance, do not need to be registered. 
However, when an individual seeks more than minimal assistance from 
staff in taking the next steps toward self-sufficient employment, then 
eligibility must be determined. Registration is the point at which 
information that is used in performance measurement begins to be 
collected. In addition, equal employment opportunity data must be 
collected on individuals when any assessment or discretionary decision 
regarding a specific individual is made. Such assessments or decisions 
include: Decisions regarding service or program eligibility, either 
positive or negative; and decisions made on the part of any workforce 
investment system employee which lead to a targeting of services for 
the individual. The Department will issue further guidance regarding 
this data collection. Additional information needed to determine 
eligibility for other assistance available at the One-Stop site may 
also be determined at the same time. Program operators should determine 
the information that they need for cost allocation purposes and when 
they can most efficiently collect it. Electronic records systems allow 
information to be collected incrementally as higher levels of 
assistance are provided.
    3. Displaced Homemaker Eligibility: In response to inquiries 
regarding assistance to displaced homemakers, the regulation at 
Sec. 663.120 clarifies that a displaced homemaker who has been 
dependent on the income of another family member but is no longer 
supported by that income, is unemployed or underemployed and is 
experiencing difficulty in obtaining or upgrading employment, may 
receive assistance with funds available to Local Boards for services to 
dislocated workers.
    4. Title I Funds: Section 663.145 clarifies how title I adult and 
dislocated worker funds are used to contribute to the provision of core 
services, and to provide intensive and training services through the 
One-Stop delivery system. All three types of services must be provided, 
but the Local Boards determine the mix of the three services.
    5. Sequence of Services: WIA provides for three levels of services: 
Core, intensive, and training, with service at one level being a 
prerequisite to moving to the next level. There was a great deal of 
concern expressed about how this tiered approach would be implemented. 
Many were particularly concerned that the Department might require a 
``failed'' job search or a minimum time period in one level of service 
before moving on to the next level. The regulations establish the 
concept of a tiered approach but allow significant flexibility at the 
local level. The Department, in response to the comments received, did 
not establish a minimum number of ``failed'' job applications or a 
minimum time period but, instead, allows localities to establish 
gateway activities that lead from participation in core to intensive 
and training services. Any core service, such as an initial assessment 
or job search and placement assistance, could be the gateway activity. 
In intensive services, the gateway activity could be the development of 
an individual employment plan, individual counseling and career 
planning or another intensive service. Key to these gateway activities 
is the determination, made at the local level, that intensive or 
training services are required for the participant to achieve the goal 
of obtaining or retaining self-sufficient employment. The three levels 
of services are discussed separately in the regulations.
    6. Core Services: The regulations at Secs. 663.150 to 663.165 
discuss the core services. All of the core services that are listed in 
the Act must be made available in each local area through the One-Stop 
system. Followup services must be available for a minimum of 12 months 
after employment begins, to registered participants who are placed in 
unsubsidized employment. Among the core services available is 
information on targeted assistance available through the One-Stop 
system for specific groups of workers, such as Migrant and Seasonal 
Farm Workers, and veterans.
    Core services also include assistance in establishing eligibility 
for the Welfare-to-Work program and programs of financial aid for 
training and education programs. The specific form of this assistance 
is determined at the local level based on the participant's needs and 
in coordination with the other partner programs. This assistance may 
include: referrals to specific agencies; information relating to, or 
provision of, required applications or other forms; or specific on-site 
assistance.
    Another core service is the provision of information relating to 
the availability of supportive services, including child care and 
transportation, available in the local area, and referral to such 
services as appropriate. The Department encourages Local Boards to 
establish strong linkages with a variety of supportive service 
programs, including Food Stamps, Medicaid programs, and CHIP. Such 
programs provide key supports for low-income working families and 
families making the transition from welfare to self-sufficiency.
    The Department also encourages Local Boards to establish strong 
linkages to child support agencies and organizations serving fathers. 
WIA services can help raise the employment and earnings of non-
custodial fathers and fathers living with their children so that they 
can better support their children. Child support payments help low 
income single parents stabilize and raise their income. At the same 
time, it is important for One-Stop programs to be aware of the child 
support requirements on non-custodial parents who may receive services.

Subpart B--Intensive Services

    1. Intensive Services for Adults and Dislocated Workers: The 
regulation at Sec. 663.200 discusses intensive services. The regulation 
provides that intensive services beyond those listed in the Act may 
also be provided. Out-of-area job search expenses, relocation expenses, 
internships, and work experience are specifically mentioned to clarify 
that they are among the additional intensive services that may be 
provided. Intensive services are intended to identify obstacles to 
employment through a comprehensive assessment or individual employment 
plan in order to determine specific services needed, such as counseling 
and career planning, referrals to community services, and, if 
appropriate, referrals to training.
    2. Participation in Intensive Services: Section 663.220 explains 
that intensive services are provided to unemployed adults and 
dislocated workers who are unable to obtain employment through core 
services and require these services to obtain or retain employment, and 
employed workers who need services to obtain or retain employment that 
leads

[[Page 18672]]

to self-sufficiency. The regulations at Secs. 663.240 through 663.250 
specify that an individual must receive at least one intensive service, 
such as the development of an individual employment plan with a case 
manager or individual counseling and career planning, before the 
individual may receive training services and that there is no Federally 
required minimum time for participation in intensive services. Each 
person in intensive services should have a case management file, either 
hard copy, electronic or both. Section 663.240 explains that the case 
file must contain a determination of need for training services, as 
identified through the intensive service received.
    3. Self-sufficiency: This regulation, at Sec. 663.230, discusses 
how ``self-sufficiency'' should be determined. WIA requires a 
determination that employed adults and dislocated workers need 
intensive or training services to obtain or retain employment that 
allows for self-sufficiency as a condition for providing those 
services. Recognizing that there are different local conditions that 
should be considered in this determination, the regulation provides 
maximum flexibility, requiring only that self-sufficiency mean 
employment that pays at least the lower living standard income level. 
State Boards or Local Boards must set the criteria for determining 
whether employment leads to self-sufficiency. Such factors as family 
size and local economic conditions may be included in the criteria. It 
may often occur that dislocated workers require a wage higher than the 
lower living standard income level to maintain self-sufficiency. 
Therefore, the Rule allows self-sufficiency for a dislocated worker to 
be defined in relation to a percentage of the lay-off wage.

