[Federal Register Volume 89, Number 37 (Friday, February 23, 2024)]
[Rules and Regulations]
[Pages 13814-13849]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03278]



[[Page 13813]]

Vol. 89

Friday,

No. 37

February 23, 2024

Part II





Department of Labor





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Employment and Training Administration





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Department of Education





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20 CFR Part 677

34 CFR Parts 361 and 463





Workforce Innovation and Opportunity Act Effectiveness in Serving 
Employers Performance Indicator; Final Rule

Federal Register / Vol. 89 , No. 37 / Friday, February 23, 2024 / 
Rules and Regulations

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DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Part 677

[Docket No. ETA-2022-0006]
RIN 1205-AC01

DEPARTMENT OF EDUCATION

34 CFR Parts 361 and 463

RIN 1830-AA32


Workforce Innovation and Opportunity Act Effectiveness in Serving 
Employers Performance Indicator

AGENCY: Office of Career, Technical, and Adult Education (OCTAE), 
Rehabilitation Services Administration (RSA), Department of Education; 
Employment and Training Administration (ETA), Department of Labor.

ACTION: Joint final rule.

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SUMMARY: The Workforce Innovation and Opportunity Act (WIOA) 
establishes six primary indicators of performance and defines five of 
those performance indicators. With this final rule, the U.S. 
Departments of Labor and Education (Departments) define the sixth 
performance indicator--effectiveness in serving employers--as Retention 
with the Same Employer and require it be reported by one WIOA core 
program on behalf of all six WIOA core programs within each State. This 
final rule incorporates two changes from the notice of proposed 
rulemaking (NPRM): the final rule does not limit the type of wage 
information that must be used, thereby permitting the use of 
supplemental wage information in the definition of the effectiveness in 
serving employers performance indicator, and it specifies that the 
definition is measuring retention in unsubsidized employment.

DATES: This final rule is effective March 25, 2024.

FOR FURTHER INFORMATION CONTACT: 
    U.S. Department of Labor: Michelle Paczynski, Administrator, Office 
of Policy Development and Research, U.S. Department of Labor, 
Employment and Training Administration, 200 Constitution Avenue NW, 
Room N-5641, Washington, DC 20210-0001, Telephone: (202) 693-3700 
(voice) (this is not a toll-free number) or 1-877-872-5627.
    U.S. Department of Education: Hugh Reid, Policy, Planning, and 
Research, U.S. Department of Education, Office of Career, Technical, 
and Adult Education, 400 Maryland Avenue SW, LBJ-4A172, Washington, DC 
20202-2800, Telephone: (202) 245-7491; or Jessica Hawes, WIOA Team 
Coordinator, U.S. Department of Education, Office of Special Education 
and Rehabilitative Services, Rehabilitation Services Administration, 
400 Maryland Avenue SW, Washington, DC 20202-2800, Telephone: (202) 
245-6486.
    For persons with a hearing or speech disability who need assistance 
to use the telephone system, please dial 711 to access 
telecommunications relay services.

SUPPLEMENTARY INFORMATION:

Preamble Table of Contents

I. Background
    A. Rulemaking Authority and Effectiveness in Serving Employers 
Performance Indicator for WIOA Core Programs
    B. Public Comments Received on Proposed Rulemaking
    C. Summary of Changes From NPRM to Final Rule of the 
Effectiveness in Serving Employers Performance Indicator for WIOA 
Core Programs and Local Level Implementation for DOL-Administered 
Core Programs
II. Section-by-Section Analysis of This Final Rule
    A. Departments' Rationale for Retention With the Same Employer 
as the Definition of the Effectiveness in Serving Employers 
Performance Indicator
    B. Retention With the Same Employer for the Effectiveness in 
Serving Employers Performance Indicator in Sec.  677.155
    C. Adjusted Levels of Performance for WIOA Core Programs--
Changes to Sec.  677.190
III. Regulatory Analysis and Review
    A. Executive Orders 12866 (Regulatory Planning and Review), 
13563 (Improving Regulation and Regulatory Review), and 14094 
(Modernizing Regulatory Review) and Subtitle E of the Small Business 
Regulatory Enforcement Fairness Act of 1996
    B. Regulatory Flexibility Act, Small Business Regulatory 
Enforcement Fairness Act, and Executive Order 13272 (Proper 
Consideration of Small Entities in Agency Rulemaking)
    C. Paperwork Reduction Act of 1995
    D. Executive Order 13132 (Federalism)
    E. Unfunded Mandates Reform Act of 1995
    F. Executive Order 13175 (Indian Tribal Governments)

Acronyms and Abbreviations

AEFLA Adult Education and Family Literacy Act
AJC American Job Center
BLS Bureau of Labor Statistics
CFR Code of Federal Regulations
COVID-19 Coronavirus disease 2019
Departments U.S. Departments of Labor and Education
DOL U.S. Department of Labor
ED U.S. Department of Education
E.O. Executive Order
ETA Employment and Training Administration
FEIN Federal Employer Identification Number
FR Federal Register
GS General Schedule
ICR Information Collection Request
INA Indian and Native American
NAICS North American Industry Classification System
NPRM or proposed rule notice of proposed rulemaking
OCTAE Office of Career, Technical, and Adult Education
OEWS Occupational Employment and Wage Statistics
OIRA Office of Information and Regulatory Affairs
OMB Office of Management and Budget
PIRL Participant Individual Record Layout
PRA Paperwork Reduction Act of 1995
Pub. L. Public Law
PY Program Year
QCEW Quarterly Census of Employment and Wages
RFA Regulatory Flexibility Act
RIA Regulatory Impact Analysis
RIN Regulation Identifier Number
RSA Rehabilitation Services Administration
SBA U.S. Small Business Administration
SLDS Statewide Longitudinal Data System
Stat. United States Statutes at Large
SWIS State Wage Interchange System
TAC Technical Assistance Circular
TEGL Training and Employment Guidance Letter
UI Unemployment Insurance
UMRA Unfunded Mandates Reform Act
U.S.C. United States Code
VR Vocational Rehabilitation
WDB Workforce Development Board
WIOA Workforce Innovation and Opportunity Act

