61588 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations

DEPARTMENT OF LABOR

Employment and Training

Administration

20 CFR Part 645

RIN 1205–AB15

Welfare-to-Work (WtW) Grants

AGENCY: Employment and Training

Administration (ETA), DOL.

ACTION: Interim final rule; request for

comments.

SUMMARY: The Employment and

Training Administration hereby issues

an Interim Final Rule implementing the

Welfare-to-Work (WtW) grant provisions

of Title IV, Part A of the Social Security

Act as amended by the recent enactment

of the Balanced Budget Act of 1997. The

Interim Final Rule provides an

administrative framework for the WtW

program which is being coordinated

with the closely-related Temporary

Assistance for Needy Families (TANF)

program administered by the

Department of Health and Human

Services (DHHS). While the use of WtW

funds should occur within the larger

framework of the TANF program in each

State, these funds have a purpose that

is distinct from that of the TANF

program. The purpose of WtW is to

provide transitional assistance which

moves hard-to-employ welfare

recipients living in high poverty areas

into unsubsidized employment and

economic self-sufficiency.

DATES: Effective Dates: This Interim

Final Rule shall become effective on

November 18, 1997. However, affected

parties do not have to comply with the

information collection requirements in

§ 645.240 (reporting requirements for

WtW programs) 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.

Comment Period: Comments must be

submitted by January 20, 1998. The

Department will not consider comments

received after this date. Comments that

are less than 10 pages in length may be

transmitted via facsimile at (202) 219–

0376, provided that submission of

written text follows.

ADDRESSES: Submit written comments

to the Employment and Training

Administration, Welfare-to-Work Office,

200 Constitution Avenue, NW, Room

S5513, Washington, D.C. 20210,

Attention: Peter E. Rell.

All comments shall be available for

public inspection and copying during

normal business hours at the

Employment and Training

Administration, Office of Employment

and Training Programs, 200

Constitution Avenue, NW, Room N4459,

Washington, D.C. 20210. Copies of the

Interim Final Rule are available in the

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 WtW web site at http:/

/wtw.doleta.gov. Comments may be

submitted electronically to that web

address.

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 N2101,

Washington, D.C. 20210, as the recipient

of petitions to review this Interim Final

Rule.

FOR FURTHER INFORMATION CONTACT: Mr.

Peter E. Rell, Welfare-to-Work Office,

U.S. Department of Labor, 200

Constitution Avenue, NW, Room S5513,

Washington, D.C. 20210, Telephone:

(202) 219–0181 (voice) (This is not a

toll-free number.) or 1–800–326–2577

(TDD).

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

Pursuant to the Paperwork Reduction

Act of 1995, information collection

requirements which would be imposed

as a result of the Interim Rule are being

submitted separately to the Office of

Management and Budget.

I. Background

On August 22, 1996, President

Clinton signed the Personal

Responsibility and Work Opportunity

Reconciliation Act (PRWORA), a

comprehensive welfare reform bill,

under which the TANF program was

established to supersede the Aid to

Families with Dependent Children

(AFDC) welfare program, the Job

Opportunities and Basic Skills (JOBS)

Training program and the Emergency

Assistance (EA) Program. The TANF

program at section 401(a) of the Social

Security Act (Act) established the

following objectives:

• Provide assistance to needy families

so that children may be cared for in

their own homes or in the homes of

relatives;

• End the dependence of needy

parents on government benefits by

promoting job preparation, work, and

marriage;

• Prevent and reduce the incidence of

out-of-wedlock pregnancies and

establish annual numerical goals for

preventing and reducing the incidence

of these pregnancies; and

• Encourage the formation and

maintenance of two-parent families.

The TANF provisions substantially

changed the nation’s welfare system

from one in which cash assistance was

provided on an entitlement basis to a

system in which the primary focus is on

moving welfare recipients to work and

promoting family responsibility,

accountability and self-sufficiency. In

general, adult welfare recipients are

expected to become self-sufficient

within a 60-month period of time. In

support of this ‘‘work-first’’ objective,

the TANF provisions established an

overall work participation rate for all

households and a work participation

rate for two-parent families that must be

met by each State starting in fiscal year

(FY) 97 and in each fiscal year thereafter

through FY 2002. States that do not

meet the TANF-established work

participation rates face significant

financial penalties.

The reference to ‘‘work-first’’ refers to

the TANF concept that the primary

focus is on placing individuals in

employment activities. Nevertheless, the

work-first approach also recognizes that

individuals may be provided, as

appropriate, education and skills

training related to the job, as well as

other services to ensure lasting

employment and the achievement of

self-sufficiency. Since the enactment of

PRWORA, the Administration and

Congress have been concerned that

those welfare recipients who have the

least skills, education, employment

experience and who live within high

poverty areas may need additional

assistance to obtain lasting jobs and

become self-sufficient.

On August 5, 1997, the President

signed the Balanced Budget Act of 1997.

This legislation amended certain TANF

provisions of the Social Security Act

and authorized the Secretary of Labor to

provide WtW grants to States and local

communities for transitional

employment assistance to move the

hard-to-employ TANF welfare

recipients into unsubsidized jobs and

economic self-sufficiency.

Approximately 75 percent of the funds

in each fiscal year will be distributed as

formula grants to the States, with 85

percent to be passed through to local

service delivery areas (SDAs) (generally,

one or more units of local government

with a population of 200,000 or more)

in the States to be administered by the
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Private Industry Council (PIC) for the

SDA, or an alternate administering

entity approved by the Secretary of

Labor according to the statutory

requirements. The funds distributed

through the WtW grant program will

assist States and PICs to meet their

welfare reform objectives by providing

additional resources targeted to hard-toemploy welfare recipients residing in

high poverty areas within the State.

WtW activities should be coordinated

with those undertaken through TANF,

as hard-to-employ welfare recipients

constitute a significant portion of the

TANF eligible population. Therefore,

the ability of State/County TANF

agencies, the PICs under the Job

Training Partnership Act (JTPA), local

governments and a variety of other

entities (e.g., One-Stop systems, private

sector employers, labor organizations,

business and trade associations,

education agencies, housing agencies,

community development corporations,

transportation agencies, communitybased and faith-based organizations,

disability community organizations,

community action agencies, and

colleges and universities which provide

some of the assistance needed by the

targeted population) to implement WtW

programs that move these individuals

into employment and self-sufficiency

will be a major factor in the success of

the national initiative to reform the

welfare system.

The Interim Final Rule provides a

framework for the administration of

WtW programs, in coordination with the

closely-related TANF program. The

Employment and Training

Administration (ETA) has coordinated

its WtW regulatory efforts with the

rulemaking being initiated by the

Department of Health and Human

Services (DHHS) for the TANF program.

The Interim Final Rule supplements

TANF’s emphasis on moving welfare

recipients into work, and on improving

program evaluation and performance.

Section 403(a)(5)(A)(ii)(I) of the Act

indicates that the States’ WtW formula

plans are an ‘‘addendum’’ to the State

TANF plans. In keeping with the

Congressional intent to allow States

maximum flexibility in implementing

TANF requirements, the WtW

regulations provide States and local

governments with broad discretion to

design and implement WtW programs

that meet the needs of the hard-toemploy population in the individual

States. This approach is consistent with

PRWORA’s statutory intent to provide

States with maximum discretion. The

PRWORA Conference Report, H.R. Conf.

Rep. No. 725 104th Cong. 2nd Sess.

(1996), states that the legislation

establishes ‘‘broad cash welfare and

child care block grants providing

maximum flexibility so that States can

reform welfare in ways that are

appropriate for them, and can move

families into jobs.’’

The WtW statute contains several

provisions designed to encourage

creative and effective use of grant funds.

In particular, section 403(a)(5)(B)

provides that approximately 25 percent

of WtW funds shall be distributed

through a competitive grant process

which are designed, in part, to expand

the base of knowledge about programs

to successfully move hard-to-employ

recipients to unsubsidized employment

and self-sufficiency. In addition, section

403(a)(5)(E) sets aside $100 million as a

successful performance bonus, to be

distributed in FY 2000 among States

who most effectively place hard-toemploy individuals in lasting

employment at increased earnings.

The format, as well as the substance,

of the Interim Final Rule reflects the

Administration’s commitment to

regulatory reform. The current Federal

Register Document Drafting Handbook

encourages Federal agencies to produce

regulations that are reader-friendly. The

Department has made every effort 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

Part 645 regulatory text is presented in

a ‘‘question and answer’’ format.

Section 403(a)(5)(C)(viii) of the Act

requires the Secretary of Labor to

prescribe regulations implementing the

WtW program within 90 days of

enactment, after consultation with the

Secretaries of DHHS and Housing and

Urban Development (HUD). Pursuant to

Secretary of Labor’s Order No. 4–75, the

Assistant Secretary for Employment and

Training has been delegated the

responsibility to carry out WtW policies,

programs, and activities for the

Secretary of Labor.

Given the short time frame imposed

on the Department, the Employment

and Training Administration (ETA) has

moved quickly to initiate coordination

with the other Federal agencies that

have related concerns. In particular, the

Department established a Federal Policy

Committee composed of officials from

the Departments of HHS, HUD,

Transportation and Labor. The Policy

Committee reviewed and provided

policy recommendations to the

Department on issues that arose during

the development of the Interim Final

Rule.

In addition, ETA requested and

received input from a broad range of

interested parties regarding guidance to

be provided by the Agency on how to

comply with a number of WtW statutory

provisions, e.g., allowable matching

funds, expenditure time limits,

reallocation policy, Governors’ authority

to select the State administrative

agency, conditions under which the

Governor may select an alternate

administrative agency (other than the

Private Industry Council) at the local

level, eligible grant applicants for

competitive WtW grants, allowable

activities, post-employment and job

retention services, job creation through

public or private sector employment

wage subsidies, community services and

work experience programs, limits on

administration costs, and performance

standards and bonuses.

The Agency has determined that this

Interim Final Rule, as promulgated,

complies with the WtW statutory

mandate and will provide effective

direction for the implementation of

WtW programs. ETA will review all

comments received in response to the

Interim Final Rule, as well as program

experience, in considering what further

action is necessary and promulgating a

Final Rule.

II. Summary and Explanation

This section describes and explains

the individual provisions of the Interim

Final Rule. The explanatory text, in

general, adheres closely to the

corresponding WtW statutory language.

The supporting rationale is provided for

those instances where the rule provides

direction not prescribed by the WtW

statute.

ETA has set regulations only where

they are necessary to clarify or to

explain how the Agency intends to

interpret the WtW statute. 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 WtW

administration. For example, while 20

CFR 645.230 indicates that the OMB

Circular A–102 ‘‘Common Rule’’

requirements apply to WtW programs,

the Department has not defined what

constitutes WtW ‘‘allowable activities’’

which are used under section

403(a)(5)(C) of the Act.

Pursuant to Section 411(a)(1) of the

Social Security Act, DHHS has the

responsibility to issue WtW participant

and program data reporting

requirements, after consultation with

other appropriate parties. Accordingly,

this Interim Final Rule does not address

such reporting requirements in detail.

Consistent with the purpose of WtW,

which is to move welfare recipients into
61590 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations

unsubsidized employment and

economic self-sufficiency, the statute

anticipates reporting on these measures:

placements in unsubsidized

employment; placements in

unsubsidized employment that last at

least six months; placements in the

private and public sectors; earnings of

individuals who obtain employment;

and average expenditures per

placement.

Subpart A—Scope and Purpose

What Does This Part Cover? (§ 645.100)

This section of the Interim Final Rule

indicates that Part 645 provides

regulatory provisions applicable to WtW

formula grant funds that are to be used

to carry out State-level programs and

programs conducted by the PICs at the

Service Delivery Area (SDA) level. This

part of the regulations also provides

general guidance on WtW competitive

grants, but it should be clear the

Department intends to publish specific

Solicitations for Grant Applications

(SGAs) in the future. The SGAs to be

published will be disseminated widely

and will contain specific information

about purpose, application

requirements, funding amounts, and

submission instructions for competitive

grant awards.

What Are the Purposes of the Welfareto-Work Program? (§ 645.110)

This section of the Interim Final Rule

describes what the Department believes

to be the statutory objective of the WtW

program, which complements the

overall objectives of the TANF program.

For example, the WtW statutory

provisions indicate that the ultimate

objective to be achieved through the

various allowable activities is to ‘‘* * *

move individuals into and keep

individuals in lasting unsubsidized

employment * * *’’. In this regard, the

WtW program complements the TANF

objective to ‘‘* * * end the dependence

of needy parents by promoting job

preparation, work * * *’’. The WtW

Program focuses on assistance on hardto-employ welfare recipients living in

high poverty areas. Although the section requires only

that WtW grant funds be coordinated

with the State TANF expenditures, the

Department also intends that WtW grant

funds be coordinated with available

resources from the Job Training

Partnership Act (JTPA), the

Employment Service, the Child Care

and Development Block Grant, OneStop systems, private sector employers,

labor organizations, business and trade

associations, vocational rehabilitation

and other education agencies, housing

agencies, community development

corporations, transportation agencies,

community-based and faith-based

organizations, disability community

organizations, community action

agencies, and colleges and universities

and other sources that provide

assistance to the WtW targeted

individuals.

What Definitions Apply to This Part?

(§ 645.120)

This section of the Interim Final Rule

includes a limited number of definitions

of terms, acronyms and phrases

important to the implementation of the

WtW programs. This section is not

intended to be an all-inclusive listing of

definitions provided within the WtW

legislation and WtW regulations.

This section includes definitions for

the terms ‘‘adult’’, ‘‘minor’’, and ‘‘TANF

MOE’’ found in the TANF statute. The

Department also relied on the

definitions provided in the JTPA

regulations at 20 CFR Part 626 for the

terms ‘‘PIC’’ and ‘‘SDA.’’ The definition

for ‘‘Chief Elected Official’’ comes from

Section 103(c) of the Job Training

Partnership Act, as amended.

States and PICs (and alternate

agencies) should keep in mind that

additional definitions applicable to the

WtW program, but not listed in this

section for the sake of brevity, can be

found in the definitions section(s) of the

pertinent OMB Circulars on Uniform

Administrative Requirements and the

OMB Cost Principles Circulars. For

example, 29 CFR 97.3 contains

definitions for terms and acronyms

relating to administration of the WtW

programs operated by State, local and

Indian tribal organizations, unless

otherwise specified. Similarly, 29 CFR

Part 95 contains other administrative

definitions relating to non-profit

organizations.

Subpart B—General Program and

Administrative Requirements

What Does This Part Cover? (§ 645.200)

This subpart provides general

program and administrative

requirements for WtW formula grant

funds, including Governors’ funds for

long-term recipients of assistance, and

for competitive grant funding.

Of the total amount of WtW funds

available for allotment (after reserving

an amount for Indian tribes, evaluation,

and performance bonuses), 75 percent is

allotted to the States on a formula basis.

Generally, the States are required to

distribute at least 85 percent of this

amount, pursuant to a statutory formula,

to service delivery areas. The Governor

of a State may reserve up to 15 percent

of the State’s allotment for projects to

help long-term recipients of assistance.

The roughly 25 percent of the funds that

is not allotted to the States by formula

is available for the Secretary to award

through a competitive grant process.

The regulations which appear in this

subpart apply to these funds.

What Is Meant by the Terms ‘‘Entity’’

and ‘‘Project’’ in the Statutory Phrase

‘‘An Entity that Operates a Project’’

With Welfare-to-Work Funds?

(§ 645.210)

This section defines the terms

‘‘entity’’ and ‘‘project’’ in the phrase ‘‘an

entity that operates a project’’ with WtW

funds, as used in section 403(a)(5)(C)(ii)

of the Act.

For WtW substate formula funds,

‘‘entity’’ means the PIC (or the alternate

agency designated by the Governor and

approved by the Secretary) which

administers the WtW formula funds in

a service delivery area(s). This entity is

referred to in §§ 645.211 through

645.225 as the ‘‘operating entity’’. The

term ‘‘entity’’ does not refer to

subrecipients, contractors, vendors, or

other parties to which the PIC or

alternate agency may choose to

distribute WtW formula funds to

provide specific services. The term

‘‘project’’ means all activities,

administrative and programmatic,

supported by the total amount of the

WtW formula funds allotted to an entity

as described above. Therefore, the

requirement relating to the expenditure

of 70 percent WtW funds on hard-toemploy individuals, as described in

§ 645.211, applies to all of the funds

allotted to the PIC/alternate

administering agency. The entity need

not impose these expenditure

requirements on each individual

subrecipient, contractor, vendor or other

party to whom it may choose to

distribute WtW funds. However, the

entity must ensure that, in the aggregate,

it complies with the 70 percent

expenditure requirement.

For Governors’ funds for long-term

recipients of assistance, ‘‘entity’’ means

the agency, group, or organization to

which the Governor has distributed

such funds, as described in § 645.410 (b)

and (c). This entity is referred to in

§§ 645.211 through 645.225 as the

‘‘operating entity’’. The term ‘‘project’’

means all activities, administrative and

programmatic, supported by the total

amount of any one award of Governor’s

funds made to an entity as described

above. Therefore, should the entity

receive more than one award from the

Governor, the 70 percent expenditure

requirement, as described in § 645.211,

applies individually to each award. The

entity need not impose the expenditure

requirement on each individual
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations 61591

subrecipient, contractor, vendor or other

party to whom it may choose to

distribute WtW funds. However, the

entity must ensure that in the aggregate

it complies with the 70 percent

expenditure requirement.

For competitive WtW grants, ‘‘entity’’

means an eligible applicant, as

described in § 645.500, which is

awarded a competitive WtW grant by

the Secretary. This entity is referred to

in §§ 645.211 through 645.225 as the

‘‘operating entity’’. The term ‘‘entity’’

does not refer to subrecipients,

contractors, vendors, or other parties to

which the competitive grant recipient

may choose to distribute WtW funds.

The term ‘‘project’’ means all activities,

administrative and programmatic,

supported by the total amount of any

one competitive grant award. Therefore,

should the same entity receive more

than one competitive grant, the 70

percent expenditure requirement, as

described in § 645.211, applies

individually to each competitive grant.

The entity need not impose the

expenditure requirements on each

individual subrecipient, contractor,

vendor or other party to whom it may

choose to distribute WtW funds.

However, the entity must ensure that in

the aggregate it complies with the 70

percent expenditure requirement.

How Must Welfare-to-Work Funds Be

Spent by the Operating Entity?

(§ 645.211)

This section restates the statutory

provisions, at section 403(a)(5)(C)(ii)

and (iii) of the Act, which require that

an operating entity, as described in

§ 645.210 of this part, expend not less

than 70 percent of the WtW funds

allotted or awarded to it for the benefit

of hard-to-employ individuals, as

described in § 645.212, and which

provide that up to 30 percent of the

funds may be spent to assist individuals

with characteristics associated with

long-term welfare dependence, as

described in § 645.213. If less than 30

percent of the funds are spent to assist

individuals with long-term welfare

dependence characteristics, as described

in § 645.213, the remaining funds shall

be spent to benefit hard-to-employ

individuals, as described in § 645.212.