Subpart C--Training Services

    1. Training Services: Training services are discussed at 
Secs. 663.300 and 663.320. Training services are designed to equip 
individuals to enter the workforce and retain employment. Under JTPA, a 
dislocated worker participating in training under title III of JTPA is 
deemed to be in training with the approval of the State Unemployment 
Compensation Agency. With such approval, unemployment compensation 
cannot be denied to the individual solely on the basis that the 
individual is not available for work because he or she is in training. 
Although there is no comparable provision in WIA, this JTPA provision 
will remain in effect during the transition period under the 
Secretary's authority to guide that transition from JTPA to WIA. The 
Department will seek an amendment adding similar language to WIA which 
would deem all adults participating in training under title I of WIA to 
be in approved training for the purposes of unemployment compensation 
qualification.
    2. Determining the Need for Training: The regulations at 
Sec. 663.310 provide that the One-Stop operator or partner determines 
the need for training based on an individual (1) meeting the 
eligibility requirements for intensive services; (2) being unable to 
obtain or retain employment through such services; and (3) being 
determined after an interview, evaluation or assessment to be in need 
of training. Section 663.310 requires that, to receive training, an 
individual must select a program of services directly linked to 
occupations in demand in the area, based on information provided by the 
One-Stop operator or partner. If individuals are willing to relocate, 
they may receive training in occupations in demand in another area.
    3. Requirements When Other Grant Assistance is Available to 
Participants. Section 663.320 implements the requirements of WIA 
section 134(d)(4)(B), which limits the use of WIA funds for training 
services to instances when there is no or inadequate grant assistance 
from other sources available to pay for those costs. The statute 
specifically requires that funds not be used to pay for the costs of 
training when Pell Grant funds or grant assistance from other sources 
are available to pay the costs. This section is intended to give effect 
to this WIA requirement and still give effect to title IV of the Higher 
Education Act (HEA) as amended (20 U.S.C. 1087uu), which prohibits 
taking into account either a Pell Grant or other Federal student 
financial assistance when determining an individual's eligibility for, 
or the amount of, any other Federal funding assistance program.
    Section 134(d)(4)(B) of WIA requires the coordination of training 
costs with funds available under other Federal programs. To avoid 
duplicate payment of costs when an individual is eligible for both WIA 
and other assistance, including a Pell Grant, Sec. 663.320(b) requires 
that program operators and training providers coordinate by entering 
into arrangements with the entities administering the alternate sources 
of funds, including eligible providers administering Pell Grants. These 
entities should consider all available sources of funds, excluding 
loans, in determining an individual's overall need for WIA funds. The 
exact mix of funds should be determined based on the availability of 
funding for either training costs or supportive services, with the goal 
of ensuring that the costs of the training program the participant 
selects are fully paid and that necessary supportive services are 
available so that the training can be completed successfully. This 
determination should focus on the needs of the participant; simply 
reducing the amount of WIA funds by the amount of Pell Grant funds is 
not permitted. Participation in a training program funded under WIA may 
not be conditioned on applying for or using a loan to help finance 
training costs.
    With such coordination and arrangements, the WIA counselor is 
likely to know the amount of WIA funds available to the WIA participant 
when calculating the amount of financial assistance needed for the 
participant to complete the training program successfully. The WIA 
counselor needs to work with the WIA participant to calculate the total 
funding resources available as well as to assess the full ``education 
and education related costs'' (training and supportive services costs) 
incurred if the participant is to complete the chosen program. This 
also ensures both that duplicate payments of training costs are not 
made and that the amount of WIA funded training is not reduced by the 
amount of Federal student financial assistance in violation of 20 
U.S.C. 1087uu.
    It is important to note that the Pell Grant is not school-based; 
rather, it is a portable grant for which preliminary eligibility can, 
and should, be determined before the participant enrolls in a 
particular school or training program. The application for determining 
eligibility and ultimately the amount of the grant, should be readily 
available at all One-Stop centers for assistance in the completion of 
these ``gateway'' financial aid applications.
    Section 663.320(c) implements the requirements of WIA section 
134(d)(4)(B)(ii). This section permits a WIA participant to enroll in a 
training program with WIA funds while an application for Pell Grant 
funds is pending, but requires that the local workforce investment area 
be reimbursed for the amount of the Pell Grant used for training if the 
application is approved. Since Pell Grants are intended to provide for 
both tuition and other education-related costs, the Rule also clarifies 
that only the portion provided for tuition is subject to reimbursement.
    In the limited cases where contracts are used rather than ITA's, 
the contracts negotiated by the One-Stop center must prohibit training 
institutions or

[[Page 18673]]

organizations from holding the student liable for outstanding charges. 
Otherwise, the performance agreements would be undercut because the 
incentive for the institution or organization to perform would be 
removed. Also, the practice of withholding Pell Grants from students is 
prohibited by the U.S. Department of Education.