I. Background

    In the final rule implementing WIOA,\1\ the Departments indicated 
that they would initially implement the sixth indicator of 
performance--effectiveness in serving employers--in the form of a pilot 
program to test the feasibility and rigor of three proposed 
approaches.\2\ The Departments assessed the pilot outcomes through 
Program Year (PY) 2021, and on September 14, 2022, published a NPRM to 
define in a single standardized way the effectiveness in serving 
employers performance indicator for the regulations implementing the 
jointly administered requirements governing WIOA's six core programs 
(87 FR 56318).\3\
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    \1\ Public Law 113-128, 128 Stat. 1425 (2014).
    \2\ Workforce Innovation and Opportunity Act; Joint Rule for 
Unified and Combined State Plans, Performance Accountability, and 
the One-Stop System Joint Provisions; Final Rule, 81 FR 55792, 55845 
(Aug. 19, 2016) (hereinafter ``Joint WIOA Final Rule'').
    \3\ Workforce Innovation and Opportunity Act Effectiveness in 
Serving Employers Performance Indicator; Joint Proposed Rule, 87 FR 
56318 (Sept. 14, 2022) (hereinafter ``Joint WIOA Effectiveness in 
Serving Employers NPRM'').

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[[Page 13815]]

A. Rulemaking Authority and Effectiveness in Serving Employers 
Performance Indicator for WIOA Core Programs

    On July 22, 2014, President Barack Obama signed into law WIOA, 
which superseded titles I and II of the Workforce Investment Act of 
1998 and amended the Wagner-Peyser Act and the Rehabilitation Act of 
1973 (Rehabilitation Act). In WIOA sec. 503(f), Congress directed the 
Departments to issue regulations implementing statutory requirements to 
ensure that the public workforce system operates as a comprehensive, 
integrated, and streamlined system to provide pathways to prosperity 
and continuously improve the quality and performance of its services to 
job seekers and employers. The Secretaries of Labor and Education are 
also authorized to promulgate regulations governing the WIOA-authorized 
programs, the Wagner-Peyser Act programs, and the Vocational 
Rehabilitation (VR) program. Specifically, WIOA sec. 189(a) permits the 
Secretary of Labor to prescribe rules and regulations to carry out 
title I of WIOA. Similarly, section 12 of the Wagner-Peyser Act permits 
the Secretary of Labor to promulgate rules to administer the Wagner-
Peyser Act programs. Section 410 of the General Education Provisions 
Act authorizes the Secretary of Education to promulgate regulations 
governing the programs the U.S. Department of Education (ED) 
administers, including title II of WIOA--the Adult Education and Family 
Literacy Act (AEFLA)--and the VR program. Section 414 of the Department 
of Education Organization Act also authorizes the Secretary of 
Education to prescribe rules and regulations necessary or appropriate 
to administer and manage the function of ED.
    WIOA sec. 116 establishes the performance indicators \4\ and 
performance reporting \5\ requirements to assess \6\ the six WIOA core 
programs' effectiveness in serving WIOA customers (i.e., participants, 
other job seekers, and employers). The core programs are the adult, 
dislocated worker, and youth programs under title I of WIOA; the AEFLA 
program under title II of WIOA; programs authorized under the Wagner-
Peyser Act as amended by WIOA title III; and the VR program authorized 
under title I of the Rehabilitation Act as amended by WIOA title IV.
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    \4\ WIOA sec. 116(b)(2)(A) states the primary indicators of 
performance: (1) the percentage of participants who are employed 
during the second quarter after exit from the program; (2) the 
percentage of participants who are employed during the fourth 
quarter after exit from the program; (3) the median earnings of 
participants who are employed during the second quarter after exit 
from the program; (4) the percentage of participants who obtain a 
recognized postsecondary credential during the program or within 1 
year of exit from the program; (5) the percentage of participants 
who achieve measurable skill gains during a program year; and (6) 
``indicators of effectiveness in serving employers.'' This last 
indicator is the subject of this final rule. Definitions of the 
other five performance indicators were included in the Joint WIOA 
Final Rule (see 20 CFR 677.155, 34 CFR 361.155, 34 CFR 463.155).
    \5\ WIOA sec. 116(d)(2)(A) requires States to include in their 
performance report information specifying levels of performance 
achieved with respect to the primary indicators of performance 
referenced in footnote 4 supra and the State adjusted levels of 
performance for such indicators for each program.
    \6\ WIOA sec. 116(b)(3)(A) establishes the procedures at the 
State, local, and Federal levels to assess levels of performance by 
each program, and the State as a whole, for each performance 
indicator.
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    In the 2016 Joint WIOA Final Rule, the Departments initiated a 
phased approach to defining the effectiveness in serving employers 
performance indicator. Currently, 20 CFR 677.155(a)(1)(vi) and 34 CFR 
361.155(a)(1)(vi) and 463.155(a)(1)(vi) implement the effectiveness in 
serving employers performance indicator as described in WIOA sec. 
116(b)(2)(A)(i)(VI), subject to WIOA sec. 116(b)(2)(A)(iv), which 
requires the Secretaries of Labor and Education to jointly develop and 
establish the performance indicator, after consultation with 
representatives of State and local governments, business and industry, 
and other interested parties. To that end, in developing the Joint WIOA 
Final Rule, the Departments consulted with stakeholders and considered 
public comments on three proposed approaches to defining the 
performance indicator, and in the Joint WIOA Final Rule, the 
Departments stated they would work to implement a pilot program, the 
details of which would be further delineated in joint Departmental 
guidance (81 FR 55792, 55846).
    The pilot tested all three approaches described by the Departments 
in the Joint WIOA NPRM \7\ and Joint WIOA Final Rule, with the intent 
of assessing each approach for its efficacy in measuring effectiveness 
in serving employers. The piloted approaches were Retention with the 
Same Employer, Repeat Business Customer, and Employer Penetration, 
which are further discussed in Section II.A below. The Departments 
included these approaches in the WIOA Joint Performance Information 
Collection Request (ICR) (Office of Management and Budget (OMB) Control 
Number 1205-0526) and required each State \8\ to report on any two of 
the three approaches set out in the Joint WIOA Final Rule, as well as 
any additional measure a State established related to services to 
employers.\9\ On behalf of the Departments, the Department of Labor 
(DOL) commissioned an examination of State experiences with the various 
approaches through a third-party contractor, and the Departments used 
the results of that study to help inform their analysis of which 
definition of the effectiveness in serving employers performance 
indicator to propose in the Joint WIOA Effectiveness in Serving 
Employers NPRM.
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    \7\ Workforce Innovation and Opportunity Act; Joint Rule for 
Unified and Combined State Plans, Performance Accountability, and 
the One-Stop System Joint Provisions; Notice of Proposed Rulemaking, 
80 FR 20574 (Apr. 16, 2015) (hereinafter ``Joint WIOA NPRM'').
    \8\ Throughout this final rule, the Departments use the term 
``State'' to mean those geographical areas covered by the 
definitions of ``State'' and ``outlying area,'' in WIOA secs. 3(56) 
and 3(45), respectively. Therefore, for purposes of this final rule, 
``State'' includes the 50 States, the District of Columbia, Puerto 
Rico, the U.S. Virgin Islands, Guam, the Commonwealth of the 
Northern Mariana Islands, American Samoa, and for certain programs, 
the Republic of Palau.
    \9\ Governors had the option to establish and report on a third 
State-specific approach for measuring effectiveness in serving 
employers, in addition to two of the three Departmental pilot 
approaches selected by the State.
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B. Public Comments Received on Proposed Rulemaking