This requirement applies to all WtW

funds, i.e., to substate formula funds,

Governors’ funds for long-term

recipients of assistance, and competitive

funds. It should be noted that the

requirement does not apply to the

proportion of WtW participants served;

rather, as noted above, it applies to the

percentage of WtW funds expended on

the participants in each category of

eligibility.

Who May be Served as a Hard-toEmploy Individual Under the 70 Percent

Provision? (§ 645.212)

The WtW legislation targets those

welfare recipients who will have the

most difficulty transitioning into

employment. Specifically, the Act, at

sections 403(a)(5)(C)(ii) and (iv),

establishes three different categories of

individuals who may be served under

the 70 percent provision. An individual

is eligible if (s)he meets the criteria of

any one of the following three eligibility

categories. (1) To be eligible under the

first category, individuals: (a) must be

recipients of TANF assistance; and (b)

must have two of the three specified

barriers to employment; and (c) must be

long-term recipients of TANF assistance

or will become ineligible for TANF

assistance within twelve months. (2) To

be eligible under the second category,

an individual must be a noncustodial

parent of a minor whose custodial

parent meets the three criteria of the

first eligibility category. (3) To be

eligible under the third category, an

individual must have the specified

barriers to employment and no longer

be receiving TANF assistance because

(s)he has reached either the Federal fiveyear lifetime limit on receipt of

assistance, or a State-imposed lifetime

limit. The regulations paraphrase the

statutory language.

Eligibility: Category One. To be

eligible to be served under category one

of the 70 percent provision, an

individual must meet each of the

following three eligibility criteria:

Criterion a: Recipients of TANF

Assistance. The individual must be a

current recipient of TANF assistance.

The Act, at section 403(a)(5)(C)(ii), uses

the term ‘‘recipients of assistance under

the program funded under this part.’’ In

order to facilitate coordination at the

local level, the Department has

consulted with DHHS regarding

interpretations for ‘‘the program funded

under this part’’ and ‘‘assistance’’.

Provisions in the statute which use the

term ‘‘the program funded under this

part’’ refer to the State’s program of

family assistance that is operated in

accordance with the TANF statute,

regardless of its funding source. Thus,

any individual receiving TANF

assistance under the State TANF

program (whether funded with State or

Federal funds) is deemed to meet this

criterion of eligibility under the 70

percent provision.

‘‘Assistance’’ means every form of

support provided to families under

TANF (including child care, work

subsidies, and allowances to meet living

expenses), except: (a) services that have

no direct monetary value to an

individual family and that do not

involve implicit or explicit income

support, such as counseling, case

management, peer support, and

employment services that do not

involve subsidies or other forms of

income support; and (b) one-time, shortterm assistance (i.e., assistance which is

paid no more than once in any 12

month period, is paid within a 30 day

period, and covers needs that do not

extend beyond a 90-day period, such as

automobile repair to obtain employment

and avoid welfare receipt, and

appliance repair to maintain living

arrangements). The Secretary notes that

she may issue further rules to conform

this provision to similar provisions in

forthcoming final regulations governing

the TANF program.

Criterion b: Barriers to Employment.

The Act, at section 403(a)(5)(C)(ii)(I),

states that as the second criterion of

eligibility under category one of the 70

percent provision, an individual must

face at least two of the three following

barriers to employment: (1) the

individual has not completed secondary

school or obtained a certificate of

general equivalency, and has low skills

in reading or mathematics; (2) the

individual requires substance abuse

treatment for employment; or (3) the

individual has a poor work history.

We are defining the phrase ‘‘has low

skills in reading or mathematics’’,

which is used in the first barrier in

criterion b, to mean having reading or

mathematics skills at or below grade

level 8.9. This definition is consistent

with the definition which is used in the

Job Training Partnership (JTPA)

program. We are also defining the

phrase ‘‘has a poor work history’’ to

mean having worked no more than three

consecutive months in the last 12

calendar months. In this way

individuals who have taken the

initiative to try employment but have

not been successful for more than a brief

period of time, are eligible for

assistance. These definitions reinforce

the intent of the WtW legislation to

focus assistance on hard-to-employ

individuals. However, we provide PICs

flexibility for each of these definitions

for up to 10 percent of participants to

recognize individual circumstances,

specialized needs, including individuals

with disabilities, and local labor market

conditions.

TANF agencies are required to

perform an initial assessment of the

skills, prior work experience and

employability of each TANF recipient

who is at least 18 years old, or who has

not completed high school (or

equivalent) and is not attending
61592 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations

secondary school. It is likely that this

assessment may identify the abovenoted barriers, and we do not want to

require further assessment for the

purposes of establishing eligibility

where it is not needed. Additionally, in

relation to the criterion ‘‘requires

substance abuse treatment for

employment,’’ we note that DHHS is

suggesting that the optional individual

responsibility plan which the TANF

agency develops based on the initial

assessment may require the individual

to undergo appropriate substance abuse

treatment. We do not want to impose an

additional Federal definition which

would cause a local WtW program

operator to ‘‘second-guess’’ this

determination.

Criterion c: Long-Term/DurationImpacted TANF Recipients. The third

eligibility criterion under category one

of the 70 percent provision requires that

individuals be long-term recipients of

TANF assistance or will become

ineligible for TANF assistance within 12

months. The regulations paraphrase the

statutory requirements, at section

403(a)(5)(C)(ii)(II), which states that an

individual: (1) must have received

assistance under a State TANF program,

and/or its predecessor program, for at

least 30 months, whether consecutive or

not; or (2) will become ineligible for

assistance within 12 months due to

Federal or State-imposed durational

time limits on receipt of TANF

assistance. This includes individuals

who have been exempted from the

durational limits due to hardship

pursuant to section 408(a)(7)(C) of the

Act, but would have faced termination

within 12 months without the

exemption.

Eligibility: Category Two:

Noncustodial Parents. The regulations

paraphrase the statutory requirement at

section 403(a)(5)(C)(ii). A noncustodial

parent of a minor child whose custodial

parent meets the eligibility criteria of

category one, as specified in

§ 645.212(a) of this part, is eligible

under the 70 percent provision. In order

to facilitate coordination at the local

level, we are not defining the term

‘‘noncustodial’’ any further. We are

allowing States to develop and employ

their own definition of the term, which

we understand States generally use to

mean a parent who is absent from the

child’s household. Under TANF, States

can extend employment services to

noncustodial parents by including them

in their definition of ‘‘eligible family’’.

In these cases, the States are already

using their own non-Federal definition

of ‘‘noncustodial.’’ Further, States are

required by statute to report to DHHS on

the number of noncustodial parents

participating in work activities. We do

not want to impose a definition which

would be at odds with those already

existing in the States. If a State does not

have a definition for ‘‘noncustodial’’

parent for TANF purposes, it should

develop one in order to serve

noncustodial parents in WtW projects.

Eligibility: Category Three: Exceeding

Durational Time Limits. The regulations

interpret the statutory provision at

section 403(a)(5)(C)(iv) to apply to

individuals who have reached Stateimposed time limits on receipt of TANF

assistance in addition to individuals

who have reached the five-year Federal

limit on receipt of Federal assistance.

This interpretation is consistent with

the purpose of the WtW funds to assist

those who have the most difficulty

making the transition from welfare to

work. Therefore, an individual who has

barriers to employment, as specified in

§ 645.212(a)(2) of this part, and who

would otherwise be eligible to receive

TANF assistance but is no longer

receiving TANF assistance because (s)he

has reached either the Federal five-year

lifetime limit on receipt of assistance, or

a State-imposed lifetime limit, is

eligible.

Who May be Served as an Individual

With Long-Term Welfare Dependence

Characteristics Under the 30 Percent

Provision? (§ 645.213)

The Act, at sections 403 (a)(5)(C)(iii)

and (iv), establishes three different

categories of individuals who may be

served as individuals with

characteristics associated with longterm welfare dependence under the 30

percent provision. An individual is

eligible if (s)he meets any one of the

following three eligibility categories: (1)

To be eligible under the first category,

individuals must be recipients of TANF

assistance and have characteristics

associated with, or predictive of, longterm welfare dependence. (2) To be

eligible under the second category, an

individual must be a noncustodial

parent of a minor whose custodial

parent is receiving TANF assistance,

and the noncustodial parent must have

characteristics associated with, or

predictive of, long-term welfare

dependence. (3) To be eligible under the

third category, an individual must have

characteristics associated with, or

predictive of, long-term welfare

dependence, be otherwise eligible to

receive TANF assistance, but no longer

be receiving TANF assistance because

(s)he has reached either the Federal fiveyear lifetime limit on receipt of

assistance, or a State-imposed lifetime

limit.

Eligibility: Category One. To be

eligible under category one of the 30

percent provision, an individual must

meet both of the following criteria:

Criterion a: Recipients of TANF

Assistance. The individual must be a

current recipient of TANF assistance.

The Act states, at section 403

(a)(5)(C)(iii)(I), that individuals with

long-term welfare dependence

characteristics under the 30 percent

provision must be ‘‘recipients of

assistance under the program funded

under this part’’. The regulations

paraphrase the statutory requirement. In

order to facilitate coordination at the

local level, the Department has

consulted with DHHS regarding

interpretations for ‘‘the program funded

under this part’’ and ‘‘assistance’’. For a

fuller discussion of this approach, refer

to the discussion regarding recipients of

TANF assistance in the preamble for

§ 645.212.

Criterion b: Characteristics Associated

With Long-Term Welfare Dependence.

The Act states, at section 403

(a)(5)(C)(iii)(I), that an individual must

have characteristics associated with

long-term welfare dependence, such as

having dropped out of school, teenage

pregnancy, or having a poor work

history. We are interpreting ‘‘associated

with’’ to include characteristics

‘‘predictive of’’ long-term welfare

dependence. In order to facilitate

coordination at the local level, we will

not further define the characteristics

associated with long-term welfare

dependence. It is likely that the TANF

assessment may identify the abovenoted characteristics, and we do not

want to require further assessment for

the purposes of establishing eligibility

where it is not needed. Moreover, the

regulations interpret the statutory

phrase ‘‘such as’’ to mean that, in

addition to the characteristics listed in

the statute, States and PICs may

designate other characteristics

associated with, or predictive of, longterm welfare dependence, including

having a disability. In order to provide

the State and local areas with flexibility

to design the WtW program to support

the goals and objectives of their overall

program of assistance for welfare

recipients, we are not imposing any

further restrictions in this area. Starting

with the FY99 State WtW formula plans,

States will be asked to include examples

of characteristics which the State and

PICs consider to be predictive of longterm welfare dependency.

Eligibility: Category Two:

Noncustodial Parents. The Act states, at

section 403(a)(5)(C)(iii)(II), that

noncustodial parents of minors who

have the characteristics associated with,
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations 61593

or predictive of, long-term welfare

dependence, as described under

category one, are eligible to participate

under the 30 percent provision if the

custodial parent is receiving TANF

assistance. In order to facilitate

coordination at the local level, we are

not defining the term ‘‘noncustodial’’

any further. For a fuller discussion of

this approach, refer to the discussion

regarding noncustodial parents in the

preamble for § 645.212.

Eligibility: Category Three: Exceeding

Durational Time Limits. The regulations

interpret the statutory provision at

section 403(a)(5)(C)(iv) to apply to

individuals who have reached Stateimposed time limits on receipt of TANF

assistance in addition to individuals

who have reached the five-year Federal

limit on receipt of Federal assistance.

This interpretation is consistent with

the purpose of the WtW funds to assist

those who have the most difficulty

making the transition from welfare to

work. Therefore, an individual who has

characteristics associated with, or

predictive of, long-term welfare

dependence, as specified in

§ 645.213(a)(2) of this part, and who

would otherwise be eligible to receive

TANF assistance but is no longer

receiving TANF assistance because (s)he

has reached either the Federal five-year

lifetime limit on receipt of assistance, or

a State-imposed lifetime limit, is eligible

to participate under the 30 percent

provision.

How Will Welfare-to-Work Participant

Eligibility be Determined? (§ 645.214)

The regulations state that the

operating entity is accountable for

ensuring that WtW funds are spent on

individuals who are eligible for WtW

projects. The regulations acknowledge,

however, that the operating entity may

not be in the best position to determine

all aspects of WtW eligibility,

particularly those associated with

receipt of TANF assistance. Therefore,

the regulations require that the

operating entity ensure that there are

mechanisms in place to establish WtW

eligibility based on the criteria in

§§ 645.212 and 645.213. We urge that

the mechanisms for determining WtW

eligibility address how the PIC or other

WtW operating entity and the TANF

agency will work together to facilitate

the exchange of eligibility information.

The actual scope of the mechanisms,

operating procedures, and roles and

responsibilities of the cooperating

parties are best left to local

determination given the myriad of

circumstances that exist in local areas.

Since receipt of TANF assistance will

be the single most critical WtW

eligibility criterion in the majority of

cases, it is critical that the TANF agency

be the source of information about

whether an individual is receiving

TANF assistance, the length of such

receipt, and applicable time limits on

such receipt. At a minimum, therefore,

for TANF recipients, WtW eligibility

determination mechanisms must

include arrangements with the TANF

agency to ensure that such a

determination is based on information,

current at the time of the WtW

eligibility determination, for the factors

specified in § 645.214(b)(1) of this part.

In establishing WtW eligibility for the

criteria of barriers to employment,

pursuant to § 645.212(a)(2), and

characteristics associated with long

term-welfare dependency, pursuant to

§ 645.213(a)(2) of this part, the

regulations seek to minimize

duplication of effort and encourage

coordination of TANF and WtW

resources. Specifically, the regulations

state that for TANF recipients, the

operating entity may base a

determination of WtW eligibility for

these factors on information that was

collected up to six months prior to the

WtW eligibility determination, by or

through the operating entity for JTPA or

for other purposes, or by the TANF

agency for the TANF assessment or

individual responsibility plan (IRP).

This mechanism provides an efficient

method to minimize duplication of

effort and utilize existing, reliable

information while ensuring that a WtW

eligibility determination will not be

made on the basis of outdated

information. This six-month window is

intended to provide flexibility to the

operating entity to customize its

mechanisms for determining WtW

eligibility to address the unique

circumstances of its local area. In some

cases, the operating entity may

determine that a shorter time period is

preferable. In others, the operating

entity may determine that for some

characteristics, such as the possession of

a high school diploma, the individual’s

status immediately prior to

determination of eligibility should be

used in the determination. We recognize

that the information previously

collected by the operating entity or in

the TANF assessment and IRP: (1) may

be sufficiently comprehensive to allow

for making the WtW eligibility

determination; or (2) may not

necessarily provide sufficient

information to determine WtW

eligibility in all categories. In either

case, we urge close coordination

between the TANF agency and the

operating entity to develop a

coordinated mechanism for eligibility

determination.

The operating entity must also have

mechanisms in place to determine WtW

eligibility for individuals who are not

receiving TANF assistance (i.e.,

noncustodial parents and individuals

who have reached the time limit on

receipt of TANF). Mechanisms may

include approaches such as: (1) using

staff from the operating entity to

determine WtW eligibility (utilizing

information from TANF and other

appropriate agencies); (2) entering into

agreements with local agencies, such as

the TANF agency, and other appropriate

entities, such as One-Stop systems and

substance abuse treatment providers,

which foster coordination and facilitate

the exchange of eligibility information

among parties at the local level; and/or

(3) performing joint WtW eligibility

determination with other appropriate

agencies, including the TANF agency.

The TANF agency should be able to

provide information about assistance

received by the custodial parent of

minors or by exhaustees to permit the

PIC to determine whether an individual

qualifies as a noncustodial parent or

about individuals who are no longer

receiving TANF assistance.

In determining whether someone

requires substance abuse treatment for

employment, the operating entity can

benefit from coordinating with the local

recipients of funds from the Substance

Abuse Prevention and Treatment

(SAPT) Block Grant. In some States,

SAPT funds substance abuse awareness

and identification programs for TANF

case workers. In others, substance abuse

counselors supported by SAPT funds

are co-located in TANF offices. We urge

close coordination by the operating

entity with efforts of SAPT and other

agencies to identify and address

substance abuse among the TANF

population.

The regulations also state that once an

individual begins to receive WtW

services, the operating entity is not

required to redetermine WtW eligibility.

For instance, if someone ceases to

receive TANF assistance due to

increased earnings, that individual may

continue to participate in appropriate

WtW services (such as occupational

training offered as a post-employment

service or job retention services, if such

services are not otherwise available).

What Activities Are Allowable Under

This Part? (§ 645.220)

The ultimate objective for each

welfare recipient is placement into an

unsubsidized job which provides the

potential for achieving economic selfsufficiency. Activities conducted with
61594 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations

WtW grant funds must be grounded in

the ‘‘work first’’ philosophy which is a

fundamental tenet of the Act. Although

a variety of activities are authorized

under WtW, these activities should be

viewed as employment-based

developmental steps for helping

individuals secure and retain

unsubsidized employment.

Section 403(a)(5)(C)(i) specifies the

allowable activities which can be

funded under WtW grants. The statute

prescribes the following as allowable

activities: job readiness, placement, and

post-employment services financed

through job vouchers or through

contracts with public or private

providers; community service or work

experience programs; job creation

through public or private sector

employment wage subsidies; on-the-job

training; and job retention or support

services if such services are not

otherwise available. Congress did not

define these activities further. Some

activities have commonly understood

meanings from their use over time or

from operational definitions adopted by

other employment and training

programs, but others may not.

We consulted with a variety of groups

to determine what others thought about

how these activities should be defined.

A major theme they expressed is the

need for maximum State and local

flexibility to design programs to

successfully move the hardest to employ

welfare recipients into unsubsidized

employment leading to economic selfsufficiency.

Another major theme expressed by

those with whom we consulted is the

need for flexibility to provide to the

WtW eligible population, training in

basic educational and occupational

skills, English as a second language

training, and referral to vocational

rehabilitation services. Indeed, one of

the eligibility factors is the lack of a

high school or secondary school

diploma or a certificate of general

equivalency, coupled with low skills in

math or reading. In order to make it

possible for these educationally

disadvantaged individuals to begin to

achieve economic self-sufficiency, they

need access to tools for developing the

skills necessary for achieving their

employment goal.

The regulations address these

concerns. They provide maximum

flexibility to provide transitional

assistance which moves welfare

recipients into unsubsidized

employment providing good career

potential for achieving economic selfsufficiency. They also encourage

effective linkages of welfare agencies,

other agencies serving people with

disabilities, adult education, and the

workforce development system at the

State and local operational levels to

maximize the use of all available

resources and to focus resources on

direct assistance to recipients.