Subpart D--Individual Training Accounts

    1. Definition of an Individual Training Account: Information 
regarding Individual Training Accounts (ITA) is contained in 
Secs. 663.400 through 663.430. A key reform tenet of the Workforce 
Investment Act is that adults and dislocated workers who have been 
determined to need training, may access training with an Individual 
Training Account. The regulation at Sec. 663.410 provides a definition 
for an ITA that seeks to provide maximum flexibility to State and local 
program operators in managing ITA's. These regulations do not establish 
the procedures for making payments, restrictions on the duration or 
amounts of the ITA, or policies regarding exceptions to the limits, but 
provide that authority to the State or Local Boards. However, this 
authority to restrict the duration of ITA's or restrict funding amounts 
should not be used to establish limits that arbitrarily exclude 
eligible providers.
    2. Exceptions to ITA's: The Act at section 134(d)(4)(G)(ii) and 
Sec. 663.430 of the regulations provide that, under certain limited 
circumstances, contracts for training rather than ITA's may be used. 
Specifically, on-the-job training contracts with employers and 
customized training contracts are authorized. Contracts may also be 
used when there is an insufficient number of eligible providers in a 
local area. This exception applies primarily to rural areas. The 
exceptions to ITA's are to be used infrequently. The Act reforms the 
local service delivery system by eliminating the current practice of 
assigning participants to contracted training services and instead 
establishing a system that maximizes customer choice in the selection 
of training providers. When the Local Board determines there are an 
insufficient number of eligible providers in the local area to 
accomplish the purposes of a system of ITA's, and intends to use 
contracts for services, there must be at least a 30 day public comment 
period for interested providers.
    Contracts for Special Populations--Contracts for training are also 
authorized when the Local Board determines that there are special 
populations that face multiple barriers to employment, as identified in 
Sec. 663.430(b), and that there is a training services program of 
demonstrated effectiveness offered by an eligible provider. Section 
663.430(a)(3) explains that an eligible provider in this case is a 
community based organization (CBO) or other private organization. The 
Department has received many suggestions about this exception and the 
extent to which it may be used. This exception is intended to meet 
special needs and should be used infrequently. Those training providers 
operating under the ITA exceptions still must qualify as eligible 
providers, as required at Sec. 663.505. The Department believes that 
effective eligible training providers, including CBO's and other 
training providers, can and will compete for individual training 
accounts and, that providers should view the use of ITA's as an 
opportunity to expand their customer base.
    Criteria for ``Demonstrated Effectiveness''--The regulation at 
Sec. 663.430(a)(3) provides that when the exception for special 
populations is used, the Local Board must apply criteria it develops to 
determine ``demonstrated effectiveness,'' particularly as it applies to 
the special participant population it proposes to serve. This 
determination is in addition to meeting the requirements for qualifying 
as an eligible training provider. The provisions in the regulation are 
illustrative and Local Boards should develop specific criteria 
applicable to their local areas.

Subpart E--Eligible Training Providers

    1. Subpart E describes the methods by which organizations qualify 
as eligible providers of training services under WIA. It also describes 
the roles and responsibilities of Local Boards and the State in 
managing this process. Although no single entity has full 
responsibility for the entire process, the State must play a leadership 
role in ensuring the success of the eligible provider system. The 
Governor establishes minimum performance levels for initial 
determination of non-Higher Education Act/registered apprenticeship 
providers and for all subsequent eligibility determinations. The Local 
Board may establish additional local performance levels for subsequent 
eligibility determinations. The eligible provider process requires a 
collaborative effort among the State, Local Boards, and other partners. 
The regulations attempt to amplify and clarify the intent of the Act, 
by linking statutory language on eligible providers in WIA section 122 
with section 134 provisions covering Individual Training Accounts. In 
Sec. 663.505, the regulations clarify that all training providers, 
including those operating under the ITA exceptions, must qualify as 
eligible providers, except for those engaged in on-the-job and 
customized training (for which the Governor should establish qualifying 
procedures as discussed in Sec. 663.595). Finally, in order to ensure 
the strong relationship between the eligible provider process and 
program performance, the regulation at Sec. 663.530 establishes a 
maximum eighteen month period for an organization's initial 
determination as an eligible provider.
    The Department heard concern that some traditional providers of 
training under previous workforce programs, such as community-based 
organizations, would face difficulties in participating in this system. 
The regulations clarify that such organizations have the opportunity to 
deliver training funded under WIA, provided they deliver services that 
customers value and meet training performance requirements. It is 
important that States provide access to these organizations in order to 
maximize customer choice. States should provide access to a broad and 
diverse set of providers, including CBO's, while maintaining the 
quality and integrity of training services.

Subpart F--Priority and Special Populations

    1. Priority Under Limited Adult Funding: This subpart contains 
requirements related to the statutorily-required priority for the use 
of adult funds when funds are limited. WIA section 134(d)(4)(E) states 
that in the event that funds allocated to a local area for adult 
employment and training activities are limited, priority shall be given 
to recipients of public assistance and other low-income individuals for 
intensive services and training services. The appropriate Local Board 
and the Governor must direct the One-Stop operators in the local area 
with regard to making determinations related to such priority. The 
Department assumes that adult funding is generally limited because 
there are not enough adult funds available to provide services to all 
of the adults who could benefit from such services. However, the 
Department also recognizes that conditions are different from one area 
to another and funds might not be limited in all areas. Because of 
this, the regulation requires that all Local Boards must consider the 
availability of funds in their area. In making this determination, the 
availability of other Federal funding, such as TANF and Welfare-to-Work