    Because of the narrow scope of the regulation, the Departments 
encouraged commenters to submit only comments regarding the definition 
of the effectiveness in serving employers performance indicator and the 
indicator's use in determining whether sanctions are necessary for 
failure to achieve adjusted levels of performance as set forth herein. 
The proposed amendments in the Joint WIOA Effectiveness in Serving 
Employers NPRM were on a limited number of provisions in the 
performance accountability regulations at 20 CFR part 677 and 34 CFR 
parts 361 and 463. Therefore, the Departments determined comments 
received on other provisions and aspects of the WIOA regulations that 
were not covered in this final rule, whether promulgated jointly by the 
Departments or independently by each agency, to be outside the scope of 
this rulemaking and, thus, did not consider those comments when 
developing this final rule.

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    The Joint WIOA Effectiveness in Serving Employers NPRM invited 
written comments from the public concerning this rulemaking through 
November 14, 2022. No commenters requested an extension of the comment 
period. The comments received may be viewed by entering docket number 
ETA-2022-0006 at https://www.regulations.gov.
    The Departments received 47 comments in the docket for this 
rulemaking, and the docket for the Workforce Innovation and Opportunity 
Act Title I Non-Core Programs Effectiveness in Serving Employers 
Performance Indicator NPRM (ETA-2022-0005, RIN 1205-AC08) published 
concurrently with the Joint WIOA Effectiveness in Serving Employers 
NPRM received 11 comments related to the Joint WIOA Effectiveness in 
Serving Employers NPRM. Of those 58 comments, 43 were unique; 14 were 
form letter copies, and 1 was not germane. Public sector commenters 
included State and local government agencies, State and local workforce 
development boards, and one-stop operators. Nonprofit sector commenters 
included advocacy groups, professional associations, and training 
providers. Of the unique comments, about one-third came from State 
workforce agencies and State VR agencies. The Departments also received 
comments from private citizens.
    This section of the final rule provides a general overview of the 
comments received. Section II (Section-by-Section Analysis of this 
Final Rule), which follows this section, describes the comments in more 
detail and provides the Departments' responses to them.
    A commenter expressed general support for the proposed rule 
because, in their view, it would benefit the workforce and promote cost 
savings for employers in the long term. Many commenters addressed the 
pilot program in a myriad of ways, including discussing the advantages 
and disadvantages of the piloted approaches for measuring effectiveness 
in serving employers, making alternative recommendations, requesting 
flexibilities, and seeking an extension of certain aspects of the 
pilot.
    The Departments' proposal to use Retention with the Same Employer 
as the indicator for measuring effectiveness in serving employers 
received mixed reviews, with a few agreeing that it is the preferred 
approach while others expressed concerns that it would not measure the 
right things.
    A few commenters asked the Departments for clarification about how 
the proposed indicator will be calculated and implemented, with some 
describing potential issues in data collection or recommending 
different approaches to calculating the indicator. Other commenters 
recommended that the Departments allow the use of supplemental wage 
information in the definition of effectiveness in serving employers. 
Responding to a request for comment in the proposed rule, some 
commenters offered recommendations about ways the Departments could 
mitigate potential unintended consequences and downsides of the 
Retention with the Same Employer measure.
    Several commenters provided feedback on the Departments' proposal 
that the overall State indicator score for effectiveness in serving 
employers be a shared outcome reported by one core program on behalf of 
all six core programs in the State, with some opposing that approach 
and others supporting it. A few commenters focused on concerns about 
the administration and implementation of a shared outcome, requesting 
clarification about local level implementation of the effectiveness in 
serving employers performance indicator, and provided recommendations 
to the Departments with regard to certain aspects of implementation. A 
few commenters provided input on the administrative burden proposed in 
the Regulatory Impact Analysis (RIA) of the Joint WIOA Effectiveness in 
Serving Employers NPRM.
    Additionally, a few commenters provided feedback on topics not 
within the scope of the rulemaking, including earnings data collected 
by workforce development boards and types of measurable skill gains 
under WIOA. The Departments appreciate the thoughtfulness of these 
comments and will address those germane to this final rule in the 
section-by-section analysis below. However, as explained in the Joint 
WIOA Effectiveness in Serving Employers NPRM and above, the scope of 
this rulemaking is limited to amendments to the definition of the 
effectiveness in serving employers performance indicator and the 
indicator's use in determining whether sanctions are necessary for 
failure to achieve adjusted levels of performance as set forth in the 
proposed rule. Because these comments pertain to other provisions and 
aspects of the WIOA regulations, they are considered outside the scope 
of this rulemaking and are not addressed in the section-by-section 
analysis below.