Additionally, they encourage the use of

training interventions only after an

individual begins to work to help

participants retain their jobs and move

toward economic self-sufficiency.

Specifically, in order to facilitate

coordination between WtW and TANF

activities at the State and local level, the

regulations do not define or describe the

activities which are common to both

WtW allowable activities and TANF

work activities. That is, the regulations

provide no definitions or description for

community service, work experience,

job creation through public or private

sector employment wage subsidies, onthe-job training, or job readiness

activities. Job readiness may, however,

include training for WtW participants

starting their own businesses. It is

expected that operating definitions for

these activities will be arrived at

through partnership between the State

and local administering agencies, taking

into consideration applicable statutory

and regulatory provisions.

The regulations do provide examples

of post-employment services. Whether

an individual is working in a subsidized

or unsubsidized job, including selfemployment or participation in a

registered apprenticeship program, that

individual may be allowed to receive

post-employment services, which may

include basic education, English as a

second language, occupational skills

training, and mentoring. While the

legislation does not permit stand-alone

training activities independent of a job,

allowing them as post-employment

activities only while the participant is

working in a subsidized or unsubsidized

job reflects the basic ‘‘work first’’ thrust

of the legislation, while recognizing the

critical importance of continuous skills

acquisition and lifelong learning to

economic self-sufficiency. These

examples of post-employment services

are not intended to imply that only

educational, training, or mentoring

services are allowable as postemployment services.

The regulations incorporate the

statutory requirement that job readiness,

placement, and post-employment

services be provided through job

vouchers or contracts with public or

private providers. Additionally, the

requirement, at § 645.230(a)(3), that

contracts or vouchers for job placement

must include a provision to require that

at least one-half of the payment occur

after an eligible individual has been

placed into the workforce for six

months, is referenced.

Given the needs of the target group for

this assistance, the provision of

adequate job retention and support

services will be critical. Each

participant engaged in a job readiness

activity, an employment activity, or in

any other subsidized or unsubsidized

job, including participation in a

registered apprenticeship program, will

also be allowed to receive appropriate

job retention and support services, if

such services are not otherwise

available. These could include

transportation assistance, substance

abuse treatment, child care, emergency

or short-term housing assistance,

disability-related services, or other

supportive services. However, these

services can be provided with WtW

funds only where they are not otherwise

available to the participant. For

instance, in the area of child care, the

operating entity should ensure that

WtW funds are not substituted for child

care services available from the Child

Care and Development Block Grant,

TANF funds, and other State and local

funds.

The availability of transportation

services, to get welfare recipients to

work, training, and child care, is a

significant factor in obtaining and

retaining employment. Historically,

DHHS and DOL programs have defined

transportation in terms of the individual

client, and allowed reimbursement for

services used rather than for service

availability. However, client

reimbursement will not work where

services do not exist. WtW funds may be

used for both purposes. For instance,

WtW funds may be used to reimburse

individual participants for

transportation costs, to enable an

administering agency to purchase

additional needed services from

transportation providers, or

alternatively to support, in combination

with other funding sources, the

development of new transportation

services that may be needed in order to

connect individuals to jobs. Such

services could include: late night and

other off peak hour services, shuttle

service, guaranteed ride home, van

pooling and ridesharing, and

specialized transportation services

provided by non-profit agencies. WtW

funds cannot be substituted for services

available or already provided through

other sources. However, this is not

meant to preclude funding of an

individual’s access to existing sources.

For example, although a transit service

may exist, an individual may need

financial assistance to afford such

transportation.
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations 61595

Substance abuse treatment is

specifically provided as an example of

a job retention service because one of

the eligibility factors under the hard-toemploy criteria is the need for substance

abuse treatment for employment. In

arranging for substance abuse treatment,

States and localities should coordinate

with the Single State Authority (SSA)

(and its subcontractors) designated by

the Governor to receive and administer

the Substance Abuse Prevention and

Treatment (SAPT) Block Grant

administered by the Substance Abuse

and Mental Health Services

Administration, DHHS. This grant,

totaling $1.23 billion in FY 1998,

accounts for approximately 40 percent

of all substance abuse treatment

provided through State agencies. The

SSA and its county or regional

subcontractors also coordinate with, or

actually provide, substance abuse

treatment funded through other sources.

It is imperative that use of WtW funds

for substance abuse treatment be

coordinated with other funding sources

to provide only services not otherwise

available. It is equally important that the

expertise of SAPT block grant recipients

be utilized in developing a strategy to

provide WtW participants with

substance abuse treatment services.

Regarding substance abuse treatment,

States and localities need to be aware

that section 408(a)(6) of the Act, which

bars the use of Federal TANF funds for

medical services, also applies to WtW

funds. In many, but not all, instances

the treatment of alcohol and drug abuse

involves not just ‘‘medical services,’’ but

other kinds of social and support

services as well. Allowing States to use

Federal WtW funds for substance abuse

treatment is programmatically sound

since it addresses the need of a

particular target group and may help

clients make successful transitions to

work. Therefore, WtW funds can be

used for drug and alcohol abuse

treatment services to the extent that

such services are not medical and not

otherwise available to the participant.

States and localities will have to look at

the range of services offered and

differentiate between those that are

medical and those that are not. For

instance, an evaluation of a substance

abuser, to determine the appropriate

level of care, performed by a member of

the medical profession is considered a

medical service, as is a medically

supervised detoxification program.

However, services performed by those

not in the medical profession, such as

counselors, technicians, social workers,

and psychologists, and services not

provided in a hospital or clinic,

including 24 hour care programs, may

be considered non-medical. In short, as

in TANF, States and localities cannot

use Federal WtW funds for services that

the State identifies as medical; they may

only use Federal WtW funds for services

that are non-medical. States may,

however, use their own funds or other

funds to provide these services as long

as they do not commingle State and

Federal funds. Medicare and Medicaid

funds may provide another source of

funding for medical substance abuse

treatment.

Individual development accounts

(IDAs) are authorized by section

403(a)(5)(C)(v)(I) of the Act. They are

described in detail at section 404(h) of

the Act, which gives States the option

to fund IDAs with TANF, and by

extension, WtW funds, for WtW

participants. An IDA is an account

established by or for an individual to

allow the individual to accumulate

funds for specific purposes enumerated

in the Act, i.e., postsecondary

educational expenses, first home

purchase, and business capitalization.

The Secretary of DHHS is authorized to

establish regulations regarding IDAs.

Therefore, we are not regulating or

providing further guidance in this area.

An entity that funds IDAs with WtW

grant funds must comply with Section

404(h) of the Act and the applicable

DHHS regulations.

Lastly, the regulations state that

intake, assessment, eligibility

determination, the development of an

individualized service strategy, and case

management are allowable and may be

incorporated in the program design of

any of the allowable activities.

How Do Welfare-to-Work Activities

Relate to Activities Provided Under

TANF and Other Related Programs?

(§ 645.225)

The regulations require that activities

provided through WtW be coordinated

effectively with activities being

provided through the TANF grant and

other related programs. The WtW grants

provide a critical tool to help States and

local governments achieve their own

welfare reform goals and to meet their

responsibilities under the Act to reduce

welfare caseloads and move welfare

recipients into permanent employment

and off welfare. WtW must be an

integral part of the States’ and local

governments’ overall program of

assistance to move welfare recipients

into unsubsidized employment. WtW

formula grants are intended to work

through the operating entity to

supplement and enhance their overall

capacity for assisting welfare recipients

find work and progress toward selfsufficiency.

Coordination of resources should

include not only those available through

WtW and TANF grant funds, and the

Child Care and Development Block

Grant, but also those available through

other related activities and programs,

such as the JTPA programs, the State

employment service, One-Stop systems,

private sector employers, labor

organizations, business and trade

associations, education agencies,

housing agencies, community

development corporations,

transportation agencies, communitybased and faith-based organizations,

disability community organizations,

community action agencies, and

colleges and universities which provide

some of the assistance needed by the

targeted population.

The regulations require that an

assessment of skills, prior work

experience, employability, and other

relevant information be in place for each

WtW participant. This is consistent with

the TANF requirement, at section

408(b)(1) of the Act, that an assessment

be developed for each recipient of

TANF assistance who has attained 18

years of age or has not completed high

school or obtained a certificate of high

school equivalency, and is not attending

secondary school. In order to maximize

coordination and minimize duplication

of effort, we urge the use of the TANF

assessment to meet this requirement

where feasible in order to avoid

duplicative assessments and

unnecessary use of WtW resources.

The regulations require that an

individualized strategy for transition to

unsubsidized employment should be in

place for each participant. This

requirement is similar to the TANF

provision, at section 408(b)(2) of the

Act, regarding an individual

responsibility plan (IRP). This strategy

should take into account the

individual’s circumstances reflected in

the TANF assessment, JTPA individual

service strategy or any participant

assessment which may have been

performed by the operating entity or its

agent. The individualized strategy

should also include information

regarding disabilities since the

characteristics associated with longterm welfare dependence can be caused,

or contributed to, by a physical,

emotional or cognitive disability. The

strategy should assure that activities

funded through WtW are effectively

coordinated with similar activities (e.g.,

assessment, case management,

supportive services, work activities)

being funded through TANF and other

related programs to address the
61596 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations

individual’s needs so that (s)he can

obtain and retain unsubsidized

employment. In order to maximize

coordination and minimize duplication

of effort, the regulations also state that,

where appropriate, the TANF IRP may

be used for this purpose. It is our

understanding that most, if not all,

States have exercised their option under

TANF of implementing an IRP

requirement. The statutory guidelines

for the content of an IRP, at section

408(b)(2) of the Act, include an

employment goal for the individual and

a plan for moving the individual into

unsubsidized employment as quickly as

possible, and for increasing the

responsibility and amount of work the

individual is to handle over time. The

statutory guidelines also include a

description of the obligations of the

individual and the services to be

provided so that the individual will be

able obtain and retain employment. In

order to avoid duplicative strategies and

unnecessary use of staff resources, we

urge the use of the TANF IRP as the

WtW individualized service strategy

where feasible.

What General Fiscal and Administrative

Rules Apply to the Use of Federal

Funds? (§ 645.230)

This regulation identifies the

appropriate DOL regulations which

specify the rules applicable to WtW

grants in the areas of fiscal and

administrative requirements, audit

requirements, allowable cost/cost

principles, debarment and suspension,

drug-free workplace, restrictions on

lobbying, and nondiscrimination. In

addition, paragraph (a)(3) of this section

specifically indicates that the provision

at section 403(a)(5)(C)(i) of the Act is a

requirement that is imposed in addition

to the procurement provisions

applicable to an entity awarding a

contract or voucher for job placement

services. That provision requires that

contracts or vouchers for job placement

services must include a provision to

require that at least one-half of the

payment occur after an eligible

individual placed into the workforce

has been in the workforce for at least 6

months. Consistent with the purpose of

the Act, we have interpreted this

provision to apply to placement in

unsubsidized jobs. We have done this to

avoid the unintended consequence of

having all subsidized employment last a

minimum of six months.

Paragraph (a)(4) of this section adds a

provision to address PIC conflict of

interest which is not addressed by the

uniform requirements. Paragraph (a)(5)

of this section specifies the requirement

that the addition method will be

required for the use of program income

and that the cost of generating any

program income may be deducted in

determining the amount of program

income earned. In paragraph (c) of this

section, the authority to grant or deny

prior approval for those selected items

of cost which require such approval has

been delegated to the Governor.

Paragraph (g) of this section sets forth

restrictions on nepotism related to

individuals being hired into WtW

subsidized employment, work

experience, on-the-job training positions

and the like.

What Are the Time Limitations on the

Expenditure of Welfare-to-Work Grant

Funds? (§ 645.233)

The regulation specifies the time

limitation rules for expenditure of the

two types of Federal WtW grant funds:

(a) Formula funds—The general rule

is that these funds will be available for

expenditure for a ‘‘maximum’’ period of

three years which commences with the

effective date of the grant to a State. The

grant period will be specified in the

Department’s formula grant document

for each fiscal year of funds provided to

the State.

(b) Competitive funds—The general

rule is that these funds have the

potential for being granted for the

‘‘maximum’’ three-year period from the

effective date of the grant award but are

subject to the terms and conditions of

the specific grant.

For both types of grant funds, any

remaining funds unexpended at the end

of the approved grant period must be

returned to the Department in

accordance with the applicable closeout

rules and procedures. For purposes of

determining the time limitations for

expenditure of ‘‘performance bonus’’

grants, the provisions applicable to

formula funds (excluding match) will

apply.

What Types of Activities Are Subject to

the Administrative Cost Limit on

Welfare-to-Work Grants? (§ 645.235)

Paragraph (a) of the regulation restates

the fact that the statute imposes a 15

percent limitation on administrative

costs for formula grants to States. For

competitive grants, the regulation

permits a different limitation, up to a

maximum of 15 percent, to be specified

in the grant agreement. If no limitation

is specified, then the 15 percent

limitation on administrative costs will

also apply to competitive grants.

Paragraphs (b) & (c) spell out the

definition of administrative costs for

these WtW grants and provide some

additional cost classification guidance.

Because the local JTPA system is the

presumed delivery system for these

grants, the regulation uses the JTPA

definition of ‘‘administrative costs’’

except that paragraph (c)(3) of the

regulation incorporates an exception

specified at Section 404(b)(2) of the Act.

The exception specifically excludes

from the administrative cost category

the costs of computer hardware and

software that is used for tracking and

monitoring under a WtW grant. It is

only the cost of the assets, however, and

not the salaries or wages of staff who

use the computers, that is excluded. The

regulation also requires that all

information technology purchased for

WtW grants must be ‘‘year 2000

compliant.’’ To meet this requirement,

information technology must be able to

accurately process date/time data

(including, but not limited to,

calculating, comparing and sequencing)

from, into, and between the twentieth

and twenty-first centuries, and the years

1999 and 2000. The information

technology must also be able to make

leap year calculations.

These Interim Final WtW regulations

adopt the JTPA definition of the term

‘‘Administrative Costs’’ to minimize the

burden on PICs. The Secretary notes

that she may issue further rules to

conform this provision to similar

provisions in forthcoming final

regulations governing the TANF

program. Comments on this subject are

invited and would be helpful in

assessing the advantages and

disadvantages of such a change.

What Are the Reporting Requirements

for Welfare-to-Work Grants? (§ 645.240)

This regulation indicates that DOL

will issue instructions and formats for

financial reporting, that DHHS will

issue the instructions for participant

reporting, and that DOL will issue

supplemental participant reporting

requirements for competitive grants.

With respect to participant reporting,

DOL will, as an interim measure, revise

the Standard Program Information

Report (SPIR) to incorporate

identification of WtW enrollees and

WtW activity categories to facilitate the

use of a SPIR-based management

information system by PICs who choose

to use it to manage their WtW funded

activities. However, DOL will not

require the use or submission of SPIR

for WtW.

Who is Responsible for Oversight and

Monitoring of Welfare-to-Work Grants?

(§ 645.245)

The Secretary of Labor is authorized

to provide WtW grants to States and

local entities through formula

allocations and a competitive process,
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations 61597

respectively. To ensure that Federal

funds are accounted for and used in a

permissible manner, the Secretary is

responsible for oversight of grant

activities and expenditure of grant

funds, and may monitor any WtW grant

recipient or subrecipient. The

regulations provide for Federal and

State oversight responsibilities.

For formula grants, the Department’s

monitoring of the States will include a

sample of subrecipients. States funded

under this program shall develop a

statewide monitoring plan and shall

make the monitoring plan available for

Federal review. In the event that the

Secretary determines that a State grant

recipient is not in compliance with

Federal statutory or regulatory

requirements, the Department may

provide technical assistance as part of

the corrective action process.

The Governor is responsible for

oversight of formula grants at the

substate level. The State monitoring

plan shall provide for adequate

oversight and should include State

policies and procedures for the

implementation, operation and

management of the program, as well as

State monitoring of reporting

requirements for WtW substate grants.

The State shall ensure compliance with

statutory and regulatory requirements of

WtW at the substate level. The State

monitoring plan should include an

annual monitoring schedule and should

describe its process for providing

technical assistance to substate grantees

that are not in compliance with State or

Federal requirements.

What Procedures Apply to the

Resolution of Findings Arising From

Audits, Investigations, Monitoring and

Oversight Reviews? (§ 645.250)

The regulation assigns to the

Governor the responsibility to resolve

subrecipient findings that arise from

audits, investigations, monitoring

reviews, and the like. If the States have

procedures in place that are used for

audit resolution, debt collection and

appeal for other grant programs, then

the existing processes may be used.

Otherwise the State must develop and

implement such procedures.

The regulation reserves to the

Secretary the authority for resolution of

findings that arise from Federal audits,

investigations, incident reports, and

monitoring reviews, as well as recipient

level OMB Circular A–133 audits. The

process that will be used is the grant

officer initial and final determination

process used for other grant programs

which is codified at 29 CFR 96.503.

Appeals of grant officer final

determinations are to be made to the

Department’s Office of Administrative

Law Judges in accordance with the

procedures found at 29 CFR 96.603(b).

So as to avoid confusion about which

procedures apply to nondiscrimination

findings, paragraph (c) specifies that

findings arising from investigations or

reviews conducted under

nondiscrimination laws are to be

resolved in accordance with those

nondiscrimination laws and the

applicable implementing regulations.

What Nondiscrimination Protections

Apply to Participants in Welfare-toWork Programs? (§ 645.255)

Section 645.255 of the regulations

provides that participants in WtW

programs have such rights as are

available under any applicable Federal,

State or local law prohibiting

discrimination, including, but not

limited to: the Age Discrimination Act

of 1975 (42 U.S.C. 6101 et seq.); Section

504 of the Rehabilitation Act of 1975

(Section 504)(29 U.S.C. 794); the

Americans with Disabilities Act of 1990

(ADA) (42 U.S.C. 12101 et seq.) and

Title VI of the Civil Rights Act of 1964

(Title VI)(42 U.S.C. 2000d et seq.). ETA

is not responsible for administering any

civil rights laws. Rather, it is the Civil

Rights Center (CRC), formerly the

Directorate of Civil Rights, within the

Office of the Assistant Secretary for

Administration and Management, that

has the responsibility to enforce such

laws as the Age Discrimination Act of

1975, Section 504 and Title VI, with

respect to recipients of federal financial

assistance from the Department.

Additionally, the CRC is responsible for

processing complaints alleging

violations of the ADA by all State and

local government programs, services,

and regulatory activities relating to labor

and the workforce.