[[Page 18674]]

funds, should be taken into consideration. Unless the Local Board 
determines that funds are not limited in the local area, the priority 
requirement will be in effect. States and Local Boards must work 
together to establish the criteria that must be used in making this 
determination. States and Local Boards also may administer their 
priority for adult recipients of public assistance and other low income 
adults so as not to preclude providing intensive and training services 
to other individuals.
    A substantial number of parties expressed views on the priority 
issue. Many believed that the Department should not write any 
regulations that would, in effect, establish a nationwide priority. 
Some believed that the Department should not write any regulations at 
all on this section of the statute. However, the Department believes 
that the interpretation of this requirement is of such importance that 
there must be regulations. This section reiterates the statutory 
language that provides States and Local Boards with the authority to 
determine the criteria to be applied when making the determination that 
there are sufficient funds available so that the priority is not in 
effect. Section 663.610 clarifies that the statutory priority only 
applies to adult funds for intensive and training services, and not to 
dislocated worker funds.
    2. Welfare-to-Work and Temporary Assistance to Needy Families as 
Part of One-Stop: At Sec. 663.620, the regulation discusses the 
relationship of the Welfare-to-Work program and the Temporary 
Assistance to Needy Families (TANF) program to the One-Stop delivery 
system. Welfare-to-Work is a required partner to which the One-Stop 
partner regulations apply. The TANF agency is specifically suggested as 
an additional partner. Both programs can benefit from close cooperation 
with the One-Stop delivery system because their respective participants 
will have access to a much broader range of services to promote 
employment retention and self-sufficiency.

Subpart G--On-the-Job Training and Customized Training

    1. Sections 663.700 through 663.720 are the regulatory provisions 
for conducting on-the-job (OJT) and customized training activities. 
They include specific information regarding general, contract, and 
employer payment requirements. The Department received input advocating 
OJT regulations which do not restrict the duration of OJT and which 
permit eligible employed workers to also receive this training. Unlike 
JTPA, OJT is not limited to six months. However, as specified in WIA 
section 101(31)(C), it is limited in duration as appropriate for the 
occupation being trained for. Section 663.705 establishes requirements 
that permit OJT contracts for employed workers.
    Some parties called for minimal regulations in this area; however, 
there were a few who suggested the need for information regarding 
documentation requirements to avoid audit exceptions. Section 663.710 
provides that employers are not required to document the extraordinary 
costs associated with providing OJT, and no further documentation 
requirements are established. Instead, program operators should put 
emphasis on the development and/or selection of OJT assignments that 
meet the identified needs of the participants.

Subpart H--Supportive Services

    1. Flexibility in the Provision of Supportive Services: The 
regulations in subpart H define the scope and purpose of supportive 
services and the requirements governing their disbursement. A 
fundamental principle of WIA is to provide local areas with the 
authority to make policy and administrative decisions as well as the 
flexibility to tailor the workforce investment system to meet the needs 
of the local community. To ensure this flexibility, the regulations 
afford local areas the discretion to provide supportive services as 
they deem appropriate with limitations only in the areas defined in the 
Act. Local Boards are required to develop policies and procedures 
addressing coordination with other entities to ensure non-duplication 
of resources and services, as well as any limits on the amount and 
duration of such services. Attention should be given to developing 
policies and procedures that ensure that the supportive services 
provided are not available through other agencies and that they are 
necessary for the individual to participate in title I activities.
    2. Needs-Related Payments: There were a number of issues regarding 
the eligibility requirements for dislocated workers to receive needs-
related payments that came to our attention, including the concern that 
training enrollment requirements restrict the numbers of individuals 
eligible to receive this income support which they need to participate 
in training. Studies show that early entry into training for dislocated 
workers who require it is a key factor in reducing the period of 
unemployment during the adjustment process. Early intervention 
strategies and policies are best implemented through quality rapid 
response assistance which includes comprehensive core services, and the 
provision of other reemployment assistance, including intensive and 
training services, as soon as the need can be identified, preferably 
before layoff. The statute authorizes all levels of assistance under 
title I of WIA to many workers six months (180 days) before layoff, or 
at least as soon as a layoff notice is received. Providing these 
workers with access to quality information regarding all adjustment 
assistance available in the community, including any deadlines that 
must be met, is critical for workers to make intelligent reemployment 
choices. Thus, many of the concerns raised can be resolved through the 
use of early intervention strategies. The Department has decided to 
issue only limited regulations on needs-related payments eligibility at 
Sec. 663.815 through Sec. 663.840.

Part 664--Youth Activities Under Title I

Introduction

    The youth regulations attempt to reflect the intent of the 
legislation by moving away from one-time, short-term interventions and 
moving to a systematic approach that offers youth a broad range of 
coordinated services. Such offerings include opportunities for 
assistance in both academic and occupational learning; developing 
leadership skills; and preparing for further education, additional 
training, and eventual employment. Rather than supporting separate, 
categorical programs, the youth regulations are written to facilitate 
the provision of a menu of varied services that may be provided in 
combination or alone at different times during a youth's development.
    Legislation creating the youth council, the local entity 
responsible for recommending and coordinating youth policies and 
programs, intends that the youth council be a catalyst for such broad 
change. The regulations support that legislative intent.
    Flexibility for local program operators in conducting youth 
programs is key to the legislation and these regulations. The 
Department encourages local decision making in terms of policy, youth 
program design within the statutory framework, and determining 
appropriate program offerings for each individual youth. It is the 
Department's expectation that these offerings will provide needed 
guidance for youth that is balanced with appropriate

[[Page 18675]]

consideration of each youth's involvement in his or her training and 
educational plan. Further, the regulations support strong connections 
between youth program activities and the One-Stop service delivery 
system, so that youth learn early in their development how to access 
the services of the One-Stop system and continue to use those services 
throughout their working lives.