C. Summary of Changes From NPRM to Final Rule of the Effectiveness in 
Serving Employers Performance Indicator for WIOA Core Programs and 
Local Level Implementation for DOL-Administered Core Programs

    The final rule implements Retention with the Same Employer as the 
definition for the effectiveness in serving employers indicator, as 
proposed in the NPRM, with two changes. First, this final rule removes 
the requirement that wage records be used to document a participant's 
employment status for purposes of the effectiveness in serving 
employers performance indicator, thereby allowing for the use of 
supplemental wage information as States are permitted to collect and 
report for purposes of the three employment performance indicators 
defined by WIOA sec. 116. Second, the final rule definition for 
effectiveness in serving employers now uses the term ``unsubsidized 
employment'' to better align with WIOA statutory language used in WIOA 
sec. 116 with respect to other performance indicators, specifically 
referring to unsubsidized employment in the second and fourth quarters 
after exit, which are key inputs to the definition of Retention with 
the Same Employer.
    Regarding commenters' concerns and requests for clarification about 
local level implementation, as detailed below, the Departments have 
determined that WIOA sec. 116(c)(1)(A)(i) requires that all of the 
primary indicators of performance, including the effectiveness in 
serving employers performance indicator, must be applied at the local 
level for the WIOA title I programs (Adult, Dislocated Worker, and 
Youth).\10\ Therefore, States must apply the effectiveness in serving 
employers performance indicator at the local level. The Departments 
believe this indicator should be assessed at each level for the WIOA 
title I programs in the same manner as the other primary indicators of 
performance are assessed.
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    \10\ Pursuant to WIOA sec. 116(c)(1)(A)(i), the requirement to 
implement the primary indicators of performance at the local level 
do not apply to the other core programs, specifically the AEFLA, 
Wagner-Peyser Act, and VR programs.
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II. Section-by-Section Analysis of This Final Rule

    In the discussion of the regulatory text changes below, the heading 
references the DOL CFR part and section number. However, ED has 
identical provisions at 34 CFR part 361, subpart E (under its State VR 
program regulations) and at 34 CFR part 463, subpart I (under its AEFLA 
regulations). For purposes of

[[Page 13817]]

brevity, the discussion of regulatory text changes below appears only 
once--in conjunction with the DOL section number--but is applicable to 
all three regulatory sections and constitutes the Departments' 
collective explanation of the final rule. These changes to the joint 
performance regulations will appear in each of the CFR parts identified 
in this paragraph when the regulations are published in the CFR.
    Section II of the final rule provides the Departments' responses to 
comments and explains the two changes in the language of the final rule 
from the proposed rulemaking. Section II.A provides greater background 
detail on the pilot for effectiveness in serving employers, comments 
regarding the pilot, commenters' suggestions for other approaches to 
measuring effectiveness in serving employers that were not part of the 
pilot, and the Departments' rationale for choosing Retention with the 
Same Employer as the definition of the effectiveness in serving 
employer performance indicator. Section II.B discusses comments 
received on the proposal to modify Sec.  677.155 to adopt Retention 
with the Same Employer as the definition for the effectiveness in 
serving employers performance indicator and explains the Departments' 
decision to finalize the measure with two changes from the NPRM, as 
suggested by multiple commenters. Section II.C discusses comments on 
proposed modifications to Sec.  677.190 where the effectiveness in 
serving employers performance indicator is incorporated into adjusted 
levels of performance.

A. Departments' Rationale for Retention With the Same Employer as the 
Definition of the Effectiveness in Serving Employers Performance 
Indicator