Section 645.255 of the regulations

further provides that complaints

alleging discrimination, except for those

alleging gender discrimination in

violation of § 645.255(d), shall be

processed in accordance with applicable

regulations. For example, WtW

recipients who are not also JTPA grant

recipients should process complaints

that allege discrimination based on race,

color or national origin in violation of

Title VI of the Civil Rights Act of 1964

in accordance with the Department’s

Title VI regulation at 29 CFR part 31 by

forwarding all such complaints to the

CRC (Address at the end of this

paragraph.). Similarly, WtW recipients

who are not also JTPA grant recipients

should process complaints that allege

discrimination based upon disability in

violation of Section 504 in accordance

with 29 CFR 32.45(b), i.e., using the

complaint procedures established

pursuant to that section. WtW recipients

who are also JTPA grant recipients

should process complaints of

discrimination under procedures

established pursuant to 29 CFR 34.42.

29 CFR 34.42 establishes the

procedures under which JTPA grant

recipients shall process complaints

involving violations of the JTPA

nondiscrimination and equal

opportunity provisions. Since many

WtW grant recipients will be PICs and

other entities with experience operating

programs under JTPA, the Department

has determined that, in order to avoid

administrative burdens, such entities

shall process WtW discrimination

complaints under these procedures

rather than require that they comply

with two different sets of procedures.

(Recipients of financial assistance from

the Department should be aware that the

DOL regulations, at 29 CFR Parts 31, 32,

and 34, also require that programs and

activities meet certain administrative

obligations. Among those is the

responsibility to notify participants of

their rights under nondiscrimination

laws (e.g., Title VI, Section 504 and the

Age Discrimination Act), including the

right to file a complaint with the CRC.

Individuals with questions about the

requirements of these

nondiscrimination laws, or concerns

about compliance by individual WtW

programs with these laws, should

address their comments or concerns to

the Director, Civil Rights Center, U.S.

Department of Labor, 200 Constitution

Avenue, NW, Room N4123,

Washington, D.C. 20210.)

Both Section 408(d) of the PRWORA

and its legislative history, as reflected in

H.R. Conf. Rep. No. 725, 104 Cong., 2nd

Sess. 293 (1996), clarify that recipients

are subject to Federal enforcement

mechanisms. The Balanced Budget Act

of 1997 amended the PRWORA. It

provides for, among other things, a new

civil rights protection against gender

discrimination. This provision ensures

that participants who may not be

covered under either Title VII of the

Civil Rights Act of 1964 or Title IX of

the Education Amendments of 1972, are

protected against gender discrimination.

The PRWORA, as amended, requires

States to have grievance procedures to

process complaints alleging gender

discrimination. The legislative history

makes clear that gender-based

discrimination is the only civil rights

matter that the legislation required to be

resolved through a State grievance

procedure. See H.R. Conf. Rep. No. 217,

105th Cong., 1st Sess. 935–937 (1997).

Other civil rights matters are to be

resolved in accordance with the
61598 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations

applicable statutes and regulations

listed in the preceding paragraph.

What Health and Safety Provisions

Apply to Participants in Welfare-toWork Programs? (§ 645.260)

The regulation restates the health and

safety provisions which are found in

section 403(a)(5)(J)(ii) of the Act and

specifies that participants alleging a

violation of these standards may file a

complaint using the State’s legislatively

mandated grievance system. The

Department interprets the statutory

phrase ‘‘work activity’’ to refer to the

allowable employment activities

provided for at § 645.220(b) of this part.

What Safeguards Are There to Ensure

That Participants in Welfare-to-Work

Employment Activities do not Displace

Other Employees? (§ 645.265)

Section 403(a)(5)(J) of the Act

provides protections to ensure that

employees are not displaced by WtW

participants engaged in a work activity.

The Department interprets the phrase

‘‘work activity’’ to refer to the allowable

employment activities provided for at

§ 645.220(b) of this part.

The regulation incorporates the

statutory prohibition, in section

403(a)(5)(J)(i) of the Act, against

allowing WtW participants to be

enrolled in employment activities

which violate existing contracts for

services or collective bargaining

agreements. Where an employment

activity would violate a collective

bargaining agreement, the regulations

provide that the appropriate affected

labor organization and employer must

provide written concurrence before the

employment activity can be undertaken.

The regulations also incorporate the

statutory prohibition against allowing

an individual participating in

employment activities under the WtW

program from displacing another

employee. Employment activities shall

not result in the employment or

assignment of a WtW participant or the

filling of a position when any other

person is on layoff from the same or

substantially equivalent job within the

same organizational unit. The use of the

phrase ‘‘within the same organizational

unit’’ further clarifies the parameters for

the concept of ‘‘a substantially

equivalent job’’. The employment or

assignment of a WtW participant or the

filling of a position is prohibited when

an employer has terminated any regular,

unsubsidized employee or otherwise

reduced its workforce with the intent of

filling the vacancy with a WtW program

participant. In addition, a WtW

participant may not be employed or

assigned to a position where the

employer has caused an involuntary

reduction to less than full time in hours

of an employee in the same or

substantially equivalent job.

Consistent with the goal of this

program, which is to place participants

in employment which will eventually

lead to their economic self-sufficiency,

we encourage the States to safeguard the

current workforce, while aggressively

promoting the creation of employment

opportunities for welfare recipients. The

State’s goal should be the expansion of

its workforce through the creation of

additional new jobs.

The regulations also specify that

grievances regarding displacement may

be filed using the State’s legislatively

mandated grievance system.

What Procedures Are There To Ensure

That Currently Employed Workers May

File Grievances Regarding Displacement

and That Welfare-to-Work Participants

in Employment Activities May File

Grievances Regarding Displacement,

Health and Safety Standards and Gender

Discrimination? (§ 645.270)

The regulations reflect the statutory

language concerning the requirement

that a State must establish a grievance

system for regular, unsubsidized

employees regarding displacement and

for participants in the WtW program

regarding displacement, health and

safety standards and gender

discrimination.

The statute requires that the grievance

system must provide an opportunity for

a hearing, an appeal, and a final

determination within 120 days of the

original filing date of the complaint. The

regulations give the State the option of

including in the grievance system an

opportunity for informal resolution

prior to the formal hearing. The

regulations also provide that in

developing its grievance system, the

State must specify the time period and

format for the hearing and the appeal

portions of the procedure. The informal

resolution and hearing steps in the

grievance procedure may occur at either

the State or SDA level. This section of

the regulations also restates the

statutory provision concerning the

designation of a State agency,

independent of the State or local agency

responsible for administering or

supervising the administration of State

TANF and WtW programs, to hear

appeals.

Subpart C—Additional Formula Grant

Administrative Requirements and

Procedures

What Constitutes an Allowable Match?

(§ 645.300)

A State will be awarded a total of $2

in WtW formula grant funds for each $1

in State matching expenditures up to

the maximum amount that the State is

entitled to receive under the WtW

allotment formula. If the State chooses

to propose a lesser amount of match

than would be required in order for it

to receive the full allotment, it may do

so. In such cases, the amount of the

Federal WtW grant will be reduced

accordingly.

The regulation authorizes the States to

use the uniform financial and

administrative requirements, codified at

29 CFR 97.24 (the Common Rule),

regarding match allowability and

documentation, except that no more

than one-half of the match may be in the

form of in-kind contributions. We will

allow 50 percent of the required match

to be in-kind contributions in order to

encourage the participation of private

non-profit and faith-based organizations

in efforts to assist individuals transition

from welfare to unsubsidized

employment and economic selfsufficiency. These organizations can

offer significant resources, especially inkind services, to assist WtW program

participants.

Cash donations from non-Federal

third parties that are used to pay for

allowable costs of the WtW grant

program will be considered as cash

match, and not counted as in-kind

contributions. Matching funds include

those State and local dollars in excess

of funds spent to meet the TANF MOE

requirement when those funds are spent

on WtW eligible individuals and

activities. Matching requirements may

not be met by the use of employers’

share of participant wage payments, e.g.,

the employer’s share of OJT. The

planning guidance issued for FY98

reiterated the legislative provision

requiring that the total matching funds

must be expended during the FY in

which the WtW grant is awarded. A

legislative amendment eliminating this

requirement and permitting the

expenditure of matching funds over the

same three-year period as Federal funds

is being considered by Congress. The

final rule will reflect the action taken by

the Congress with respect to this

amendment. If match expenditures do

not satisfy the requirement for the full

level of Federal funds, the grant amount

will be reduced by an appropriate

corresponding amount.
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations 61599

Paragraph (c)(7) of the regulation

indicates that the burden-of-proof for

substantiating match expenditures is to

be borne by the recipient of a WtW grant

based on its own records and/or those

of its subrecipients.

What Assurances Must a State Provide

That It Will Make the Required

Matching Expenditures? (§ 645.310)

This regulation restates the planning

guidance which requires a State to

provide a written estimate of planned

matching expenditures in its State plan

and to describe the process by which

the funds will be tracked and reported

to ensure that the State meets its

projected match.

What Actions Are To Be Taken if a State

Fails To Make the Required Matching

Expenditures? (§ 645.315)

This regulation requires the

Department to implement an annual

reconciliation and grant adjustment

process for WtW grants. The

reconciliation will be based on reported

match expenditures made through the

end of the FY, as specified in the

required report due 45 days after the

end of each fiscal year. If the end-offiscal-year report has not been received

by December 1 of that year, then the

reconciliation will be based on the most

current report received.

In addition, each FY the Department

will evaluate second quarter matching

expenditures to determine the status of

each State’s expenditures compared

with planned match. DOL will alert and

consult with States that appear to be

underexpending matching funds

concerning the possibility of reducing

the grant to reallot funds if match

requirements are not met.

When Will Formula funds be Reallotted

and What Reallotment Procedures Will

the Secretary Use? (§ 645.320)

This section describes the

reconciliation process that the

Department will use for determining

whether or not a State has expended the

required level of matching funds and

the process for reallotment of funds that

become available as a result of

underexpenditure of the required match

or failure to fully obligate funds by

either States or substate entities. Funds

are fully obligated by States when they

are awarded to the substate entities.

Subpart D—State Formula Grants

Administration

Under What Conditions May the

Governor Request an Alternate

Administering Agency at the Local

Level? (§ 645.400)

The regulations reflect the WtW

legislative intent to assign PICs, in

cooperation with Chief Elected Officials

(CEOs), a presumptive role as the

administering agencies for the WtW

program at the local level. The Act also

provides the Governor authority to

select an alternate administrative agency

and to request from the Secretary a

waiver of the statutory provision that

PICs have the sole authority to expend

funds for the program at the local level.

The Governor may request such a

waiver in the State’s annual plan and

must provide information indicating

how the selection of the alternate

agency will improve the effectiveness or

efficiency of the program in each

substate area. In presenting the

rationale, pursuant to section

403(a)(5)(A)(vii)(III) of the Act, the

Governor shall provide such

information as (s)he deems is necessary

to establish that the designated alternate

agency would improve the effectiveness

or efficiency of the administration of the

funds in each SDA.

The Department intends for the

Governors to have maximum flexibility

on what should be included in their

presentation(s) of the reason(s) for the

selection of an alternate administering

agency at the local level. While no

specific format is provided, it is

suggested the Governor include, as part

of the rationale for the selection of an

alternate administering agency,

information regarding the PIC’s

performance, administrative capacity, or

whether the PIC has turned down the

WtW role; and information on the

alternate agency’s capacity and fiscal

integrity. In addition, the Governor is to

provide copies of any comments from

the CEOs regarding the Governor’s

selection of the alternate agency.

In addition, the Governor must

request a waiver if, during the operation

of the local WtW program, s(he)

determined that the PIC, or alternate

agency, which is administering WtW

has not coordinated its expenditures

with expenditure of funds provided to

the State under TANF. Whenever the

Governor requests a waiver, the

Governor is to provide a copy of such

request to the PIC and CEO of the

affected SDA.

The Governor shall bear the burden of

proving that the proposed designated

alternate agency, rather than the PIC,

would improve the effectiveness or

efficiency of the administration of WtW

funds in the SDA. The Secretary shall

assess the information provided by the

Governor, as well as any input from the

affected CEOs, in reaching a decision on

the granting of the waiver requested.

The regulations provide the PIC and

CEO 15 days in which to respond to the

Governor’s waiver request and submit

written comments to the Department.

The Secretary’s decision on the

Governor’s request constitutes final

agency action and is not subject to

further administrative review.

It is the Department’s position,

consistent with section

403(a)(5)(A)(vii)(I) of the Act, that in

WtW programs the PICs have the same

policy guidance and oversight functions

as the PICs have under the JTPA. In

service delivery areas where, pursuant

to the PIC/CEO agreement, the PIC is not

the ‘‘administrative entity’’ or the ‘‘grant

recipient’’ (see JTPA sections 4(2) and

103(b)(1)(B)), the PICs will exercise the

authority specified in the WtW

legislation. In such situations,

consistent with section

403(a)(5)(A)(vii)(I) of the Act, the PIC

can use the current JTPA administering

agency or grant recipient to disburse

WtW funds and manage the program.

Finally, in situations where the alternate

administering agency selected and

approved by the Secretary is neither the

SDA’s administrative entity nor the

SDA’s grant recipient entity, the

Department intends for the alternate

agency to take steps to ensure the

CEO(s) continues to be consulted on

WtW service strategies and activities

planned for the SDA.

What Elements Will the State Use in

Distributing Funds Within the State?

(§ 645.410)

The regulations follow closely the

statutory provisions concerning the

Governor’s responsibility to distribute

funds to the SDAs in the State. The Act

requires the Governors to establish a

formula to distribute funds to the SDAs

in the State and specifies the use of up

to three formula factors described at

section 403(a)(5)(A)(vi)(I) of the Act.

The Governor’s formula cannot contain

any additional formula factors.

In developing the Governor’s formula,

the statute requires that a weight of no

less than 50 percent be given to the

following factor: the number by which

the population of the area with an

income less than the poverty line

exceeds 7.5 percent of the total

population of the area, compared to all

such numbers for all SDAs in the State.

This means that at least 50 percent of

the funds must be distributed to SDAs

based on this factor. If the Governor
61600 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations

chooses not to use this factor in

distributing the rest of the funds, these

funds may be distributed to an SDA

based on one or both of the following

factors: an SDA’s share of the number of

adults receiving assistance under TANF,

or the predecessor program, in the SDA

for at least 30 months (whether

consecutive or not), relative to the

number of such adults residing in the

State; or an SDA’s share of the number

of unemployed individuals residing in

the SDA, relative to the number of such

individuals residing State. If the

Governor chooses to use one or both of

these additional factors, s(he) may not

distribute more that 50 percent of the

funds on the basis of these factors. In

circumstances where the Governor’s

formula allocation to an SDA is less

than $100,000, those amounts are added

to the funds retained at the State level,

thereby increasing the amount of funds

which may be retained at the State

above the 15 percent level. However, in

cases where the distribution formula

would allocate at least $100,000 to an

SDA, those amounts must be allocated

to the SDA within 30 days of the date

the State receives its Federal allotment.

For guidance in determining the

number of individuals with income less

than the poverty line, the regulations

point the States to section 403(a)(5)(D)

of the Act. This section instructs States

to use the methodology used by the

Bureau of the Census to produce and

publish intercensal poverty data for

States and counties. The Department is

aware that the Bureau of the Census in

March of 1997 produced an intercensal

report containing State and county data

estimates of the number of individuals

in poverty and poverty rates for 1993.

States should use this data, or

comparable more recent data published

by the Bureau, to determine the number

of individuals below the poverty line

who exceed 7.5 percent of the total

population of the area. For areas for

which 1993 intercensal data is not

produced and published by the Bureau

of the Census, Governors may use 1990

Census poverty data, in conjunction

with the intercensal poverty data for

related jurisdictions, where appropriate,

as a basis for determining the poverty

data for those areas. The Governor is to

use the most recent year for which

poverty data is available when

determining the number of individuals

below the poverty line and should use

data for the most recent 12-month

period when determining the number of

adults receiving assistance for at least 30

months.

This section also sets forth the

statutory authority of the PICs (or

alternate administering agency) to

determine, within their respective

service delivery areas, the eligible

individuals and the allowable activities

upon which to expend their withinState fund allocation. The Department

expects that a PIC’s targeting of eligible

individuals and the selection of service

strategies will reflect the needs of the

target population and the local

employment opportunities, and are

coordinated with State TANF

expenditures. Up to 15 percent of the funds allotted

to the State may be retained by the State

for projects to transition long-term

recipients into unsubsidized jobs. For a

full discussion of what other

requirements are applicable to funds

retained by the State, please refer to the

preamble discussions of §§ 645.210

through 645.225. The regulations clarify

that the Governor may utilize PICs, as

well other entities, such as One-Stop

systems, private sector employers, labor

organizations, business and trade

associations, education agencies,

housing agencies, community

development corporations,

transportation agencies, communitybased and faith-based organizations,

disability community organizations,

community action agencies, and

colleges and universities, to operate

projects for long-term recipients to enter

unsubsidized jobs. The Department

intends for the Governors to develop

guidelines on such matters as project

application criteria, project design

criteria, project outcome goals, project

placement expectations, project

duration, etc. The Department intends

for the Governors to have maximum

flexibility in the management and

operation of the funds retained by the

State, consistent with statutory

requirements, to enable the Governors to

fund projects that support and

complement the Governors’ and the

PICs’ strategies to transition welfare

recipients into unsubsidized jobs and

economic self-sufficiency.

What Planning Information Must a State

Submit in Order to Receive a Formula

Grant? (§ 645.415)

The regulation follows section

403(a)(5)(ii) of the Act and specifies that

a State must provide an annual plan to

the Secretary for each fiscal year it

wishes to receive funding. The format of

the State plan, as well as the date for

submission, will be established by the

Secretary and provided to the States.

The plan will be an addendum to the

TANF plan and will be submitted to the

Secretaries of Labor and Health and

Human Services.

The Department will review the State

plan and will accept it as complete if the

plan demonstrates compliance with the

WtW legislation. Once the plan is

accepted, the Department will provide

funding to the State. Where a State

includes in its plan a request to use an

agency other than the PIC to administer

the program locally, the Secretary will

carefully assess waiver requests for each

local jurisdiction and will grant a

waiver if the Secretary determines that

the designated alternate agency will

more effectively or efficiently

administer the WtW grant funds for that

area. The Secretary will use the

information submitted by the Governor

as well as input from the affected PICs

and CEOs in the decision-making

process. The Secretary’s decision

whether to grant a waiver shall be

considered final agency administrative

action.

What Factors Will Be Used in

Measuring State Performance?

(§ 645.420)

This regulation advises that the

Secretary will develop and issue a

formula that will be used to measure

State performance and to serve as the

basis for the award of performance

grants in FY 2000. The formula will be

developed in consultation with DHHS,

the National Governors Association

(NGA), and the American Public

Welfare Association (APWA), and will

be published in mid-1998. As required

by section 403(a)(5)(E), the formula will

be the basis used to measure the success

of States in placing individuals in

private sector employment or any kind

of employment, the duration of such

placements, any increase in earnings of

such individuals, and other additional

factors that the Secretary of Labor deems

to be appropriate.