Subpart A--Youth Councils

    1. This subpart explains the purpose of youth councils. The youth 
council is a new feature of the workforce investment system that helps 
develop youth employment and training policy, brings a youth 
development perspective to the establishment of such policy, 
establishes linkages with other local youth services organizations, and 
takes into account a range of issues that can have an impact on the 
success of youth in the labor market. Working with the youth council, 
the Local Board has responsibility for oversight of youth programs. It 
may be advantageous for Local Boards to delegate responsibility for 
oversight of youth programs to youth councils which have expertise in 
youth issues, as is permitted by Sec. 664.110.

Subpart B--Eligibility for Youth Services

    1. Definition of Sixth Eligibility Barrier: Under section 
101(13)(C)(vi) of the Act, a low income youth is eligible for services 
if he or she ``requires additional assistance to complete an 
educational program, or to secure and hold employment.'' The regulation 
at Sec. 664.210 envisions that Local Boards will define this term, 
however, if State policy is set regarding this provision, the policy 
must be described in the State Plan.
    2. Registering Youth Participants: Section 664.215 provides that 
all youth participants be registered by collecting information for 
supporting eligibility determinations, as well as EEO data. The EEO 
data must be collected on individuals when any assessment or 
discretionary decision regarding an individual is made. Such 
assessments include decisions regarding service or program eligibility, 
either positive or negative, and decisions made on the part of any 
workforce investment system employee which lead to a targeting of 
services for the individual. The Department will issue further guidance 
regarding this data collection requirement.
    3. Non-Income Eligible Youth: Section 129(c)(5) of the Act provides 
that up to five percent of youth participants served in a local area 
may be individuals who do not meet income criteria for eligible youth, 
provided that they meet one or more of the criteria specified in 
section 129(c)(5) of the Act and the regulations at Sec. 664.220. Local 
Boards may define the term ``serious barriers to employment'' and 
describe it in the Local Plan.
    4. Eligibility under the National School Lunch Program: Eligibility 
for free school lunches is not a substitute for income eligibility 
under the Act. The Department received suggestions that program 
operators be allowed to use eligibility for free lunch as a substitute 
for determining eligibility under the Act, and encouraging the 
Department to seek a technical amendment that would include such a 
provision in the legislation. The Department recognizes the importance 
of this issue, yet lacks statutory authority to change the Act's income 
eligibility requirements.
    5. Eligibility of Youth with Disabilities: Section 664.250 provides 
that a disabled individual whose family income exceeds maximum income 
levels under the Act may qualify for services if the individual's own 
income meets the income criteria established in WIA section 101(25)(F), 
or the eligibility criteria for cash payments under any Federal, State 
or Local public assistance program. (WIA section 101(25)(B).)

Subpart C--Out of School Youth

    1. Defining Out-of-School Youth: Sections 664.300, 664.310, and 
664.320 address issues related to out-of-school youth. Section 101(33) 
of the Act defines ``out-of-school youth'' as: eligible youth who are 
school dropouts or who have received a secondary school diploma or its 
equivalent, but are basic skills deficient, unemployed, or 
underemployed. Youth enrolled in alternative schools are not school 
dropouts. The Department received a number of requests that it seek a 
technical amendment that would allow youth attending alternative 
schools to be included in the definition of ``dropout,'' noting that 
this would permit Local Boards to provide services to more youth in 
alternative educational environments and to design programs that take 
advantage of local resources and best meet the needs of local youth. 
While recognizing the importance of local flexibility and of serving 
youth in alternative school settings, the Department lacks statutory 
authority to change definitions established under the Act. Section 
664.310 of the regulations clarifies this issue.
    2. Funds for Summer Activities for Out-of-School Youth: The 
Department received a number of inquiries asking if summer activities 
are exempt from the requirement that 30 percent of youth funds be spent 
on services for out-of-school youth. Transition guidance will address 
how the 30% requirement applies to the Program Year 1999 JTPA summer 
funds. Section 664.320 clarifies that there is no exemption from this 
requirement for summer activities. There is no separate summer program 
under the Act. A single allocation of youth funds is available to local 
areas for year-round and summer activities. Thirty percent of the total 
youth allocation must be spent on services for out-of-school youth. 
This 30 percent, like the remaining 70 percent, may or may not be 
proportional between summer and year-round activities, as determined by 
the Local Board in consultation with the chief elected official.

Subpart D--Youth Program Design, Elements, and Parameters

    1. Program Design: Features of the youth program design are 
outlined in section 129(c) of the Act. While there are three program 
design categories and ten program elements are required, there is 
individual program design flexibility and flexibility in determining 
the definition, scope, and characteristics of the elements.
    Program Design Categories--Under section 129(c)(1), three 
categories provide the framework for youth program design. They are: 
(1) An objective assessment of each participant; (2) individual service 
strategies; and (3) services that prepare youth for postsecondary 
educational opportunities, link academic and occupational learning, 
prepare youth for employment, and provide connections to intermediary 
organizations linked to the job market and employers.
    Linkages to Entities--Youth councils and programs are required to 
establish linkages to entities that will foster the participation of 
eligible youth. Suggested linkages are included in Sec. 664.400(c).
    Information and Referrals--Section 129(c)(3) of the Act requires 
that Local Boards ensure that eligible youth receive information and 
referrals, including information on the full array of appropriate 
services available to them and referrals to appropriate training and 
educational programs. Youth program providers must ensure that eligible 
applicants who do not meet the enrollment requirements of their program 
or who cannot be served by their program are referred for additional 
assessment and program placement. This language was included in 
Sec. 664.400(d) of the regulations to emphasize the importance of 
referrals as