    This section provides background detail on the pilot for 
effectiveness in serving employers, comments regarding the pilot, 
commenters' suggestions for other approaches to measuring effectiveness 
in serving employers that were not part of the pilot, and the 
Departments' rationale for choosing Retention with the Same Employer as 
the definition of the effectiveness in serving employer performance 
indicator.
    In developing the Joint WIOA Effectiveness in Serving Employers 
NPRM, the Departments reviewed annual report data \11\ for Program Year 
(PY) 2017 through PY 2020 \12\ for each of the three approaches for 
measuring effectiveness in serving employers piloted as described in 
the 2016 Joint WIOA Final Rule, with a focus on using information that 
would provide an accurate picture of how well the public workforce 
system serves employers while minimizing employer burden. Specifically, 
States, under guidance from the Departments (hereinafter ``joint 
guidance''), piloted the following definitions for the effectiveness in 
serving employers performance indicator: \13\
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    \11\ The indicator is reported on an annual basis; therefore, 
the reporting period is the program year from July 1 through June 
30.
    \12\ ETA, ``Workforce Performance Results,'' https://www.dol.gov/agencies/eta/performance/results (last visited Oct. 23, 
2021); ETA, ``PY 2020 WIOA National Performance Summary,'' Feb. 28, 
2022, https://www.dol.gov/sites/dolgov/files/ETA/Performance/pdfs/PY%202020%20WIOA%20National%20Performance%20Summary.pdf (last 
visited July 31, 2023). PY 2020 data were the most current 
information available at the time of the Joint WIOA Effectiveness in 
Serving Employers NPRM in September 2022 and, thus, were included in 
the Departments' rationale for the Joint WIOA Effectiveness in 
Serving Employers NPRM. At the time of the development of this final 
rule, PY 2021 data are available and are discussed below. The PY 
2021 data support the Departments' rationale in this final 
rulemaking. ETA, ``PY 2021 WIOA National Performance Summary,'' Feb. 
28, 2022, https://www.dol.gov/sites/dolgov/files/ETA/Performance/pdfs/PY%202021%20WIOA%20National%20Performance%20Summary.pdf (last 
visited July 31, 2023).
    \13\ The Departments issued joint guidance on December 19, 2016, 
``Performance Accountability Guidance for Workforce Innovation and 
Opportunity Act (WIOA) Title I, Title II, Title III, and Title IV 
Core Programs'' (Training and Employment Guidance Letter [TEGL] No. 
10-16, OCTAE Program Memorandum 17-2, and RSA Technical Assistance 
Circular [TAC] 17-01), that described the pilot indicators for 
effectiveness in serving employers. The Departments updated this 
joint guidance in August 2017, with the issuance of a change to the 
guidance, and required States to submit the first report of annual 
results using data collected during PY 2017 (July 1, 2017-June 30, 
2018), meaning that States did not report any data for the pilot 
study for purposes of PY 2016. However, due to the lag in Quarterly 
Census of Employment and Wages (QCEW) data availability for the 
Retention with the Same Employer and Repeat Business Customer 
approaches, the initial results for the effectiveness in serving 
employers performance indicator pilot were not available for 
reporting in the WIOA annual report due October 16, 2017. As a 
result, States reported their initial data in PY 2017. ETA, TEGL No. 
10-16, Change 1, ``Performance Accountability Guidance for Workforce 
Innovation and Opportunity Act (WIOA) Title I, Title II, Title III, 
and Title IV Core Programs,'' Aug. 23, 2017, page 26, https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=3255; ED, OCTAE Program 
Memorandum 17-2, ``Performance Accountability Guidance for Workforce 
Innovation and Opportunity Act (WIOA) Title I, Title II, Title III, 
and Title IV Core Programs,'' Aug. 23, 2017, page 23, https://www2.ed.gov/about/offices/list/ovae/pi/AdultEd/octae-program-memo-17-2.pdf; ED, RSA-TAC-17-01, ``Performance Accountability Guidance 
for Workforce Innovation and Opportunity Act (WIOA) Title I, Title 
II, Title III, and Title IV Core Programs,'' Aug. 17, 2017, page 23, 
https://rsa.ed.gov/sites/default/files/subregulatory/tac-17-01.pdf.
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    <bullet> Retention with the Same Employer: Percentage of 
participants with wage records who exit from WIOA core programs and 
were employed by the same employer in the second and fourth quarters 
after exit.
    <bullet> Repeat Business Customer: Percentage of employers who have 
used WIOA core program services more than once during the last three 
reporting periods.
    <bullet> Employer Penetration: Percentage of employers using WIOA 
core program services out of all employers in the State.
    During the pilot,\14\ the Departments determined that the 
effectiveness in serving employers performance indicator should be a 
shared outcome across all six core programs within each State (i.e., 
meaning that one program would report on behalf of all six core 
programs in the State), rather than reported separately by each of the 
six core programs.
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    \14\ The pilot study began in PY 2016 and lasted through PY 
2021. However, States must continue to report on the piloted 
measures for the effectiveness in serving employers performance 
indicator until these final regulations take effect.
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    For PY 2021--the most recent data available at the time the 
Departments made their decisions for this final rulemaking--the piloted 
approaches for the effectiveness in serving employers performance 
indicator provided the following performance results: \15\
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    \15\ The most current public workforce system performance 
accountability data can be found on ETA's website. ETA, ``Workforce 
Performance Results,'' https://www.dol.gov/agencies/eta/performance/results (last visited Oct. 13, 2023). See ETA, ``PY 2021 WIOA 
National Performance Summary,'' Dec. 22, 2022, page 9, https://www.dol.gov/sites/dolgov/files/ETA/Performance/pdfs/PY%202021%20WIOA%20National%20Performance%20Summary.pdf.
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    <bullet> Retention with the Same Employer PY 2021 Rate: 56 percent 
(35 States reported effectiveness in serving employers performance 
using this definition);
    <bullet> Repeat Business Customer PY 2021 Rate: 35 percent (47 
States reported using this definition); and

[[Page 13818]]

    <bullet> Employer Penetration PY 2021 Rate: 8 percent (48 States 
reported using this definition).
    Exhibit 1 summarizes this information and provides further detail 
about the calculation methodology used to determine the outcome rate 
for the three approaches.

                           Exhibit 1--Pilot Definition Outcomes for Program Year 2021
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                                                                                                     Number of
                                               Performance                                            states
              Pilot definition                   outcome         Pilot definition calculation        reporting
                                              national rate             methodology *              outcomes for
                                                   (%)                                              definition
----------------------------------------------------------------------------------------------------------------
Retention with the Same Employer...........              56  The number of participants with                  35
                                                              wage records who exit during the
                                                              reporting period and were employed
                                                              by the same employer during the
                                                              second quarter after exit and the
                                                              fourth quarter after exit DIVIDED
                                                              by the number of participants with
                                                              wage records who exit and were
                                                              employed during the second quarter
                                                              after exit.
Repeat Business Customer...................              35  The total number of establishments,              47
                                                              as defined by the Bureau of Labor
                                                              Statistics (BLS) Quarterly Census
                                                              of Employment and Wages (QCEW)
                                                              program, served during the current
                                                              reporting period (i.e., one
                                                              program year) and that during the
                                                              prior three reporting periods have
                                                              used core program services more
                                                              than once DIVIDED by the number of
                                                              establishments, as defined by BLS
                                                              QCEW, served during the current
                                                              reporting period.
Employer Penetration.......................               8  The total number of establishments,              48
                                                              as defined by the BLS QCEW
                                                              program, that received a service
                                                              or, if it is an ongoing activity,
                                                              are continuing to receive a
                                                              service or other assistance during
                                                              the reporting period DIVIDED by
                                                              the total number of
                                                              establishments, as defined by BLS
                                                              QCEW. This measure is a unique
                                                              count of employers using WIOA core
                                                              programs. If an establishment
                                                              receives, or continues to receive,
                                                              more than one service during the
                                                              reporting period (i.e., during the
                                                              program year), that establishment
                                                              should be counted only once in
                                                              this calculation.
----------------------------------------------------------------------------------------------------------------
* As described in the joint guidance issued by the Departments.