What Are the Roles and Responsibilities

of the State(s) and PIC(s)? (§ 645.425)

This section of the regulations

enumerates a number of State and PIC

roles and responsibilities embedded in

the WtW statute. During the

consultation process conducted by the

Department to gather input on WtW

policy development, there were a

number of requests for the Department

to explain and clarify the State and PIC

roles. The Department believes this

section of the regulation is responsive to

those requests and highlights the key

responsibilities at the State and local

level. It does not attempt to create

arbitrary divisions since it is our view

that coordination among State agencies

and programs (e.g., TANF, employment

service, One-Stop centers), and local

agencies and programs (e.g., PICs, JTPA

Title IIA) is essential to meeting the

goals of the WtW legislation and that the

methods and mechanisms established to
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations 61601

combine resources and mount a

coordinated effort to serve WtW

participants will necessarily vary

according to State/local needs and

established relationships. In general, it

is our view that, under the Act, the State

has the primary responsibility for

ensuring that WtW programs are

consistent with and well coordinated

with services under TANF, and that

local entities are in the best position to

decide the participants to be targeted

and the service mix most appropriate for

the participants. Consistent with

statutory provisions, the State may not

restrict PICs from exercising their

authority to expend funds on the

statutorily eligible populations. PICs,

therefore, have authority to determine

the individuals to be served in the

service delivery areas.

Subpart E—Welfare-To-Work

Competitive Grants

Who Are Eligible Applicants for

Competitive Grant Funds? (§ 645.500)

According to the Act, in order to be

eligible to apply for competitive grant

funds, an organization must be a PIC for

an SDA in a State, a political

subdivision of a State (e.g., cities,

counties), or a private entity applying in

conjunction with the PIC or political

subdivision. The proposal must be

developed in consultation with the

Governor. The Department defines the

term ‘‘in conjunction with’’ to mean that

the application submitted by a private

entity must include a signed

certification by both the applicant and

either the applicable PIC or political

subdivision that the relevant PIC/

political subdivision has been consulted

during the development of the

application and that the activities

proposed in the application are

consistent with, and will be coordinated

with, the WtW efforts of the PIC/

political subdivision.

We believe that this definition of ‘‘in

conjunction with’’ provides sufficient

flexibility for private nonprofit entities,

such as community development

corporations, community-based and

faith-based organizations, disability

community organizations, community

action agencies, and public and private

colleges and universities, to apply for

funds, while ensuring that adequate

coordination with the ongoing WtW

formula program occurs. Our

requirement for consultation and

certification reiterates the Department’s

emphasis on collaboration and

integration of resources at the local

level.

We are also interpreting ‘‘private

entity’’ to be any qualified organization,

public or private, which is neither a PIC

nor a political subdivision of a State.

The legislative intent, however, is that

competitive grants are for projects

which are community based and

responsive to the circumstances in a

local community. Therefore, an

application for competitive grant funds

will be judged for its connection and

responsiveness to a local community.

Although the Department considers

local collaboration to be critical to the

development of a WtW proposal, in

some limited cases, providing evidence

of such a collaborative effort may not be

possible. In these cases, where a private

entity cannot obtain certification from

the PIC/political subdivision, the

applicant must certify, and provide

information indicating, that the PIC/

political subdivision has been provided

a sufficient opportunity to cooperate in

the development of the application and

has not acted within a reasonable period

of time. The Department believes that 30

days is a sufficient period of time in

which a private entity can expect a

response from the PIC or political

subdivision.

This requirement applies to all PICs

or political subdivisions included in the

area to be served by the proposed

project.

What Is the Required Consultation With

the Governor? (§ 645.510)

All applicants for competitive grants,

including PICs and political

subdivisions, must submit their

application to the Governor or the

designated State administrative entity

for the WtW program for review and

comment prior to submission of the

application to the Secretary. We have

defined sufficient time for review and

comment at the State level to be at least

15 days. For applications from private

entities, the 15 day comment period

must be consecutive to the 30 day

period for obtaining evidence of

collaboration and support from the PIC

or political subdivision.

What Are the Program and

Administrative Requirements That

Apply to Both the Formula Grants and

Competitive Grants? (§ 645.515)

The regulations indicate that all of the

general program and administrative

requirements that apply to the WtW

formula grants also apply to the

competitive grants. Competitive grants

will be subject to additional reporting

and monitoring requirements, however,

which will be tailored to the scope of

work of the specific grants.

What Are the Application Procedures

and Timeframes for Competitive Grant

Funds? (§ 645.520)

The Secretary shall establish

appropriate application procedures,

selection criteria and an approval

process to ensure that grant awards

accomplish the statutory purposes of the

competitive grant funds and that

available funds are used in an effective

manner. We anticipate that more than

one application and award process will

occur in each fiscal year of the WtW

program. Grant application procedures

will be published in the Federal

Register for each round of competitive

grants.

What Special Consideration Will Be

Given to Rural Areas and Cities With

Large Concentrations of Poverty?

(§ 645.525)

Competitive grant awards will be

targeted to areas of significant need,

especially rural areas and cities with

large concentrations of residents living

in poverty.

Subpart F—Administrative Appeal

Process

What Administrative Remedies Are

Available Under This Part? (§ 645.800)

The WtW statute contains provisions

(e.g., those addressing the allowable use

of funds) which contemplate the

exercise of discretion by ETA. It is

reasonable to anticipate that there will

be instances where parties will seek to

overturn decisions made by the Agency.

This section sets the administrative

procedures available where a party

seeks review of a Grant Officer

determination that imposes a sanction

or corrective action, pursuant to

§ 645.250(b) of this part. Paragraph (a)

provides that an adverse decision by a

Grant Officer may be appealed, within

21 days of the Grant Officer’s final

determination, to the Department of

Labor’s Office of Administrative Law

Judges. The parties present their cases

before an Administrative Law Judge

(ALJ) who develops the record for the

proceeding, making findings of fact and

of law. Such proceedings are relatively

informal, utilizing relaxed rules of

evidence. For example, a Notice of

Appeal functions simply as the

invocation of a party’s right to

administrative review of an Agency

decision, rather than as a formal

complaint.

Paragraph (b) of this section provides

that the ALJ’s decision regarding a case

arising under this section constitutes

final agency action for the purpose of

judicial review, unless, within 20 days

of the ALJ’s decision, a dissatisfied
61602 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations

party petitions the Administrative

Review Board (ARB) for review. Review

by the ARB is discretionary, so

paragraph (b) of this section provides

that the ALJ’s decision constitutes final

Agency action unless the ARB notifies

the parties, within 30 days of the filing

of the petition for review, that the case

has been accepted for review. Further,

the ALJ’s decision constitutes final

Agency action if the ARB has not

decided the case arising under this

section within 120 days of acceptance

for review.

III. Regulatory Flexibility and

Executive Order

The Regulatory Flexibility Act of

1980, as amended in 1996 (5 U.S.C.

Chapter 6), requires the Federal

government to anticipate and minimize

the impact of rules and paperwork

requirements on small entities. ‘‘Small

entities’’ are defined as small businesses

(those with fewer than 500 employees,

except where otherwise provided),

small non-profit organizations (those

with fewer than 500 employees, except

where otherwise provided) and small

governmental entities (those in areas

with fewer than 50,000 residents). ETA

has assessed the potential impact of the

draft Interim Final Rule, consulting with

a wide range of small entities, in order

to identify any areas of concern. Based

on that assessment, the Agency certifies

that the Interim Final Rule, as

promulgated, will not have a significant

impact on a substantial number of small

entities.

As indicated in the Background

Section (Section I, above), the WtW

Interim Final Rule implements grant

programs that enhance the resources

available to States and PICs or the

additional WtW financial resources

targeted to hard-to-employ welfare

recipients and which will assist in

efforts to move these individuals into

lasting unsubsidized jobs.

ETA has minimized any potential

burdens for grant applicants and

recipients in order to maximize the

resources that will be applied to achieve

the purposes of the WtW program. The

Agency has further ameliorated any

foreseeable burdens by providing (at

§ 645.235 of the Interim Final Rule) that

a grantee can allocate up to 15 percent

of a grant award for management and

administration of the grant, rather than

for the direct provision of services to

participants. The Agency has

determined that the incremental costs of

applying for or administering WtW

grants will be minimal, because

applicants and grantees will, in general,

already be familiar with the grant

process due to involvement in existing

TANF and JTPA programs. Further, ETA

has concluded that any such costs will

not place small entities at a

disadvantage in relation to larger

entities, with regard to obtaining

formula grants or competitive grants.

Therefore, it is unnecessary to set

alternative requirements for small

entities.

In addition, pursuant to the Small

Business Regulatory Fairness Act

(SBREFA) (5 U.S.C. Chapter 8), the

Agency has screened the Interim Final

Rule and has determined that it is not

a ‘‘major rule,’’ as defined in 5 U.S.C.

804(2).

IV. Executive Order 12866

Pursuant to Executive Order 12866,

the Agency has evaluated the Interim

Final Rule and has determined its

provisions are consistent with the

statement of regulatory philosophy and

principles promulgated by the Executive

Order. The Department of Labor is

required to prescribe regulations for the

WtW program within 90 days of the

enactment of the Balanced Budget Act

of 1997. Within this limited time frame,

the Department has made every

reasonable effort to obtain input in a

purposeful manner from a variety of

interested parties (State and local

government officials, community-based

organizations, and the general public).

The WtW grant program increases the

resources available to the public and

private organizations that promote longterm employment and family selfsufficiency. The Agency has determined

the Interim Final Rule will not have an

adverse effect in a material way on the

nation’s economy.

ETA has developed the Interim Final

Rule in close consultation with the

Departments of HHS, HUD, and

Transportation, and with other

responsible Federal agencies. Based on

that consultation, the Agency has

determined the Interim Final Rule will

not create a serious inconsistency or

otherwise interfere with any action

taken or planned by another agency.

The Agency has also assessed the

impact of the WtW State match

requirement and has determined it will

not materially alter the budgetary

impact of entitlements and grants. States

will receive $2 dollars in WtW grant

funds for each $1 in State matching

expenditures up to the State WtW fund

allotment. Further, ETA has determined

that up to 50 percent of the State

matching effort can be ‘‘in kind’’ (goods

and services provided in lieu of cash),

allowing the States additional flexibility

in qualifying for formula funds.

Overall, as discussed above, the

Department has determined that the

Interim Final Rule is not unduly

burdensome and that the impacts and

consequences are non-material for

States, local governmental entities and

other potentially interested parties.

The Agency finds that this Interim

Final Rule raises novel policy issues

and thus constitutes a significant

regulatory action which has been

reviewed by the Office of Management

and Budget for the purposes of

Executive Order 12866.

V. Unfunded Mandates

The Interim Final Rule has been

reviewed in accordance with the

Unfunded Mandates Reform Act of 1995

(UMRA) (2 U.S.C. 1501 et seq.) and

Executive Order 12875. Section 202 of

UMRA requires that a covered agency

prepare a budgetary impact statement

before promulgating a rule that includes

any Federal mandate that may result in

the expenditure by State, local and

Tribal governments, in the aggregate, or

by the private sector, of $100 million or

more in any one year.

If a covered agency must prepare a

budgetary impact statement, section 205

of UMRA further requires that it select

the most cost-effective and least

burdensome alternative that achieves

the objectives of the rule and is

consistent with the statutory

requirements. In addition, section 203 of

UMRA requires a plan for informing and

advising any small government that may

be significantly or uniquely impacted.

ETA has determined that the WtW

Interim Final Rule will not regulate the

expenditure by the State, local, and

Tribal governments, in the aggregate, or

by the private sector, of more than $100

million in any one year (Tribal

governments are covered by a separate

Interim Final Rule for which a separate

Unfunded Mandates statement has been

prepared). Accordingly, the Agency has

not prepared a budgetary impact

statement, specifically addressed the

regulatory alternatives considered, or

prepared a plan for informing and

advising any significant or uniquely

impacted small government.

VI. Effective Date and Absence of

Notice and Comment

The Employment and Training

Administration has determined,

pursuant to 5 U.S.C. 553(b)(B), that the

statutory mandate to promulgate

regulations within 90 days of the

enactment of the statute constitutes

good cause for waiving notice and

comment proceedings. In addition, the

Agency has determined, pursuant to 5

U.S.C. 553(d)(3), that the WtW statutory

mandate provides good cause for

waiving the customary requirement to
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations 61603

delay the effective date of a final rule for

30 days following its publication. The

short statutory duration of the WtW

program underscores the importance of

beginning the disbursement of WtW

funds at the earliest possible date.

Accordingly, the issuance of a proposed

rule, rather than an interim final rule,

(or delaying the effective date for 30

days) would be contrary to the public

interest. The Interim Final Rule sets a

comment period to elicit any concerns

raised by the Rule. ETA has limited the

comment period to 60 days so that any

input is received in time for the Agency

to review it in considering any revisions

to Part 645 while the WtW program is

still in its early steps of operation.

VII. Catalog of Federal Domestic

Assistance Number

The program is listed in the Catalog

of Federal Domestic Assistance at No.

17.253, ‘‘Employment and Training

Assistance—Welfare-to-Work Grants to

States & Local Entities for Hard-toEmploy Welfare Recipient Programs.’’

List of Subjects in 20 CFR Part 645

Employment programs, Grant

programs—labor, Welfare-to-Work

programs.

Signed at Washington, D.C., this 10th day

of November 1997.

Alexis M. Herman,

Secretary of Labor.

Raymond J. Uhalde,

Acting Assistant Secretary, Employment and

Training Administration.

For the reasons set forth in the

preamble, 20 CFR Ch. V is amended by

adding Part 645 to read as follows:

PART 645—PROVISIONS GOVERNING

WELFARE-TO-WORK GRANTS

Subpart A—Scope and Purpose

Sec.

645.100 What does this subpart cover?

645.110 What are the purposes of the

Welfare-to-Work program?

645.120 What definitions apply to this part?

Subpart B—General Program and

Administrative Requirements

645.200 What does this part cover?

645.210 What is meant by the terms

‘‘entity’’ and ‘‘project’’ in the statutory

phrase ‘‘an entity that operates a project’’

with Welfare-to-Work funds?

645.211 How must Welfare-to-Work funds

be spent by the operating entity?

645.212 Who may be served as a hard-toemploy individual under the 70 percent

provision?

645.213 Who may be served as an

individual with long-term welfare

dependence characteristics under the 30

percent provision?

645.214 How will Welfare-to-Work

participant eligibility be determined?

645.220 What activities are allowable under

this part?

645.225 How do Welfare-to-Work activities

relate to activities provided through

TANF and other related programs?

645.230 What general fiscal and

administrative rules apply to the use of

Federal funds?

645.233 What are the time limitations on

the expenditure of Welfare-to-Work grant

funds?

645.235 What types of activities are subject

to the administrative cost limit on

Welfare-to-Work grants?

645.240 What are the reporting

requirements for Welfare-to-Work

programs?

645.245 Who is responsible for oversight

and monitoring of Welfare-to-Work

grants?

645.250 What procedures apply to the

resolution of findings arising from

audits, investigations, monitoring, and

oversight reviews?

645.255 What nondiscrimination

protections apply to participants in

Welfare-to-Work programs?

645.260 What health and safety provisions

apply to participants in Welfare-to-Work

programs?

645.265 What safeguards are there to ensure

that participants in Welfare-to-Work

employment activities do not displace

other employees?

645.270 What procedures are there to

ensure that currently employed workers

may file grievances regarding

displacement and that Welfare-to-Work

participants in employment activities

may file grievances regarding

displacement, health and safety

standards and gender discrimination?

Subpart C—Additional Formula Grant

Administrative Standards and Procedures

645.300 What constitutes an allowable

match?

645.310 What assurances must a State

provide that it will make the required

matching expenditures?

645.315 What actions are to be taken if a

State fails to make the required matching

expenditures?

645.320 When will formula funds be

reallotted, and what reallotment

procedures will the Secretary use?

Subpart D—State Formula Grants

Administration

645.400 Under what conditions may the

Governor request a waiver to designate

an alternate local administering agency?

645.410 What elements will the State use in

distributing funds within the State?

645.415 What planning information must a

State submit in order to receive a

formula grant?

645.420 What factors will be used in

measuring State performance?

645.425 What are the roles and

responsibilities of the State(s) and

PIC(s)?

Subpart E—Welfare-to-Work Competitive

Grants

645.500 Who are eligible applicants for

competitive grants?

645.510 What is the required consultation

with the Governor?

645.515 What are the program and

administrative requirements that apply

to both the formula grants and

competitive grants?

645.520 What are the application

procedures and timeframes for

competitive grant funds?

645.525 What special consideration will be

given to rural areas and cities with large

concentrations of poverty?

Subpart F—Administrative Appeal Process

645.800 What administrative remedies are

available under this part?

Authority: 42 U.S.C. 606(a)(5)(C)(viii).

Subpart A—Scope and Purpose

§ 645.100 What does this subpart cover?

(a) Subpart A establishes regulatory

provisions that apply to the Welfare-toWork (WtW) programs conducted at the

State and at the Service Delivery Area

(SDA) levels.

(b) Subpart B provides general

program requirements applicable to all

WtW formula funds. The provisions of

this subpart govern how WtW funds

must be spent, who is eligible to

participate in the program, allowable

activities and their relationship to

TANF, Governor’s projects for long-term

recipients, administrative and fiscal

provisions, and program oversight

requirements. This subpart also

addresses worker protections and the

establishment of a State grievance

system.

(c) Subpart C sets forth additional

administrative standards and

procedures for WtW Formula Grants,

such as matching requirements and

reallotment procedures.

(d) Subpart D sets forth the conditions

under which the Governor may request

a waiver to designate an alternate

administering agency, sets forth the

formula elements that must be included

in the within-State distribution formula,

the submission of a State annual plan,

the factors for measuring State

performance, and the roles and

responsibilities of the States and the

Private Industry Councils (PICs).

(e) Subpart E outlines general

conditions and requirements for the

WtW Competitive Grants.

(f) Regulatory provisions applicable to

the Indian and Native American

Welfare-to-Work Program (INA WtW)

are found at 20 CFR part 646.
61604 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations

§ 645.110 What are the purposes of the

Welfare-to-Work Program?

The purposes of the WtW program

are:

(a) To facilitate the placement of hardto-employ welfare recipients into

transitional employment opportunities

which will lead to lasting unsubsidized

employment and self-sufficiency;

(b) To provide a variety of activities,

grounded in TANF’s ‘‘work first’’

philosophy, to prepare individuals for,

and to place them in, lasting

unsubsidized employment;

(c) To provide for a variety of postemployment and job retention services

which will assist the hard-to-employ

welfare recipient to secure lasting

unsubsidized employment;

(d) To provide targeted WtW funds to

high poverty areas with large numbers

of hard-to-employ welfare recipients.

§ 645.120 What definitions apply to this

part?