[[Page 18676]]

a part of overall youth program design. To further promote the concept 
of seamless One-Stop service delivery, One-Stop operators are 
encouraged to send those youth assessments that are completed at the 
One-Stop center to other training and educational programs to which the 
youth is referred.
    2. Program elements: Section 129(c)(2) of the Act lists 10 program 
elements that must be generally available to youth through local 
programs. The Department received requests for clarification that not 
all of the 10 youth program elements must be provided to every youth 
participant, and this interpretation is included in Sec. 664.410(b). 
Local program operators must determine what program elements will be 
provided to each youth participant based on the participant's objective 
assessment and service strategy; however, it is envisioned that each 
youth will participate in more than one of the ten program elements 
required as part of any local youth program, and all youth must receive 
follow-up services. For example, even if it is determined appropriate 
that a youth participate in only summer employment activities, he or 
she would still receive at least 12 months of followup services. 
Followup service requirements are fully described in Sec. 664.450. 
Sections 664.420 through 664.470 further define and discuss five 
program elements: leadership development, positive social behaviors, 
supportive services, followup services, and work experiences.
    Leadership Development--The Act states that youth programs must 
provide leadership development opportunities, and gives the following 
examples of such activities: community service and peer-centered 
activities encouraging responsibility and other positive social 
behaviors during non-school hours. Some additional examples of 
leadership development activities are outlined in Sec. 664.420 which 
elaborates on the definition of leadership development opportunities. 
The development of leadership abilities might address team work, 
decision making, personal responsibility, and citizenship training, as 
well positive social behavior training in areas such as positive 
attitudinal development, self esteem building, issues of cultural 
diversity, and other skills and attributes that would help youth to 
lead effectively, responsibly, and by example.
    Supportive Services--The Act states that youth programs must 
provide supportive services. Section 101(46) of the Act defines 
supportive services to include services such as transportation, child 
care, dependent care, housing, and needs-related payments, that are 
necessary to participate in activities authorized under the Act. 
Section 664.440 elaborates on the definition of supportive services as 
it applies to youth. Such services may include: linkages to community 
services; referrals to medical services; and assistance with work 
attire and work-related tool costs, including such items as eye glasses 
and protective eye gear.
    Followup Services--The Act states that followup services will be 
provided for not less than 12 months after the completion of 
participation, as appropriate. Section 664.450(b) clarifies that all 
youth participants must receive some form of followup services. Such 
services must be for a minimum of 12 months. Followup services for 
youth who participate in only summer employment activities may, 
however, be less intensive than for those youth who participate in 
other types of activities. Program operators are encouraged to consider 
the intensity of the services provided and the needs of the individual 
youth in determining the appropriate level of followup services. This 
section also provides that followup may include leadership development 
or supportive service activities, as well as other allowable 
activities, and provides additional examples of permissible followup 
services.
    Evaluation studies such as Abt Associates' Final Report on the 
National JTPA Study, have shown disappointing results for short-term 
job training programs for youth. Meanwhile, programs such as STRIVE and 
the Children's Village have shown much success with longer-term 
followup strategies. A 1993 study by MDRC showed that the Center for 
Employment Training, which features close ties to the private sector 
and a strong job placement component with followup with employers, 
increased the earnings of enrollees by $3,000 a year over a control 
group during the last two years of a four-year evaluation.
    Work Experiences--Sections 664.460 and 664.470 address work 
experiences for youth. Work experiences are planned, structured 
learning experiences that take place in a workplace for a limited 
period of time. No specific time period is specified. As provided in 
section 129(c)(2)(D) of the Act, work experiences may be paid or 
unpaid, as appropriate. Section 664.460 states that work experiences 
may be in the private for-profit sector, the nonprofit sector, or the 
public sector, and gives examples of the types of activities that work 
experiences may include, such as On-the-Job Training (OJT). While OJT 
is likely not an appropriate activity for most youth under age 18, it 
may be used as a service strategy for such youth based on the needs 
identified in an objective assessment of an individual youth 
participant. Section 664.470 provides that youth funds may be used to 
pay the wages of youth in work experience. Youth funds may be used to 
pay the wages of youth in work experiences, including in the private, 
for-profit sector, under conditions designed to protect youth and 
incumbent workers when the purpose of the work experiences is to 
provide youth with opportunities for career exploration and skill 
development and not to benefit the employer. If an unpaid work 
experience creates an employer/employee relationship, federal wage 
standards may apply. This relationship is determined under the Fair 
Labor Standards Act.

Subpart E--Concurrent Enrollment

    1. Concurrent Enrollment in Youth and Adult Programs: Under the 
Act, an eligible youth is an individual 14 through 21 years of age. 
Adults are defined in the Act as individuals age 18 and older. The 
Department received suggestions that local program operators be allowed 
to decide whether youth or adult services are appropriate for 
individuals aged 18 through 21 based on individual participant 
assessments and service strategies. The Department encourages local 
flexibility in serving both youth and adult participants, and thus 
included this clarification in the regulations. Section 664.500(b) 
clarifies that eligible youth who are 18 through 21 years old may 
participate in youth and adult programs concurrently, as appropriate 
for the individual. Such individuals must meet the eligibility 
requirements under the applicable youth or adult criteria for the 
services received. Local program operators must identify and track the 
funding streams for services provided to individuals who participate in 
youth and adult programs concurrently, ensuring non-duplication of 
services.
    2. Individual Training Accounts for Youth: Section 664.510 states 
that ITA's are not an authorized use of youth funds. The ITA is the 
currency of a market-based system that enables adults to select the 
service providers most suited to their needs based on information about 
the past performance of such providers. Under the Act, ITA's are not 
authorized for youth below age 18. Providers of youth services are 
competitively selected based on predetermined criteria, the judgment of 
Local Boards, and recommendations of youth councils about the 
providers' ability to meet the needs of youth

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participants. Youth aged 18 through 21 can access ITA's under the adult 
or dislocated worker program, if appropriate.