    Throughout the pilot period, only one State reported on a State-
specific approach to the effectiveness in serving employers performance 
indicator.\16\ However, this State-specific approach was only applied 
to Wagner-Peyser Act programs (as amended by WIOA title III), not all 
six core programs.\17\
---------------------------------------------------------------------------

    \16\ See Shayne Spaulding, Burt Barnow, Amanda Briggs, John 
Trutko, Alex Trutko, and Ian Hecker, ``Measuring the Effectiveness 
of Services to Employers: Options for Performance Measures under the 
Workforce Innovation and Opportunity Act,'' Jan. 2021, Chapter 5 
(Alternative Measures and Data Sources), https://wdr.doleta.gov/research/FullText_Documents/ETAOP2021-17%20Measures%20of%20Effectiveness%20in%20Serving%20Employers_Final%20Report.pdf (hereinafter ``Final Pilot Study Report'').
    \17\ One State reported a State-specific approach to measuring 
effectiveness in serving employers, which the State called ``Active 
Job Orders with Referrals.'' This measure is explained in the 
State's PY 2019 WIOA Annual Statewide Performance Report Narrative, 
which can be accessed at https://www.dol.gov/sites/dolgov/files/eta/performance/pdfs/PY2019/PA_PY19%20WIOA%20Annual%20Report%20Narrative.pdf (last visited Jan. 
27, 2022).
---------------------------------------------------------------------------

    The Departments assessed the pilot through a DOL contract that 
resulted in a final report titled Measuring the Effectiveness of 
Services to Employers: Options for Performance Measures under the 
Workforce Innovation and Opportunity Act.\18\ (hereinafter referred to 
as the Final Pilot Study Report). Specifically, the Final Pilot Study 
Report assessed each approach to defining the effectiveness in serving 
employers performance indicator for validity, reliability, 
practicality, and unintended consequences.\19\ Though the Final Pilot 
Study Report did not definitively recommend one approach, in assessing 
the study's findings for each of the three approaches of the 
effectiveness in serving employers performance indicator and 
considering the subject matter expertise gained through the 
Departments' administration of WIOA, the Departments concluded, as 
explained in the Joint WIOA Effectiveness in Serving Employers NPRM, 
that Retention with the Same Employer provides a valid and reliable 
approach to measuring the indicator, while placing the least amount of 
burden on States to implement it.
---------------------------------------------------------------------------

    \18\ S. Spaulding, et al., ``Measuring the Effectiveness of 
Services to Employers: Options for Performance Measures under the 
Workforce Innovation and Opportunity Act,'' Jan. 2021, https://wdr.doleta.gov/research/FullText_Documents/ETAOP2021-17%20Measures%20of%20Effectiveness%20in%20Serving%20Employers_Final%20Report.pdf.
    \19\ See id. at 3-6 (stating that validity ``is used to assess 
whether you are measuring what you intend to measure''; that 
reliability ``refers to the ability to maintain consistency in data 
collection over time and across organizations collecting the data''; 
that practicality means that the measure ``must be relatively 
uncomplicated and simple to administer to avoid threats to 
reliability and validity'' and ``must be practical to use in 
administrating programs''; and that unintended consequences are 
``negative consequences or behaviors that result, like the 
displacement of goals or conflict with other goals'').
---------------------------------------------------------------------------

    The Departments received several comments regarding the pilot, 
findings from the Final Pilot Study Report, and alternatives to 
measuring the effectiveness in serving employers performance indicator. 
These comments and the Departments' responses are discussed below.
Suggestions To Use Multiple Performance Indicators To Measure 
Effectiveness in Serving Employers
    Comments: One commenter asserted that the Retention with the Same 
Employer measure only provides a partial perspective for how the system 
is serving employers and urged the Departments to consider the other 
performance measures piloted over the previous period, as well as 
additional information, to more comprehensively demonstrate the impact 
of services rendered to employers.
    A commenter stated that the Final Pilot Study Report noted the 
benefit of using multiple measures to understand the WIOA system's 
effectiveness in serving employers. According to the commenter, the 
Final Pilot Study Report asserted that because the system uses multiple 
measures to understand the system's effectiveness in serving workers, 
it would make sense to use

[[Page 13819]]