The following definitions apply under

this part:

Act means Title IV, Part A of the

Social Security Act, 42 U.S.C. 601–619.

Adult means an individual who is not

a minor child.

Chief Elected Official(s) (CEOs)

means:

(1) The chief elected official of the

sole unit of general local government in

the service delivery area,

(2) The individual or individuals

selected by the chief elected officials of

all units of general local government in

such area as their authorized

representative, or

(3) In the case of a service delivery

area designated under section

101(a)(4)(A)(iii) of JTPA, the

representative of the chief elected

official for such area (as defined in

section 4(4)(C) of JTPA).

Competitive Grants means those WtW

funds awarded by the Department under

a competitive application process to

local governments, PICs, and private

entities (such as community

development corporations, communitybased and faith-based organizations,

disability community organizations, and

community action agencies) who apply

in conjunction with a PIC or local

government.

Department or DOL means the U.S.

Department of Labor.

Employment activities means the

activities enumerated at § 645.220(b).

ETA means the Employment and

Training Administration of the U.S.

Department of Labor.

Fiscal year (FY) means any 12-month

period ending on September 30 of a

calendar year.

Formula grants means the WtW funds

allotted to each Welfare-to-Work State,

based on a formula prescribed by the

Act, which equally considers States’

shares of the national number of poor

individuals and of adult recipients of

assistance under TANF. The State is

required to distribute not less than 85

percent of the allotted formula grant

funds to service delivery areas in the

State; and the State may retain not more

than 15 percent for projects to help

long-term recipients of assistance enter

unsubsidized employment. Unless

otherwise specified, the term ‘‘formula

grant’’ refers to the 85 percent and 15

percent funds.

Governor means the Chief Executive

Officer of a State.

Job Training Partnership Act or JTPA

means Public Law (Pub. L.) 97–300, as

amended, 29 U.S.C. 1501, et seq.

Minor child means an individual who

has not attained 18 years of age; or has

not attained 19 years of age and is a fulltime student in a secondary school (or

in the equivalent level of vocational or

technical training).

MOE means maintenance of effort.

Under TANF, States are required to

maintain a certain level of spending on

welfare based on ‘‘historic’’ FY 1994

expenditure levels (Section 409 (a)(7) of

the Act).

PIC means a Private Industry Council

established under Section 102 of the Job

Training Partnership Act, which

performs the functions authorized at

Section 103 of the JTPA.

PRWORA means the Personal

Responsibility and Work Opportunity

Reconciliation Act of 1996, Public Law

(Pub. L.) 104–193, which established the

TANF program.

SDA means a service delivery area

designated by the Governor pursuant to

section 101(a)(4) of the Job Training

Partnership Act.

Secretary means the Secretary of

Labor.

Separate State program means a

program operated outside of TANF in

which the expenditures of State funds

may count for TANF MOE purposes.

State means the 50 States of the

United States, the District of Columbia,

the Commonwealth of Puerto Rico, the

US Virgin Islands, Guam, and American

Samoa, unless otherwise specified.

State TANF Program means those

funds expended under the State Family

Assistance Grant (SFAG), the basic

block grant allocated to the States under

Section 403(a)(1) of the Act.

TANF means Temporary Assistance

for Needy Families Program established

under PRWORA.

TANF MOE means the expenditure of

State funds that must be made in order

to meet the Temporary Assistance for

Needy Families Maintenance of Effort

requirement.

WtW means Welfare-to-Work.

WtW State means those States that the

Secretary of Labor determines have met

the five conditions established at

Section 403(a)(5)(A)(ii) of the Act. Only

States that are determined to be WtW

States can receive WtW grant funds.

WtW statute means those provisions

of the Balanced Budget Act of 1997

containing certain amendments to

PRWORA and establishing the new

Welfare-to-Work program, amending

Title IV of the Social Security Act,

(codified at 42 U.S.C. 601–619).

Subpart B—General Program and

Administrative Requirements

§ 645.200 What does this subpart cover?

This subpart provides general

program and administrative

requirements for WtW formula funds,

including Governors’ funds for longterm recipients of assistance, and for

competitive grant funding (section

403(a)(5) of the Act).

§ 645.210 What is meant by the terms

‘‘entity’’ and ‘‘project’’ in the statutory

phrase ‘‘an entity that operates a project’’

with Welfare-to-Work funds?

The terms ‘‘entity’’ and ‘‘project’’, in

the statutory phrase ‘‘an entity that

operates a project’’, means:

(a) For WtW substate formula funds:

(1) ‘‘Entity’’ means the PIC (or the

alternate agency designated by the

Governor and approved by the Secretary

pursuant to § 645.400 of this part) which

administers the WtW substate formula

funds in a service delivery area(s). This

entity is referred to in §§ 645.211

through 645.225 of this part as the

‘‘operating entity.’’

(2) ‘‘Project’’ means all activities,

administrative and programmatic,

supported by the total amount of the

WtW substate formula funds allotted to

the entity described in paragraph (a)(1)

of this section.

(b) For WtW Governors’ funds for

long-term recipients of assistance:

(1) ‘‘Entity’’ means the agency, group,

or organization to which the Governor

has distributed any of the funds for

long-term recipients of assistance, as

described in § 645.410 (b) and (c) of this

part. This entity is referred to in

§§ 645.211 through 645.225 of this part

as the ‘‘operating entity.’’

(2) ‘‘Project’’ means all activities,

administrative and programmatic,

supported by the total amount of one

discrete award of WtW Governors’ funds

for long-term recipients of assistance

awarded to the entity described in

paragraph (b)(1) of this section.

(c) For competitive WtW funds:
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations 61605

(1) ‘‘Entity’’ means an eligible

applicant, as described in § 645.500 of

this part, which is awarded a

competitive WtW grant. This entity is

referred to in §§ 645.211 through

645.225 of this part as the ‘‘operating

entity.’’

(2) ‘‘Project’’ means all of the

activities, administrative and

programmatic, supported by the total

amount of one discrete WtW

competitive grant awarded to the entity

described in paragraph (c)(1) of this

section (section 403(a)(5)(C) of the Act).

§ 645.211 How must Welfare-to-Work

funds be spent by the operating entity?

(a) At least 70 percent of the WtW

funds allotted to or awarded to an

operating entity, as described in

§ 645.210 of this part, must be spent to

benefit hard-to-employ individuals, as

described in § 645.212 of this part.

(b) Not more than 30 percent of the

WtW funds allotted to or awarded to an

operating entity, as described in

§ 645.210 of this part, may be spent to

assist individuals with long-term

welfare dependence characteristics, as

described in § 645.213 of this part. If

less than 30 percent of the funds is

spent to assist individuals with longterm welfare dependence

characteristics, the remaining funds

shall be spent to benefit hard-to-employ

individuals pursuant to paragraph (a) of

this section (section 403(a)(5)(C)of the

Act).

§ 645.212 Who may be served as a hardto-employ individual under the 70 percent

provision?

(a) An individual is eligible to be

served under the 70 percent provision if

(s)he meets all three of the criteria listed

in paragraphs (a)(1), (2), and (3) of this

section:

(1) The individual is receiving TANF

assistance; and

(2) Barriers to employment—at least

two of the three following barriers to

employment must apply to the

individual:

(i) Has not completed secondary

school or obtained a certificate of

general equivalency, and has low skills

in reading or mathematics. At least 90

percent of individuals determined to

have low skills in reading or

mathematics must be proficient at the

8.9 grade level or below.

(ii) Requires substance abuse

treatment for employment.

(iii) Has a poor work history. At least

90 percent of individuals determined to

have a poor work history must have

worked no more than 3 consecutive

months in the past 12 calendar months;

and

(3) Length of receipt of TANF

assistance—the individual must be a

long-term recipient, meeting one of the

following two criteria:

(i) Has received assistance under a

State TANF program, and/or its

predecessor program, for at least 30

months. The months do not have to be

consecutive; or

(ii) Will become ineligible for

assistance within 12 months due to

either Federal or State-imposed

durational time limits on receipt of

TANF assistance. This includes

individuals who have been exempted

from the durational limits due to

hardship pursuant to section

408(a)(7)(C) of the Act, but would face

termination within 12 months without

the exemption.

(b) A noncustodial parent of a minor

is eligible to participate under the 70

percent provision if the custodial parent

meets the eligibility requirements of

paragraph (a) of this section.

(c) An individual who has barriers to

employment, as specified in paragraph

(a)(2) of this section, and who would be

otherwise eligible to receive TANF

assistance but is no longer receiving

TANF assistance because (s)he has

reached either the Federal five-year

lifetime limit on receipt of assistance, or

a State-imposed lifetime limit, is eligible

to participate under the 70 percent

provision (section 403(a)(5)(C) of the

Act).

§ 645.213 Who may be served as an

individual with long-term welfare

dependence characteristics under the 30

percent provision?

(a) An individual is eligible to be

served under the 30 percent provision if

(s)he meets both criteria listed in

paragraphs (a)(1) and (2) of this section:

(1) The individual is receiving TANF

assistance; and

(2) The individual has characteristics

associated with, or predictive of, longterm welfare dependence, such as

having dropped out of school, teenage

pregnancy, or having a poor work

history. States, in consultation with the

operating entity, may designate

additional characteristics associated

with, or predictive of, long-term welfare

dependence.

(b) A noncustodial parent of a minor

child is eligible to participate under the

30 percent provision if the noncustodial

parent has the characteristics specified

in paragraph (a)(2) of this section, and

the custodial parent is receiving TANF

assistance.

(c) An individual who has

characteristics associated with, or

predictive of, long-term welfare

dependence, as specified in paragraph

(a)(2) of this section, and who would be

otherwise eligible to receive TANF

assistance but is no longer receiving

TANF assistance because (s)he has

reached either the Federal five-year

lifetime limit on receipt of assistance, or

a State-imposed lifetime limit, is eligible

to participate under the 30 percent

provision (section 403(a)(5)(C) of the

Act).

§ 645.214 How will Welfare-to-Work

participant eligibility be determined?

(a) The operating entity, as described

in §§ 645.210(a)(1), (b)(1), and (c)(1) of

this part, is accountable for ensuring

that WtW funds are spent only on

individuals eligible for WtW projects.

(b) The operating entity must ensure

that there are mechanisms in place to

determine WtW eligibility for

individuals who are receiving TANF

assistance. These mechanisms:

(1) Must include arrangements with

the TANF agency to ensure that a WtW

eligibility determination is based on

information, current at the time of the

WtW eligibility determination, about

whether an individual is receiving

TANF assistance, pursuant to

§§ 645.212(a)(1) and 645.213(a)(1) of

this part, the length of receipt of TANF

assistance, pursuant to § 645.212(a)(3)(i)

of this part, and when an individual

may become ineligible for assistance

pursuant to § 645.212(a)(3)(ii) of this

part (section 403(a)(5)(A)(ii)(dd) of the

Act).

(2) May include a determination of

WtW eligibility for barriers to

employment, pursuant to § 645.212(a)(2)

of this part, and for characteristics of

long-term welfare dependence, pursuant

to § 645.213(a)(2) of this part, based on

information collected by the operating

entity or the TANF agency up to six

months prior to the WtW eligibility

determination.

(c) The operating entity must ensure

that there are mechanisms in place to

determine WtW eligibility for

individuals who are not receiving TANF

assistance (i.e., noncustodial parents,

pursuant to §§ 645.212(b) and

645.213(b) of this part, and individuals

who have reached the time limit on

receipt of TANF, pursuant to

§§ 645.212(c) and 645.213(c) of this

part). Mechanisms may include, but are

not limited to:

(1) Using staff from the operating

entity to determine eligibility;

(2) Entering into agreements with

local agencies such as the TANF agency

and other appropriate agencies which

foster coordination and facilitate the

exchange of eligibility information

among parties at the local level; and/or
61606 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations

1OMB Circulars are available from: Executive

Office of the President Publications Service, 725

17th Street NW, Suite G–2200, Washington, DC

20503; 202–395–7332.

(3) Performing joint eligibility

determination with other appropriate

agencies, including the TANF agency.

(d) Eligibility for WtW need not be

redetermined for an individual after the

individual begins to receive WtW

services (section 403(a)(5)(C) of the Act).

§ 645.220 What activities are allowable

under this part?

Entities operating WtW projects may

use WtW funds for the following:

(a) Job readiness activities financed

through job vouchers or through

contracts with public or private

providers.

(b) Employment activities which

consist of any of the following:

(1) Community service programs;

(2) Work experience programs;

(3) Job creation through public or

private sector employment wage

subsidies; and

(4) On-the-job training.

(c) Job placement services financed

through job vouchers or through

contracts with public or private

providers, subject to the payment

requirements at § 645.230(a)(3).

(d) Post-employment services

financed through job vouchers or

through contracts with public or private

providers, which are provided after an

individual is placed in one of the

employment activities listed in

paragraph (b) of this section, or in any

other subsidized or unsubsidized job.

Post-employment services include, but

are not limited to, such services as:

(1) Basic educational skills training;

(2) Occupational skills training;

(3) English as a second language

training; and

(4) Mentoring.

(e) Job retention services and support

services which are provided after an

individual is placed in a job readiness

activity, as specified in paragraph (a) of

this section, in one of the employment

activities, as specified in paragraph (b)

of this section, or in any other

subsidized or unsubsidized job. These

services can be provided with WtW

funds only if they are not otherwise

available to the participant. Job

retention and support services include,

but are not limited to, such services as:

(1) Transportation assistance;

(2) Substance abuse treatment (except

that WtW funds may not be used to

provide medical treatment);

(3) Child care assistance;

(4) Emergency or short term housing

assistance; and

(5) Other supportive services.

(f) Individual development accounts

which are established in accordance

with section 404 (h) of the Act.

(g) Intake, assessment, eligibility

determination, development of an

individualized service strategy, and case

management may be incorporated in the

design of any of the allowable activities

listed in paragraphs (a) through (f) of

this section (section 403(a)(5)(C) of the

Act).

§ 645.225 How do Welfare-to-Work

activities relate to activities provided

through TANF and other related programs?

(a) Activities provided through WtW

must be coordinated effectively at the

State and local levels with activities

being provided through TANF (section

403(a)(5)(A)(vii)(II) of the Act).

(b) The operating entity must ensure

that there is an assessment of skills,

prior work experience, employability,

and other relevant information in place

for each WtW participant. Where

appropriate, the assessment performed

by the TANF agency or JTPA should be

used for this purpose.

(c) The operating entity must ensure

that there is an individualized strategy

for transition to unsubsidized

employment in place for each

participant which takes into account

participant assessments, including the

TANF assessment and any JTPA

assessment. Where appropriate, the

TANF individual responsibility plan

(IRP) or JTPA individual service strategy

should be used for this purpose.

(d) Coordination of resources should

include not only those available through

WtW and TANF grant funds, and the

Child Care and Development Block

Grant, but also those available through

other related activities and programs

such as the JTPA programs, the State

employment service, One-Stop systems,

private sector employers, labor

organizations, business and trade

associations, education agencies,

housing agencies, community

development corporations,

transportation agencies, communitybased and faith-based organizations,

disability community organizations,

community action agencies, and

colleges and universities which provide

some of the assistance needed by the

targeted population (section 402(a)(5)(A)

of the Act).

§ 645.230 What general fiscal and

administrative rules apply to the use of

Federal funds?

(a) Uniform fiscal and administrative

requirements. (1) State, local, and

Indian tribal government organizations

are required to follow the common rule

‘‘Uniform Administrative Requirements

for Grants and Cooperative Agreements

to State and Local Governments’’ which

is codified in the DOL regulations at 29

CFR part 97.

(2) Institutions of higher education,

hospitals, and other non-profit

organizations are required to follow

OMB Circular A–110 which is codified

in the DOL regulations at 29 CFR part

95.

(3) In addition to the requirements at

29 CFR 95.48 and 29 CFR 97.36(i),

contracts or vouchers for job placement

services supported by funds provided

for this program must include a

provision to require that at least onehalf (1⁄2) of the payment occur after an

eligible individual placed into the

workforce has been in the workforce for

six (6) months. This provision applies

only to placement in unsubsidized jobs

(section 403(a)(5)(C)(i) of the Act).

(4) In addition to the requirements at

29 CFR 95.42 and 29 CFR 97.36(b)(3)

which address codes of conduct and

conflict of interest issues related to

employees, it is also required that:

(i) A PIC member shall neither cast a

vote on, nor participate in, any decision

making capacity on the provision of

services by such member (or any

organization which that member

directly represents), nor on any matter

which would provide any direct

financial benefit to that member or a

member of his immediate family.

(ii) Neither membership on the PIC

nor the receipt of WtW funds to provide

training and related services shall be

construed, by itself, to violate these

conflict of interest provisions.

(5) The addition method shall be

required for the use of all program

income earned under WtW grants. The

cost of generating program income shall

be subtracted from the amount earned to

establish the amount of program income

available for use under the grants.

(b) Audit requirements. All

governmental and non-profit

organizations are required to follow the

audit requirements of OMB Circular A–

133.1 This requirement is imposed at 29

CFR 97.26 for governmental

organizations and at 29 CFR 95.26 for

institutions of higher education,

hospitals, and other non-profit

organizations.

(c) Allowable costs/cost principles.

The DOL regulations at 29 CFR 95.27

and 29 CFR 97.22 identify the Federal

principles for determining allowable

costs which each kind of recipient and

subrecipient must follow. For those

selected items of cost requiring prior

approval, the authority to grant or deny

approval is delegated to the Governor.

(1) State, local, and Indian tribal

government organizations must

determine allowability of costs in
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations 61607

accordance with the provisions of OMB

Circular A–87, ‘‘Cost Principles for State

and Local Governments.’’

(2) Non-profit organizations must

determine allowability of costs in

accordance with OMB Circular A–122,

‘‘Cost Principles for Non-Profit

Organizations.’’

(3) Institutions of higher education

must determine allowability of costs in

accordance with OMB Circular A–21,

‘‘Cost Principles for Education

Institutions.’’

(4) Hospitals must determine

allowability of costs in accordance with

the provisions of appendix E of 45 CFR

part 74, ‘‘Principles for Determining

Costs Applicable to Research and

Development Under Grants and

Contracts with Hospitals.’’

(5) Commercial organizations and

those non-profit organizations listed in

Attachment C to OMB Circular A–122

must determine allowability of costs in

accordance with the provisions of the

Federal Acquisition Regulation (FAR),

at 48 CFR part 31.

(d) Government-wide debarment and

suspension, and government-wide drugfree workplace requirements. All WtW

grant recipients and subrecipients are

required to comply with the

government-wide requirements for

debarment and suspension, and the

government-wide requirements for a

drug-free workplace which are codified

in the DOL regulations at 29 CFR part

98.

(e) Restrictions on lobbying. All WtW

grant recipients and subrecipients are

required to comply with the restrictions

on lobbying which are codified in the

DOL regulations at 29 CFR part 93.