Subpart F--Summer Employment Opportunities

    1. Summer Employment Activities: This subpart provides 
clarification about summer youth employment. Although all Local Boards 
must offer summer employment opportunities for eligible youth as one of 
the ten required program elements listed in WIA section 129(c)(2) and 
Sec. 664.410, the proportion of youth funds used for summer employment 
is determined by the Local Board in consultation with the chief elected 
official. Section 664.600 elaborates on the activities that must be 
included in all summer employment opportunities, including direct 
linkages to academic and occupational learning, as well as followup 
services for at least 12 months. Numerous inquiries were received about 
whether the Act would allow cities and counties to continue to operate 
their summer activities. Section 664.610 provides that this practice is 
still allowed, and clarifies that if summer employment opportunities 
are provided by entities other than the grant recipient/fiscal agent, 
the providers must be selected by awarding a grant or contract on a 
competitive basis based on recommendations of the youth council and on 
criteria contained in the State plan.
    2. Application of Performance Indicators: In terms of performance 
measurement, the Department received requests for clarification on 
whether all of the core indicators listed in the Act apply to the 
summer program element as well as to youth activities that are longer 
in duration. It is important to note that the core indicators specified 
in section 136 of the Act apply to all youth program activities. This 
is consistent with the intent of the Act to move from a focus on 
separate, categorical programs to a more systematic approach to 
workforce investment and serving the needs of youth. Summer employment 
opportunities then, are to be viewed as one element among many 
available to youth as a part of a menu of activities offered by the 
Local Board. Section 664.620 indicates that summer activities, as part 
of the overall youth program, are required to meet the same core 
indicators of performance as the other youth activities.

Subpart G--One-Stop Career Center Services to Youth

    1. The Connection between the Title I Youth Program and the One-
Stop Delivery System: This subpart explains that the chief elected 
official (as the local grant recipient for the youth program), as a 
required One-Stop partner, is subject to the One-Stop provisions 
related to such partners described in part 662 of the regulations and 
is responsible for connecting the youth program and its activities to 
the One-Stop system. In addition to the provisions of part 662, 
connections between the youth program and the One-Stop system may 
include those that facilitate:
    <bullet> The coordination of youth activities;
    <bullet> Connections to the job market and employers;
    <bullet> Access for eligible youth to information and services; and
    <bullet> Other activities designed to achieve the purposes of the 
youth program.
    The Department received requests for clarification on connecting 
youth program activities to the One-Stop delivery system; however, some 
parties felt that the youth program, as a One-Stop partner, should not 
be made to conform to the same One-Stop partner requirements as other 
partners. The Rule attempts to clarify the role of the youth program in 
the One-Stop center through a cross-reference to the One-Stop 
regulations found in 20 CFR, part 662.
    2. Universal Access to One-Stop Centers for Youth under 18: Under 
section 134(d)(2) of the Act, adults have access to core services in 
One-Stop centers without regard to eligibility. Adults are defined 
under the Act as persons aged 18 and above. Section 664.710 of the 
regulations clarifies that local area youth, including youth under age 
18 who are not eligible under the title I youth program, may receive 
services through the One-Stop centers; however, services for such youth 
must be funded from sources that do not restrict eligibility for 
services, such as Wagner-Peyser. The Department believes that the 
intent of the Act is to introduce youth, particularly out-of-school 
youth, to the services of the One-Stop system early in their 
development and to encourage the use of the One-Stop system as an entry 
point to obtaining education, training, and job search services.

Subpart H--Youth Opportunity Grant Programs

    This subpart explains that competitive procedures for awarding 
Youth Opportunity Grants will be established by the Secretary. It also 
restates statutory language regarding the eligibility of Local Boards 
and other entities in high poverty areas to apply for Youth Opportunity 
Grants. Provisions of the Act regarding eligibility for services under 
Youth Opportunity Grants and the process for establishing performance 
measures are clarified at Secs. 664.800 to 664.830. The Department 
views these grants as a distinct opportunity to provide a variety of 
needed services to youth in high poverty areas, building on the current 
successful activities and innovations already at work in many 
communities.

Part 665--Statewide Activities Under Title I of the Workforce 
Investment Act

Introduction

    This part addresses the funds reserved at the State level for 
workforce investment activities under sections 128(a) and 133(2) of 
WIA.

Subpart A--General Description

    This subpart provides a general description of Statewide activities 
conducted with up to 15 percent reserved from youth, adult and 
dislocated worker funding streams (``15 percent funds''), and up to an 
additional 25 percent of dislocated worker funds reserved for Statewide 
activities from annual allotments to the State.
    1. Section 665.110(b) explains that the 15 percent reserved funds 
may be pooled and expended on workforce investment activities without 
regard to the source of the funding. For example, funds reserved from 
the adult funding stream may be used to carry out Statewide youth 
activities and vice versa. The Department believes that the use of 
these funds can provide critical leadership in the development and 
continuous improvement of a comprehensive workforce investment system 
for each State and, as a result, create a national system to which job 
seekers and workers can look for expert assistance, and employers can 
look for a qualified workforce.