multiple measures to understand the system's effectiveness in serving 
employers. The commenter suggested additional data collection methods 
to better understand the system's effectiveness in meeting employers' 
needs, including periodic, random, and anonymous satisfaction surveys 
for both workers and employers, WIOA system user satisfaction surveys, 
and focus groups with both workers and employers.
    Departments' Response: As discussed in more detail in the 
introduction to Section II.A. above, the Final Pilot Study Report 
considered each approach to defining the effectiveness in serving 
employers performance indicator for validity, reliability, 
practicality, and unintended consequences. Based upon a review of the 
pilot results, the Departments determined that a single measure best 
limits the implementation burden to States. Moreover, while the Final 
Pilot Study Report may have noted advantages for using multiple 
measures to understand the system's effectiveness in serving employers, 
the Departments note, in response to the commenter, that the Final 
Pilot Study Report did not definitively conclude multiple measures were 
necessary to assess effectiveness in serving employers. Therefore, the 
Departments decline to amend this final rule to use multiple approaches 
for defining the effectiveness in serving employers indicator of 
performance.
    Over the pilot period and through stakeholder engagements, the 
Departments heard from employers about the burden of surveys and the 
preference for a measure that did not rely on survey responses. Because 
a survey would be too burdensome, the Departments decline to accept the 
suggestion to use surveys to assess effectiveness in serving employers.
Alternative Approaches to Defining Effectiveness in Serving Employers 
Performance Indicator
    Comments: The Departments received comments in support of 
alternative approaches to measuring effectiveness in serving employers. 
These comments included preferences for other piloted approaches 
(Employer Penetration and Repeat Business Customer) or variations 
thereof, as well as a variety of suggestions for application of those 
various metrics.
    Other commenters voiced support for different approaches, such as 
tracking work-based learning services, using employer satisfaction 
surveys, and tracking a suite of data points: number of job orders 
posted and number of candidates referred per posting; use of incumbent 
worker training (by percentage of WIOA funds used and number of 
businesses served); number, array, and availability of business 
services offered by a workforce development board or American Job 
Center (AJC); funding passed from workforce development boards or AJCs 
through to local businesses; or number of businesses engaged with 
Registered Apprenticeship opportunities through workforce development 
boards or AJCs.
    A different commenter suggested Employer Penetration could be 
improved by measuring the increase in businesses served rather than the 
actual penetration rate, using a recording period longer than a 
quarter, and using penetration figures determined by 3-digit North 
American Industry Classification System (NAICS) sectors.
    Departments' Response: The Departments acknowledge the various 
benefits of the different proposed pilot approaches for measuring the 
effectiveness in serving employers indicator. The Departments also 
appreciate the suggestions of different additional approaches to be 
considered; however, these metrics do not apply well to all six WIOA 
core programs due to differences in program design. For example, among 
the WIOA core programs, only Wagner-Peyser Act programs provide job 
order services to employers. Therefore, a job order measure would not 
be applicable to all six WIOA core programs. Moreover, as noted in the 
introduction to Section II.A. above, throughout the 6-year pilot 
period, States could submit a State-specific approach for measuring 
effectiveness in serving employers. Only one State did so throughout 
the pilot period, which suggests that States did not identify any 
viable additional approaches. The Departments do not believe it is 
prudent to impose untested, unpiloted approaches, through this final 
rule, particularly given the benefits and use of the Retention with the 
Same Employer metric.
    The suggested alternative approaches mentioned in the comments, 
such as Employer Penetration and Repeat Business Customer, were 
ultimately not selected as indicators of employer satisfaction due to 
(1) the nature of a very low employer penetration rate compared to all 
businesses within a State, leading to difficulties in improving the 
measure over time; and (2) the fact that a satisfied business may not 
need to partner with the State workforce system again. Additionally, 
these alternative measures are not based on existing standardized 
reporting mechanisms, would be impractical to apply to all grantees 
across core programs, and would not fully track satisfied employers 
based on measuring only outputs of services provided.
    In the Joint WIOA Effectiveness in Serving Employers NPRM, the 
Departments explained their rationale for proposing the Retention with 
the Same Employer measure and not proposing either Employer Penetration 
or Repeat Business Customer as the definition for the effectiveness in 
serving employers performance indicator. Specifically, the Departments 
noted in the Joint WIOA Effectiveness in Serving Employers NPRM that 
Employer Penetration, which reports the percentage of employers using 
services out of all employers in the State, would have required counts 
of services provided to employers requiring States and local areas to 
report unique counts of employer establishments receiving services 
through the WIOA core programs. While the Employer Penetration 
definition would have the benefit of capturing the extent to which 
employers within a State are engaged with WIOA core programs and would 
provide those programs an incentive to work with additional employers, 
it would require a more data-intensive analysis than the Retention with 
the Same Employer approach. Additionally, in the Final Pilot Study 
Report, the Department found significant weaknesses in this pilot 
approach including: (1) emphasis on quantity rather than quality or 
intensity of the employer service provided; (2) reliability issues 
associated with data entry and the process to count unique 
establishments; (3) measurement of program output rather than outcome; 
(4) potential for creation of perverse incentives to prioritize program 
breadth rather than depth in services; and (5) lack of sensitivity to 
industry sectors targeted by State and local workforce agencies.
    The Repeat Business Customer definition, which reports the 
percentage of employers receiving services in a year who also received 
services within the previous 3 years requires a more data-intensive 
analysis than the Retention with the Same Employer. In the Final Pilot 
Study Report, the Department also found significant weaknesses in this 
pilot approach including that it: (1) may provide a disincentive to 
reach out to new employers; (2) is subject to variation in industry and 
sector economic conditions; and (3) may require a statistical 
adjustment model to mitigate the weaknesses and improve implementation 
and interpretation.
    As we summarized in the introduction to Section II.A., comments 
received in response to the NPRM, the

[[Page 13820]]

findings of an independent study conducted on the pilot, and the data 
reported by States in their annual reports, all considered, have not 
persuaded the Departments to change course and adopt either of the 
other alternative definitions for the effectiveness in serving 
employers performance indicator. Instead, the Departments adopt through 
this final rule the Retention with the Same Employer measure as the 
definition for the effectiveness in serving employers performance 
indicator as proposed. See 87 FR 56318, 56323.
    Regarding employer satisfaction surveys, the Departments note that 
employer satisfaction surveys introduce a higher level of burden and 
potentially inconsistent results because of the subjective nature of 
such surveys and the respondents completing them compared to the 
quantifiable and verifiable employment data collected and reported for 
the Retention with the Same Employer metric. Furthermore, during 
previous webinars and town halls with State workforce agencies, members 
of the employer community, and other stakeholders that the Departments 
held in September and October 2014 to inform the development of the 
Joint WIOA NPRM (80 FR 20609) and the Joint WIOA Final Rule (81 FR 
55792, 55848),\20\ employers specifically commented that they consider 
satisfaction surveys burdensome and recommended they not be used in 
this indicator. At that time, several employers also provided input 
that reducing employee turnover was paramount for their success.
---------------------------------------------------------------------------

    \20\ The Departments conducted an extensive consultation process 
regarding methods for measuring the effectiveness in serving 
employers performance indicator. Prior to publication of the Joint 
WIOA NPRM, the Departments engaged with numerous stakeholders 
through a series of town hall meetings with State workforce 
agencies, State and local workforce development boards, and members 
of the employer community in September and October 2014, in various 
cities across the country (80 FR 20609). A great deal of discussion 
regarding proposed methods for measuring this indicator took place 
during the consultation process. The outcome of these discussions 
was the three options listed in the NPRM. Understanding the 
importance of receiving extensive feedback on this issue, the 
Departments requested further input via the NPRM and the WIOA Joint 
Performance ICR (81 FR 55848).
---------------------------------------------------------------------------