(f) Nondiscrimination. All WtW grant

recipients and subrecipients are

required to comply with the

nondiscrimination provisions which are

codified in the DOL regulations at 29

CFR parts 31 and 32. In addition,

recipients of WtW grants who are also

recipients under JTPA are required to

comply with 20 CFR part 34. For

purposes of this paragraph, the term

‘‘recipient’’ has the same meaning as the

term is defined in 29 CFR parts 31, 32,

and 34. Participant rights related to

nondiscrimination may be found at

§ 645.255 of this part.

(g) Nepotism. (1) No individual may

be placed in a WtW employment

activity if a member of that person’s

immediate family is engaged in an

administrative capacity for the

employing agency.

(2) To the extent that an applicable

State or local legal requirement

regarding nepotism is more restrictive

than this provision, such State or local

requirement shall be followed.

§ 645.233 What are the time limitations on

the expenditure of Welfare-to-Work grant

funds?

(a) Formula grant funds. The

maximum time limit for the expenditure

of a given fiscal year allotment is three

years from the effective date of the

Federal grant award to the State. The

maximum time limit will be allowed

and will be specified in the

Department’s formula grant document

for each fiscal year of funds provided to

the State. Any remaining funds that

have not been expended at the end of

the expenditure period must be returned

to the Department in accordance with

the applicable closeout procedures for

formula grants.

(b) Competitive grant funds. The

maximum time limit for the expenditure

of these funds is three years from the

effective date of award, but will, in all

cases, be determined by the grant period

and the terms and conditions specified

in the Federal grant award agreement

(including any applicable grant

modification documents). Any

remaining funds that have not been

expended at the end of the approved

grant period must be returned to the

Department in accordance with the

applicable closeout procedures for

competitive grants (section

503(a)(5)(C)(vii) of the Act).

§ 645.235 What types of activities are

subject to the administrative cost limit on

Welfare-to-Work grants?

(a) Administrative cost limitation

(section 404(b)(1)). (1) Formula grants to

States. Expenditures for administrative

purposes under WtW formula grants to

States are limited to fifteen percent

(15%) of the grant award.

(2) Competitive grants. The limitation

on expenditures for administrative

purposes under WtW competitive grants

will be specified in the grant agreement

but in no case shall the limitation be

more than fifteen percent (15%) of the

grant award.

(b) The costs of administration are

that allocable portion of necessary and

allowable costs associated with the

overall management and administration

of the WtW program and which are not

directly related to the provision of

services to participants. These costs can

be both personnel and non-personnel

and both direct and indirect. Costs of

administration shall include:

(1) Except as provided in paragraph

(c)(1) of this section, costs of salaries,

wages, and related costs of the

recipient’s, subrecipient’s or PIC’s staff

engaged in:

(i) Overall program management,

program coordination, and general

administrative functions, including the

salaries and related costs of the

executive director, WtW director,

project director, personnel officer, fiscal

officer/bookkeeper, purchasing officer,

secretary, payroll/insurance/property

clerk and other costs associated with

carrying out administrative functions;

(ii) Preparing program plans, budgets,

schedules, and amendments thereto;

(iii) Monitoring of programs, projects,

subrecipients, and related systems and

processes;

(iv) Procurement activities, including

the award of specific subgrants,

contracts, and purchase orders;

(v) Providing State or local officials

and the general public with information

about the program (public relations);

(vi) Developing systems and

procedures, including management

information systems (except as provided

in paragraph (c)(3) of this section), for

assuring compliance with program

requirements;

(vii) Preparing reports and other

documents related to the program

requirements;

(viii) Coordinating the resolution of

audit findings;

(ix) Evaluating program results against

stated objectives; and

(x) Performing administrative

services, including such services as

general legal services, accounting

services, audit services; and managing

purchasing, property, payroll, and

personnel;

(2) Except as provided at paragraph

(c)(3) of this section, costs for goods and

services required for administration of

the program, including such goods and

services as rental or purchase of

equipment, utilities, office supplies,

postage, and rental and maintenance of

office space;

(3) The costs of organization-wide

management functions; and

(4) Travel costs incurred for official

business in carrying out program

management or administrative

activities.

(5) These Interim Final WtW

regulations adopt the description of the

term ‘‘Administrative Costs’’ found in

the JTPA regulations at 29 CFR 627.440

to minimize the burden on PICs. The

Secretary reserves the right to change

the definition to be consistent with the

TANF definition when final TANF

regulations are issued.

(c) Other cost classification guidance.

(1) Personnel and related non-personnel

costs of the recipient’s or subrecipient’s

staff, including project directors, who

perform both administrative and

programmatic services or activities may

be allocated to the benefitting cost

objectives/categories based on

documented distributions of actual time
61608 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations

worked or other equitable cost

allocation methods.

(2) Indirect or overhead costs

normally shall be charged to

administration, except that specific

costs charged to an overhead or indirect

cost pool that can be identified directly

with a cost objective/category other than

administration may be charged to the

cost objective/category directly

benefitted. Documentation of such

charges shall be maintained.

(3) The costs of information

technology—computer hardware and

software—needed for tracking or

monitoring under a WtW grant shall not

be charged to the administration of the

grant (section 404(b)(2) of the Act).

Only the costs of information

technology that is ‘‘year 2000

compliant’’ shall be allowable under

WtW grants. To meet this requirement,

information technology must be able to

accurately process date/time data

(including, but not limited to,

calculating, comparing and sequencing)

from, into and between the twentieth

and twenty-first centuries, and the years

1999 and 2000. The information

technology must also be able to make

leap year calculations. Furthermore,

‘‘year 2000 compliant’’ information

technology when used in combination

with other information technology shall

accurately process date/time data if the

other information technology properly

exchanges date/time data with it.

§ 645.240 What are the reporting

requirements for Welfare-to-Work

programs?

(a) General. All States and other direct

grant recipients shall report pursuant to

instructions issued by DOL (financial

data) and by DHHS (participant data

only). Reports shall be submitted no

more frequently than quarterly within a

time period specified in the reporting

instructions. In addition, DOL will

establish supplemental reporting

requirements for competitive grant

recipients through the grant agreements

pursuant to § 645.515 of this part.

(b) Subrecipient reporting. A State or

other direct grant recipient may impose

different forms or formats, shorter due

dates, and more frequent reporting

requirements on subrecipients.

However, the recipient is required to

meet the reporting requirements

imposed by DOL and DHHS.

(c) Financial reports. Financial

reports shall be submitted to DOL by

each grant recipient. Reported

expenditures and program income must

be on the accrual basis of accounting

and cumulative by fiscal year of

appropriation. If the recipient’s

accounting records are not normally

kept on the accrual basis of accounting,

the recipient shall develop accrual

information through an analysis of the

documentation on hand.

(d) Due date. Financial reports will be

due no later than 45 days after the end

of each quarter. A final financial report

is required 90 days after the expiration

of a funding period or the termination

of grant support.

(e) Optional SPIR Reporting. DOL may

also provide instructions for an optional

modified SPIR for internal program

management (section 411(a) of the Act).

§ 645.245 Who is responsible for oversight

and monitoring of Welfare-to-Work grants?

(a) The Secretary may monitor all

recipients and subrecipients of all grants

awarded and funds expended under

WtW. Federal oversight will be

conducted primarily at the State level

for formula grants and at the recipient

level for competitive grants.

(b) The Governor shall monitor PICs

(or other approved administrative

entities) funded under the State’s

formula allocated grants on a periodic

basis for compliance with applicable

laws and regulations. The Governor

shall develop and make available for

review a State monitoring plan.

§ 645.250 What procedures apply to the

resolution of findings arising from audits,

investigations, monitoring and oversight

reviews?

(a) Resolution of subrecipient level

findings. (1) The Governor is

responsible for the resolution of

findings that arise from the State’s

monitoring reviews, investigations and

audits (including OMB Circular A–133

audits) of subrecipients.

(2) A State shall utilize the audit

resolution, debt collection and appeal

procedures that it uses for other Federal

grant programs.

(3) If a State does not have such

procedures, it shall prescribe standards

and procedures to be used for this grant

program.

(b) Resolution of State level findings.

(1) The Secretary is responsible for the

resolution of findings that arise from

federal audits, monitoring reviews,

investigations, incident reports, and

recipient level OMB Circular A–133

audits.

(2) The Secretary will use the DOL

audit resolution process, consistent with

the Single Audit Act of 1996 and OMB

Circular A–133.

(3) A final determination issued by a

grant officer pursuant to this process

may be appealed to the DOL Office of

Administrative Law Judges under the

procedures at § 645.800.

(c) Resolution of nondiscrimination

findings. Findings arising from

investigations or reviews conducted

under nondiscrimination laws shall be

resolved in accordance with those laws

and the applicable implementing

regulations.

§ 645.255 What nondiscrimination

protections apply to participants in Welfareto-Work programs?

(a) All participants in WtW programs

under this part shall have such rights as

are available under all applicable

Federal, State and local laws prohibiting

discrimination including:

(1) The Age Discrimination Act of

1975 (42 U.S.C. 6101 et seq.);

(2) Section 504 of the Rehabilitation

Act of 1973 (29 U.S.C. 794);

(3) The Americans with Disabilities

Act of 1990 (42 U.S.C. 12101 et seq.);

and

(4) Title VI of the Civil Rights Act of

1964 (42 U.S.C. 2000d et seq.).

(b) Complaints alleging

discrimination in violation of any

applicable Federal, State or local law,

including those listed in paragraph (a)

of this section, shall be processed in

accordance with those laws and the

implementing regulations.

(c) Questions about or complaints

alleging a violation of the

nondiscrimination laws in paragraph (a)

of this section may be directed or

mailed to the Director, Civil Rights

Center, U.S. Department of Labor, Room

N4123, 200 Constitution Avenue, NW,

Washington, D.C. 20210 for processing.

(d) Participants in job readiness and

employment activities operated with

WtW funds, as defined in § 645.220 of

this part, shall not be discriminated

against because of gender. Participants

alleging gender discrimination may file

a complaint using the State’s grievance

system procedures as described in

§ 645.270 of this part (section

403(a)(5)(J)(iii) of the Act).

§ 645.260 What health and safety

provisions apply to participants in Welfareto-Work programs?

(a) Participants in an employment

activity operated with WtW funds, as

defined in § 645.220 of this part, are

subject to the same health and safety

standards established under State and

Federal law which are applicable to

similarly employed employees, of the

same employer, who are not

participants in programs under WtW.

(b) Participants alleging a violation of

these health and safety standards may

file a complaint pursuant to the

procedures contained in § 645.270 of

this part (section 403(a)(5)(J)(ii) of the

Act).
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations 61609

§ 645.265 What safeguards are there to

ensure that participants in Welfare-to-Work

employment activities do not displace other

employees?

(a) An adult participating in an

employment activity operated with

WtW funds, as described in § 645.220 of

this part, may fill an established

position vacancy subject to the

limitations in paragraph (c) of this

section.

(b) An employment activity operated

with WtW funds, as described in

§ 645.220 of this part, shall not violate

existing contracts for services or

collective bargaining agreements. Where

such an employment activity would

violate a collective bargaining

agreement, the appropriate labor

organization and employer shall provide

written concurrence before the

employment activity is undertaken.

(c) An adult participating in an

employment activity operated with

WtW funds, as described in § 645.220 of

this part, shall not be employed or

assigned:

(1) When any other individual is on

layoff from the same or any

substantially equivalent job within the

same organizational unit;

(2) If the employer has terminated the

employment of any regular,

unsubsidized employee or otherwise

caused an involuntary reduction in its

workforce with the intention of filling

the vacancy so created with the WtW

participant; and,

(3) If the employer has caused an

involuntary reduction to less than full

time in hours of any employee in the

same or substantially equivalent job

within the same organizational unit.

(d) Regular employees and program

participants alleging displacement may

file a complaint pursuant to § 645.270 of

this part (section 403(a)(5)(J)(i) of the

Act).

§ 645.270 What procedures are there to

ensure that currently employed workers

may file grievances regarding displacement

and that Welfare-to-Work participants in

employment activities may file grievances

regarding displacement, health and safety

standards and gender discrimination?

(a) The State shall establish and

maintain a grievance procedure for

resolving complaints from:

(1) Regular employees that the

placement of a participant in an

employment activity operated with

WtW funds, as described in § 645.220 of

this part, violates any of the

prohibitions described in § 645.265 of

this part; and

(2) Program participants in an

employment activity operated with

WtW funds, as described in § 645.220 of

this part, that any employment activity

violates any of the prohibitions

described in §§ 645.255(d), 645.260, or

645.265 of this part.

(b) Such grievance procedure should

include an opportunity for informal

resolution.

(c) If no informal resolution can be

reached within the specified time as

established by the State as part of its

grievance procedure, such procedure

shall provide an opportunity for the

dissatisfied party to receive a hearing

upon request.

(d) The State shall specify the time

period and format for the hearing

portion of the grievance procedure, as

well as the time period by which the

complainant will be provided the

written decision by the State.

(e) A decision by the State under

paragraph (d) of this section may be

appealed by any dissatisfied party

within 30 days of the receipt of the

State’s written decision, according to

the time period and format for the

appeals portion of the grievance

procedure as specified by the State.

(f) The State shall designate the State

agency which will be responsible for

hearing appeals. This agency shall be

independent of the State or local agency

which is administering, or supervising

the administration of the State TANF

and WtW programs.

(g) No later than 120 days of receipt

of an individual’s original grievance, the

State agency, as designated in paragraph

(f) of this section, shall provide a

written final determination of the

individual’s appeal.

(h) The grievance procedure shall

include remedies for violations of

§§ 645.255(d), 645.260, and 645.265 of

this part which may continue during the

grievance process and which may

include:

(1) Suspension or termination of

payments from funds provided under

this part;

(2) Prohibition of placement of a WtW

participant with an employer that has

violated §§ 645.255(d), 645.260, and

645.265 of this part;

(3) Where applicable, reinstatement of

an employee, payment of lost wages and

benefits, and reestablishment of other

relevant terms, conditions, and

privileges of employment; and

(4) Where appropriate, other equitable

relief (section 403(a)(5)(J)(iv) of the Act).

Subpart C—Additional Formula Grant

Administrative Standards and

Procedures

§ 645.300 What constitutes an allowable

match?

(a) A State is entitled to receive two

(2) dollars of Federal funds for every

one (1) dollar of State match

expenditures, up to the amount

available for allotment to the State based

on the State’s percentage for WtW

formula grant for the fiscal year. The

State is not required to provide a level

of match necessary to support the total

amount available to it based on the

State’s percentage for WtW formula

grant. However, if the proposed match

is less than the amount required to

support the full level of federal funds,

the grant amount will be reduced

accordingly (section 403(a)(5)(A)(i)(I) of

the Act).

(b) States shall follow the match or

cost-sharing requirements of the

‘‘Common Rule’’ Uniform

Administrative Requirements for Grants

and Cooperative Agreements to State

and Local Governments (codified for

DOL at 29 CFR 97.24). Paragraphs (b)(1)

(i) and (ii), (b)(3), (b)(4) and (c)(1) of this

section are in addition to the common

rule requirements. Also, paragraphs

included in the common rule which

relate to the use of donated buildings

and other real property as match have

been excluded from this provision.

(1) Only costs that would be allowable

if paid for with WtW grant funds will be

accepted as match.

(i) Because the use of Federal funds is

prohibited for construction or purchase

of facilities or buildings except where

there is explicit statutory authority

permitting it, costs incurred for the

construction or purchase of facilities or

buildings shall not be acceptable as

match for a WtW grant.

(ii) Because the costs of construction

or purchase of facilities or buildings are

unallowable as match, the donation of a

building or property as a third party inkind contribution is also unallowable as

a match for a WtW grant.

(2) A match or cost-sharing

requirement may be satisfied by either

or both of the following:

(i) Allowable costs incurred by the

grantee, subgrantee or a cost type

contractor under the assistance

agreement. This includes allowable cost

borne by non-Federal grants or by others

and cash donations from non-Federal

third parties.

(ii) The value of third party in-kind

contributions applicable to the FY

period to which the cost-sharing or

matching requirement apply.

(3) No more than one-half (1⁄2) of the

total match expenditures may be in the

form of third party in-kind

contributions.

(4) Match expenditures must be

recorded in the books of account of the

entity that incurred the cost or received

the contribution. These amounts may be
61610 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations

rolled up and reported as aggregate State

level match.

(c) Qualifications and exceptions. (1)

The matching requirements may not be

met by the use of an employer’s share

of participant wage payments (e.g.,

employer share of OJT wages).

(2) Costs borne by other Federal grant

agreements. A cost-sharing or matching

requirement may not be met by costs

borne by another Federal grant. This

prohibition does not apply to income

earned by a grantee or subgrantee from

a contract awarded under another

Federal grant.

(3) General revenue sharing. For the

purpose of this section, general revenue

sharing funds distributed under 31

U.S.C. 6702 are not considered Federal

grant funds.

(4) Cost or contributions counted

towards other Federal cost-sharing

requirements. Neither costs nor the

values of third party in-kind

contributions may count towards

satisfying a cost-sharing or matching

requirement of a grant agreement if they

have been or will be counted towards

satisfying a cost-sharing or matching

requirement of another Federal grant

agreement, a Federal procurement

contract, or any other award of Federal

funds.

(5) Costs financed by program

income. Costs financed by program

income, as defined in 29 CFR 97.25,

shall not count towards satisfying a

cost-sharing or matching requirement

unless they are expressly permitted in

the terms of the assistance agreement.

(This use of general program income is

described in § 97.25(g)).

(6) Services or property financed by

income earned by contractors.

Contractors under a grant may earn

income from the activities carried out

under the contract in addition to the

amounts earned from the party

awarding the contract. No costs of

services or property supported by this

income may count toward satisfying a

cost-sharing or matching requirement

unless other provisions of the grant

agreement expressly permit this kind of

income to be used to meet the

requirement.

(7) Records. Costs and third party inkind contributions counting towards

satisfying a cost-sharing or matching

requirement must be verifiable from the

records of grantees and subgrantee or

cost-type contractors. These records

must show how the value placed on

third party in-kind contributions was

derived. To the extent feasible,

volunteer services will be supported by

the same methods that the organization

uses to support the allocability of

regular personnel costs.

(8) Special standards for third party

in-kind contributions. (i) Third party inkind contributions count towards

satisfying a cost-sharing or matching

requirement only where, if the party

receiving the contributions were to pay

for them, the payments would be

allowable costs.

(ii) Some third party in-kind

contributions are goods and services

that, if the grantee, subgrantee, or

contractor receiving the contribution

had to pay for them, the payments

would have been an indirect costs. Cost

sharing or matching credit for such

contributions shall be given only if the

grantee, subgrantee, or contractor has

established, along with its regular

indirect cost rate, a special rate for

allocating to individual projects or

programs the value of the contributions.