Subpart B--Required and Allowable Statewide Workforce Investment 
Activities

    This subpart discusses required and optional activities conducted 
with funds reserved from the three title I funding streams (youth, 
adults, and dislocated workers).
    1. Required Activities: Section 665.200 identifies the eight 
activities which each State is required to carry out with its reserved 
funds from the three funding streams. The Governor must reserve funding 
for these activities, but has discretion to determine the amount 
reserved, up to the maximum 15 percent of each funding stream. One use 
of these funds is administration, subject to the five percent 
administrative cost

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limitation at 20 CFR 667.210(a)(1). This section clarifies that while 
there is no specific amount for each of the seven of the eight required 
activities to be carried out with the 15 percent funds, it is expected 
that the State will expend a sufficient amount to ensure effective 
implementation of those activities. The eighth required activity, rapid 
response, is discussed in subpart C.
    2. Optional Activities: Section 665.210 also identifies activities 
which each State is allowed to carry out with the 15 percent funds. For 
the first time, States have the discretion to conduct research and 
demonstration projects, and incumbent worker projects, including the 
establishment and implementation of an employer loan program. Section 
665.220 makes clear that employed (incumbent) workers served under 
projects funded with these reserve funds are not required to meet the 
requirements that training is needed to lead to a self-sufficient wage 
applicable to employed adult or dislocated workers served with local 
formula funds.

Subpart C--Rapid Response Activities

    This subpart addresses the use of funds that must be reserved (up 
to 25 percent of dislocated worker funds allotted to States under 
section 132(b)(2)(B) of WIA) to provide rapid response assistance.
    1. Section 665.300 describes what are rapid response activities and 
who is responsible for providing them. Rapid response assistance 
commences at the site of dislocation as soon as a State has received a 
WARN notice, a public announcement or other information that a mass 
dislocation or plant closure is scheduled to take place. The Department 
believes that this early intervention feature for dislocated workers, 
if provided in a comprehensive and systematic manner through 
collaboration between the State and Local Boards, One-Stop partners and 
other applicable entities, is critical to enabling workers to minimize 
the duration of unemployment following layoff. The Department strongly 
urges States and Local Boards to implement processes that allow for 
core services to be an integral part of rapid response assistance, 
preferably on-site, if the size of the dislocation or other factors 
warrant it. Further, WIA defines a dislocated worker at section 101(9) 
in a way that permits formula funds to be used for intensive and 
training services for workers: (1) As soon as they have layoff notices; 
or (2) six months (180 days) prior to layoff if employed at a facility 
that has made a general announcement that it will close within 180 
days.
    The Department believes that this is a critical period for workers, 
States, Local Boards, One-Stop operators and partners to begin to make 
important decisions. One important decision is whether there are 
sufficient formula funds in the State (at the State or local levels) to 
adequately serve the workers being dislocated, or whether national 
emergency grant funds must be requested in a timely manner so that all 
services are available to the workers when they need them.
    2. In response to numerous concerns regarding whether rapid 
response funds may be used beyond those types of required rapid 
response assistance described in the Act and Sec. 665.310, the 
Department has elaborated on the authorized rapid response activities 
in the regulation at Sec. 665.320. These additional activities were 
recommended by experts consulted on this topic.
    3. Section 665.330 addresses the linkage of rapid response 
assistance and WIA title I assistance to NAFTA-Transitional Adjustment 
Assistance (NAFTA-TAA). This linkage is an important feature of the 
One-Stop delivery system, and a requirement under NAFTA-TAA.

Part 666--Performance Accountability Under Title I of the Workforce 
Investment Act

Introduction

    This part presents the performance accountability requirements 
under title I of the Act. This part of the regulations primarily 
summarizes the statutory language in the Act and clarifies a few key 
areas based on input the Department has received. WIA's purpose is to 
provide workforce investment activities that improve the quality of the 
workforce. The Department is strongly committed to a systemwide 
continuous improvement approach, grounded upon proven quality 
principles and practices. The regulations identify some of the major 
issues where further guidance will be provided.

Subpart A--State Measures of Performance

    1. Indicators: Section 666.100 identifies the 15 core indicators of 
performance and the two customer satisfaction indicators that States 
are required to address in title I grant applications. The 15 core 
indicators represent the four core indicators that will be applied 
separately for the three population categories (adult, dislocated 
workers and eligible youth age 19 through 21) for a total of 12 
indicators and the three youth indicators. There is one customer 
satisfaction indicator for participants and one for employers. Section 
666.110 clarifies that Governors may develop additional performance 
indicators to be negotiated with Local Boards and that these additional 
indicators must be included in the State Plan.
    2. Definitions: Section 666.100(b) also explains that the 
Departments of Labor and Education will issue more detailed definitions 
for the title I and title II indicators after further consultation with 
representatives identified in section 502(b) of WIA. The Departments 
will consult further on the indicator definitions, including taking 
into account factors such as the degree of difficulty and expense of 
collecting data and reporting on the measures.
    3. Negotiations: As noted at Sec. 666.120(a), the Department will 
provide further guidance on each of these areas after additional 
consultation. Section 666.120(b) addresses the requirement that States 
must submit expected or proposed levels of performance for the core 
indicators and customer satisfaction indicators for years one through 
three of the State Plan. The Department may require States to express 
levels of improvement as a percentage improvement over the previous 
year's actual performance. The Department recognizes that continuous 
improvement is more than incremental increases in performance and will 
develop a comprehensive and rigorous approach to integrate continuous 
improvement at all levels of the workforce investment system. The 
Dep