(iii) A third party in-kind contribution

to a fixed-price contract may count

towards satisfying a cost-sharing or

matching requirement only if it results

in:

(A) An increase in the services or

property provided under the contract

(without additional cost to the grantee

or subgrantee) or

(B) A cost savings to the grantee or

subgrantee.

(iv) The values placed on third party

in-kind contributions for cost-sharing or

matching purposes will conform to the

rules in the succeeding sections of this

part. If a third party in-kind

contribution is a type not treated in

those sections, the value placed upon it

shall be fair and reasonable.

(d) Valuation of donated services. (1)

Volunteer services. Unpaid services

provided to a grantee or subgrantee by

individuals will be valued at rates

consistent with those ordinarily paid for

similar work in the grantee’s or

subgrantee’s organization. If the grantee

or subgrantee does not have employees

performing similar work, the rates will

be consistent with those ordinarily paid

by other employers for similar work in

the same labor market. In either case, a

reasonable amount for fringe benefits

may be included in the valuation.

(2) Employees of other organizations.

When an employer other than a grantee,

subgrantee, or cost-type contractor

furnishes free of charge the services of

an employee in the employee’s normal

line of work, the services will be valued

at the employee’s regular rate of pay

exclusive of the employee’s fringe

benefits and overhead costs. If the

services are in a different line of work,

paragraph (d)(1) of this section applies.

(e) Valuation of third party donated

supplies and loaned equipment or

space. (1) If a third party donates

supplies, the contribution will be

valued at the market value of the

supplies at the time of donation.

(2) If a third party donates the use of

equipment or space in a building but

retains title, the contribution will be

valued at the fair rental rate of the

equipment or space.

§ 645.310 What assurance must a State

provide that it will make the required

matching expenditures?

In its State plan, a State must provide

a written estimate of planned matching

expenditures and describe the process

by which the funds will be tracked and

reported to ensure that the State meets

its projected match (section

403(a)(5)(A)(i)(I) of the Act).

§ 645.315 What actions are to be taken if

a State fails to make the required matching

expenditures?

(a) The Department will implement an

annual reconciliation and grant

adjustment for WtW grants.

(1) The reconciliation will be based

on reported match expenditures through

the end of the FY report, which is due

45 days after the end of the fiscal year.

(2) If the end of FY report has not

been received by December 1 of that

year, then the reconciliation will be

based on the most current report

received.

(b) If match expenditures do not

satisfy the requirement of the FY grant,

the subsequent FY grant amount will be

reduced by the appropriate

corresponding amount (i.e., the grant

will reduced by two (2) dollars for each

one (1) dollar shortfall in State matching

funds).

§ 645.320 When will formula funds be

reallotted, and what reallotment procedures

will the Secretary use?

(a) No reallotment of funds among

States will occur during FY 98;

(b) For subsequent fiscal years, a

reconciliation will be made during the

first quarter of the fiscal year under

§ 645.315 of this part to determine

whether or not a State has satisfied its

required level of matching funds for the

prior year.

(c) If a State has failed to expend the

required level of matching funds, the

required reduction in the State grant

will be made during the second quarter

of the fiscal year.

(d) Also, any funds which become

available as a result of

underexpenditures of required match, or

failure to obligate 100 percent of the

funds by either States or substate

entities by the end of the fiscal year of

the grant, will be reallotted among

qualifying States (i.e., those which have

committed a sufficient match to qualify

for additional funds). The reallotment
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations 61611

will occur during the second quarter of

the following fiscal year (section

403(a)(5)(A)(i)(I) of the Act).

Subpart D—State Formula Grants

Administration

§ 645.400 Under what conditions may the

Governor request a waiver to designate an

alternate local administering agency?

(a)(1) The Governor may include in

the State’s WtW Plan a waiver request

to select an agency other than the PIC

to administer the program for one or

more SDAs in a State; or

(2) When the Governor determines the

PIC, or alternative agency, has not

coordinated its expenditures with the

expenditure of funds provided to the

State under TANF, pursuant to section

403(a)(5)(A)(vii)(II) of the Act, the

Governor shall request a waiver.

(b) The Governor shall bear the

burden of proving that the designated

alternative agency, rather than the PIC

or other administering agency, would

improve the effectiveness or efficiency

of the administration of WtW funds in

the SDA. The Governor’s waiver request

shall include information to meet that

burden. The Governor shall provide a

copy of the waiver request and any

supporting information submitted to the

Secretary to the PIC and CEO of the SDA

for which an alternative administering

agency is requested.

(c) The PIC and CEO shall have fifteen

(15) days in which to submit his or her

written response to the Department. The

PIC and CEO shall provide a copy of

such response to the Governor.

(d) The Secretary will assess the

waiver information submitted by the

Governor, including input from the PIC

and CEO in reaching the decision

whether to permit the use of an alternate

administrative agency.

(e) The Secretary shall approve a

waiver request if she determines that the

Governor has established that the

designated alternative administering

agency, rather than the PIC or other

administering agency, will improve the

effectiveness or efficiency of the

administration of WtW funds provided

for the benefit of the SDA.

(f) Where an alternate administering

agency is approved by the Secretary,

such administrative entity shall

coordinate with the CEO for the

applicable SDA(s) regarding the

expenditure of WtW grant funds in the

SDA(s).

(g) The decision of the Secretary to

approve or deny a waiver request will

be issued promptly and shall constitute

final agency action.

§ 645.410 What elements will the State use

in distributing funds within the State?

(a) Of the WtW funds allotted to the

State, not less than 85 percent of the

State allotment must be distributed to

the SDAs in the State.

(1) The State shall prescribe a formula

for determining the amount of funds to

be distributed to each SDA in the State

using no factors other than the three

factors described in paragraphs (a)(2)

and (3) of this section;

(2) The formula prescribed by the

Governor must include as one of the

formula factors for distributing funds

the provision at section

403(a)(5)(A)(vi)(I)(aa) of the Act. The

Governor is to distribute funds to an

SDA based on the number by which the

population of the area with an income

that is less than the poverty line exceeds

7.5 percent of the total population of the

area, compared to all such numbers in

all such areas in the State. The Governor

must assign a weight of not less than 50

percent to this factor;

(3) The Governor shall distribute the

remaining funds, if any, to the SDAs

utilizing only one or both of the

following factors:

(i) The SDA’s share of the number of

adults receiving assistance under TANF

or the predecessor program in the SDA

for 30 months or more (whether

consecutive or not), relative to the

number of such adults residing in the

State;

(ii) The SDA’s share of the number of

unemployed individuals residing in the

SDA, relative to the number of such

individuals residing in the State.

(4) If the amount to be distributed to

a service delivery area by the Governor’s

formula is less than $100,000, the funds

shall be available to be used by the

Governor to fund projects described at

paragraph (b) of this section.

(5) States shall use the guidance

provided at section 403(a)(5)(D) of the

Act in determining the number of

individuals with an income that is less

than the poverty line.

(6) PICs (or alternate administering

agency) shall determine, pursuant to

section 403(a)(5)(A)(vii)(I) of the Act, on

which individual(s) and on which

allowable activities to expend its WtW

fund allocation.

(7) The State shall distribute the

SDAs’ allocations in a timely manner,

but not later than 30 days from receipt

of the State’s fund allotment.

(b) Of the funds allocated to the State,

up to 15 percent of the funds may be

retained at the State level to fund

projects that appear likely to help longterm recipients of assistance enter

unsubsidized employment. Any

additional funds available as a result of

the process described at paragraph

(a)(4)of this section, shall also be

available to be used to fund projects to

help long-term recipients of assistance

enter unsubsidized jobs.

(c) The Governors may distribute the

funds retained pursuant to paragraph (b)

of this section to a variety of workforce

organizations, in addition to PICs, and

other entities such as One-Stop systems,

private sector employers, labor

organizations, business and trade

associations, education agencies,

housing agencies, community

development corporations,

transportation agencies, communitybased and faith-based organizations,

disability community organizations,

community action agencies, and

colleges and universities which provide

some of the assistance needed by the

targeted population.

§ 645.415 What planning information must

a State submit in order to receive a formula

grant?

(a) Each State seeking financial

assistance under the formula grant

portion of the WtW legislation must

submit an annual plan meeting the

requirements prescribed by the

Secretary. This plan shall be in the form

of an addendum to the TANF State plan

and shall be submitted to the Secretaries

of Labor and Health and Human

Services.

(b) The Secretary shall review the

State plan for compliance with the

statutory and regulatory provisions of

the WtW program. The Secretary’s

decision whether to accept a State plan

as in compliance with the Act shall

constitute final agency action.

(c) If the Governor has requested a

waiver to permit the selection of an

alternative administering agency in the

State plan, the provisions of § 645.400 of

this part shall apply (section

403(a)(5)(A)(ii) of the Act).

§ 645.420 What factors will be used in

measuring State performance?

(a) State performance will be

measured by a formula issued by the

Secretary after consultation with DHHS,

the National Governors Association

(NGA) and the American Public Welfare

Association (APWA).

(b) The formula shall be the basis for

measuring the success of States in

placing individuals in private sector

employment or any kind of

employment, the duration of such

placements, any increase in earnings of

such individuals and other additional

factors that the Secretary of Labor deems

to be appropriate. The formula will

provide for adjustments due to general

economic conditions on a State-by-State

basis.
61612 Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations

(c) The formula shall serve as the

basis for the award of FY 2000 bonus

grants based on successful performance

(section 403(a)(5)(E) of the Act).

§ 645.425 What are the roles and

responsibilities of the State(s) and PIC(s)?

(a) State roles and responsibilities. A

State:

(1) Designates State WtW

administering agency;

(2) Provides overall administration of

WtW funds, consistent with the WtW

statute, WtW regulations and the State’s

WtW Plan;

(3) Develops the State WtW Plan in

consultation and coordination with

appropriate entities in substate areas,

such as One-Stop systems, private sector

employers, labor organizations, business

and trade associations, education

agencies, housing agencies, community

development corporations,

transportation agencies, communitybased and faith-based organizations,

disability community organizations,

community action agencies, and

colleges and universities which provide

some of the assistance needed by the

targeted population (section

403(a)(5)(A)(ii)(I)(cc) of the Act);

(4) Distributes funds to SDAs,

consistent with the provisions described

at § 645.410(a) (section

403(a)(5)(A)(ii)(I)(bb));

(5) Conducts oversight and

monitoring of WtW activities and fund

expenditures at the State and local

levels for compliance with applicable

laws and regulations, consistent with

the provisions at § 645.245 and provides

technical assistance as appropriate;

(6) Ensures coordination of PIC fund

expenditures with the State TANF

expenditures and other programs

(section 403(a)(5)(A)(ii)(I)(dd));

(7) Determines whether to request

waivers to select an alternate

administering agency consistent with

the provisions described at § 645.400 of

this part (sections 403(a)(5)(A)(ii)(I)(ee)

and 403(a)(5)(A)(vii)(III));

(8) Manages and distributes State

level WtW funds (15 percent),

consistent with the provisions at

§§ 645.410(b) and (c) (section

403(a)(5)(A)(vi)(III));

(9) Ensures that the 15 percent

administration limitation and the match

requirement are met;

(10) Ensures that worker protections

provisions are observed and establishes

an appropriate grievance process,

consistent with §§ 645.255 through

645.270 of this part (section

403(a)(5)(J));

(11) Provides comments on

Competitive Grant Application(s) from

eligible entities within the State,

consistent with § 645.510 of this part

(section 403(a)(5)(B)(ii));

(12) Cooperates with the Department

of Health and Human Services on the

evaluation of WtW programs (section

403(a)(5)(A)(ii)(III));

(13) Provides technical assistance to

PICs or alternate administering agencies;

and

(14) Establishes internal reporting

requirements to ensure Federal reports

are accurate, complete and are

submitted on a timely basis, consistent

with § 645.240 of this part.

(b) Private Industry Council (or

alternate administering agency) roles

and responsibilities. A PIC:

(1) Has sole authority, in coordination

with CEOs, to expend formula funds

(section 403(a)(5)(A)(vii)(I) of the Act);

(2) Has authority to determine the

individuals to be served in the SDA

(section 403(a)(5)(A)(vii)(I));

(3) Has authority to determine the

services to be provided in the SDA

(section 403(a)(5)(A)(vii)(I));

(4) Ensures funds are expended on

eligible recipients and on allowable

activities, consistent with

§ 645.410(a)(5) of this part;

(5) Coordinates WtW fund

expenditures with State TANF

expenditures and other programs

(section 403(a)(5)(A)(ii)(dd));

(6) Ensures that there is an assessment

and an individual service strategy in

place for each WtW participant,

consistent with §§ 645.225(a) and (b) of

this part;

(7) Conducts oversight and

monitoring of subrecipients, consistent

with the provisions at § 645.245 of this

part;

(8) Ensures worker protection

provisions and grievance process are

observed, consistent with State

guidelines (section 403(a)(5)(J)); and

(9) Consults with and provides

comments on private entity Competitive

Grant Application(s), consistent with

the provisions at § 645.500(b)(1)(i) of

this part.

Subpart E—Welfare-To-Work

Competitive Grants

§ 645.500 Who are eligible applicants for

competitive grants?

(a) Eligible applicants for competitive

grants are:

(1) PICs;

(2) Political subdivisions of a State;

and

(3) Private entities including

nonprofit organizations such as

community development corporations,

community-based and faith-based

organizations, disability community

organizations, community action

agencies, and public and private

colleges and universities, and other

qualified private organizations.

(b) Entities other than a PIC or a

political subdivision of the State must

submit an application for competitive

grant funds in conjunction with the

applicable PIC or political subdivision.

(1) The term ‘‘in conjunction with’’

shall mean that the application

submitted by such an entity must

include a signed certification by both

the applicant and either the applicable

PIC or political subdivision that:

(i) The applicant has consulted with

the applicable PIC/political subdivision

during the development of the

application; and

(ii) The activities proposed in the

application are consistent with, and will

be coordinated with, WtW efforts of the

PIC/political subdivision.

(2) If the applicant is unable to

include such a certification in its

application, the applicant will be

required to certify, and provide

information indicating that efforts were

undertaken to consult with the PIC/

political subdivision and that the PIC/

political subdivision was provided a

sufficient opportunity to cooperate in

the development of the project plan and

to review and comment on the

application prior to its submission to

the Secretary. ‘‘Sufficient opportunity

for PIC/political subdivision review and

comment’’ shall mean at least 30

calendar days.

(3) The certification described in

paragraph (b)(1) of this section, or the

evidence of efforts to consult described

in paragraph (b)(2), must be with each

PIC or political subdivision included in

the geographic area in which the project

proposed in the application is to operate

(section 403(a)(5)(B)(ii) of the Act).

§ 645.510 What is the required

consultation with the Governor?

(a) All applicants for competitive

grants, including PICs and political

subdivisions, must consult with the

Governor by submitting their

application to the Governor or the

designated State administrative entity

for the WtW program for review and

comment prior to submission of the

application to the Secretary. The

application submitted to the Secretary

must include:

(1) Comments on the application from

the State; or

(2) Information indicating that the

State was provided a sufficient

opportunity for review and comment

prior to submission to the Secretary.

‘‘Sufficient opportunity for State review

and comment’’ shall mean at least 15

calendar days.
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 / Rules and Regulations 61613

(b) For private entity applicants, the

submission of the application for State

review and comment must follow the 30

day period provided for PIC/political

subdivision review. Evidence of PIC/

political subdivision review should be

included in the submission to the State

(section 403(a)(5)(B)(ii) of the Act).

§ 645.515 What are the program and

administrative requirements that apply to

both the formula grants and competitive

grants?

(a) All of the general program

requirements and administrative

standards set by 29 CFR part 645

subpart B apply (section 403(a)(5)(C)

and section 404(b) of the Act).

(b) In addition, competitive grants

will be subject to:

(1) Supplemental reporting

requirements; and

(2) Additional monitoring and

oversight requirements based on the

negotiated scope-of-work of individual

grant awards (section 403(a)(5)(B)(iii)

and (v)).

§ 645.520 What are the application

procedures and timeframes for competitive

grant funds?

(a) The Secretary shall establish

appropriate application procedures,

selection criteria and an approval

process to ensure that grant awards

accomplish the purpose of the

competitive grant funds and that

available funds are used in an effective

manner.

(b) The Secretary shall publish such

procedures in the Federal Register and

establish submission timeframes in a

manner that allows eligible applicants

sufficient time to develop and submit

quality project plans (section

403(a)(5)(B)(i) and (iii) of the Act).

§ 645.525 What special consideration will

be given to rural areas and cities with large

concentrations of poverty?

(a) Competitive grant awards will be

targeted to geographic areas of

significant need. In developing

application procedures, special

consideration will be given to rural

areas and cities with large

concentrations of residents living in

poverty.

(b) Grant application guidelines will

clarify specific requirements for

documenting need in the local area

(section 403(a)(5)(B)(iv) of the Act).

Subpart F—Administrative Appeal

Process

§ 645.800 What administrative remedies

are available under this part?

(a) Within 21 days of receipt of a final

determination that has directly imposed

a sanction or corrective action pursuant

to § 645.250(b) of this part, a recipient,

subrecipient, or a vendor directly

against which the Grant Officer has

imposed a sanction or corrective action,

may request a hearing before the

Department of Labor Office of

Administrative Law Judges, pursuant to

the provisions of 29 CFR part 96 subpart

96.6.

(b) In accordance with 29 CFR

96.603(b)(2), the rules of practice and

procedure published at 29 CFR part 18

shall govern the conduct of hearings

under this section, except that a request

for hearing under this section shall not

be considered a complaint to which the

filing of an answer by DOL or a DOL

agency is required. Technical rules of

evidence shall not apply to a hearing

conducted pursuant to this part;

however, rules or principles designed to

assure production of the most credible

evidence available and to subject

testimony to cross-examination shall

apply.

(c) The decision of the Administrative

Law Judge (ALJ) shall constitute final

agency action unless, within 20 days of

the decision, a party dissatisfied with

the decision of the ALJ has filed a

petition for review with the

Administrative Review Board (ARB)

(established pursuant to the provisions

of Secretary’s Order No. 2–96, published

at 61 Fed. Reg. 19977 (May 3, 1996)),

specifically identifying the procedure,

fact, law or policy to which exception

is taken. Any exception not specifically

urged shall be deemed to have been

waived. A copy of the petition for

review must be sent to the opposing

party at that time. Thereafter, the

decision of the ALJ shall constitute final

agency action unless the ARB, within 30

days of the filing of the petition for

review, has notified the parties that the

case has been accepted for review. Any

case accepted by the ARB shall be

decided within 120 days of such

acceptance. If not so decided, the

decision of the ALJ shall constitute final

agency action.

[FR Doc. 97–29966 Filed 11–17–97; 8:45 am]

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