    The Departments appreciate the commenters' ideas for additional 
data points to be collected and encourage States to do so where it aids 
in guiding service delivery policies. Specifically, commenters 
recommended including collecting and reporting data on: the number of 
job orders posted and number of candidates referred per posting; use of 
incumbent worker training (by percentage of WIOA funds used and number 
of businesses served); number, array, and availability of business 
services offered by a workforce development board or AJC; funding 
passed from workforce development boards or AJCs through to local 
businesses; or number of businesses engaged with Registered 
Apprenticeship opportunities through workforce development boards or 
AJCs. The Departments decline to use these additional data points in 
defining the effectiveness in serving employers indicator because they 
are not applicable to all of the programs, and in cases where the 
metric is a count of services they would merely measure the quantity of 
services provided to employers rather than the effectiveness of those 
services. The Departments believe these suggestions would measure 
outputs compared to an outcome. In most cases, an output like the 
number of services provided may not correlate to the ultimate goal, 
placing and retaining quality employees in this case, and therefore is 
not ideal for measuring effectiveness in serving employers.
    After careful consideration of public comment opportunities, 
ongoing State stakeholder engagement efforts,\21\ review of pilot data 
and narrative input submitted since 2017 through required annual 
performance reports,\22\ and a third-party study, the Departments 
concluded that the Retention with the Same Employer approach provided a 
valid and reliable approach to measuring the indicator while placing 
the least amount of burden on States to implement.
---------------------------------------------------------------------------

    \21\ ETA's WorkforceGPS technical assistance website provides 
access to materials from trainings and stakeholder engagements, 
including (1) the Effectiveness in Serving Employers Resource Page 
accessible at https://performancereporting.workforcegps.org/resources/2018/01/29/21/13/Effectiveness-in-Serving-Employers-Resource-Page, (2) the 2019 Performance Accountability Training 
accessible at https://performancereporting.workforcegps.org/resources/2019/10/03/20/25/WIOA_2019_Performance_Accountability_Training, and (3) the January 
2020 Peer Learning Group event accessible at https://www.workforcegps.org/events/2020/01/13/17/40/WIOA-Performance-Peer-Learning-Group-Effectiveness-in-Serving-Employers.
    \22\ Annual performance reports can be found on ETA's website. 
ETA, ``Workforce Performance Results,'' https://www.dol.gov/agencies/eta/performance/results (last visited Apr. 26, 2023).
---------------------------------------------------------------------------

Recommendation To Extend Pilot for an Additional 2 Years and Allow More 
Time for Testing Other Measures
    Comments: Numerous commenters recommended that the pilot be 
extended for an additional 2 years to allow for the development of new 
and innovative indicators and urged that States be encouraged to 
propose such indicators. Several commenters remarked on the 
interruptions the Coronavirus disease 2019 (COVID-19) pandemic caused 
to the labor market and the resulting difficulties with the collection 
of representative and useful data during the pilot.
    A commenter recommended that the Departments allow additional time 
for States to identify and test different ways of measuring participant 
career progression instead of only employee retention.
    Departments' Response: After reviewing the outcomes of the Final 
Pilot Study Report and the information learned in the study, the 
Departments determined the 6-year pilot period was sufficient to gather 
relevant experience with the possible approaches. There is no evidence 
to suggest, and the commenters did not provide any such evidence, that 
extending the pilot period for potential approaches to measure 
effectiveness in serving employers would result in substantially new 
information. WIOA reporting did not cease during the COVID-19 pandemic, 
and States still submitted pilot data. While there was an impact on 
some service delivery, particularly with respect to the approaches used 
for delivering those services, there was no change in the Departments' 
expectations for States to continue to provide services to participants 
and employers. Therefore, the Departments believe that the data from 
the program years affected by the pandemic are representative and 
useful to determine the definition of the effectiveness in serving 
employers performance indicator, and these same years will provide 
useful data for purposes of the statistical adjustment model when the 
Departments determine there are sufficient data available to produce 
reliable results to assess for performance of this indicator. 
Furthermore, there has been ample time to test and provide suggestions 
for other potential approaches to measure this indicator during the 
pilot period. The Departments do not agree that extending the pilot 
period for identifying new potential measures for the effectiveness in 
serving employers indicator at this time would likely result in 
substantially new information, particularly given that only one State 
developed its own measure during the pilot period that lasted 6 program 
years, which was ample time for States to suggest an alternative metric 
(see the introduction to Section II.A. for complete discussion). 
Therefore, the Departments decline to extend the pilot phase and, 
instead, have decided to define the indicator as described in this 
final rule.

[[Page 13821]]

The Departments believe this definition, as adopted in this final rule, 
will promote accountability in serving employers and ultimately benefit 
workforce system participants.
    After careful consideration of the information gained from the 
States' reports on using the three piloted approaches, the Final Pilot 
Study Report's findings, and the comments on the pilot and other 
potential approaches to defining effectiveness in serving employers, 
the Departments are finalizing the proposed definition of the 
effectiveness in serving employers performance indicator as Retention 
with the Same Employer on a statewide level. As discussed in further 
detail below in Section II.B, this final rule implements the proposed 
changes to 20 CFR 677.155(a)(1)(vi) and (c)(6), with one modification.
    WIOA sec. 116(b)(2)(A)(i)(VI) applies the same effectiveness in 
serving employers performance indicator to four non-core programs DOL 
administers under WIOA title I.\23\ For consistency and alignment 
across WIOA programs, in addition to all the reasons discussed above, 
DOL is incorporating this same definition for the effectiveness in 
serving employers performance indicator into regulations in a separate, 
but related, rulemaking, DOL-Only Performance Accountability Final Rule 
(RIN 1205-AC08), published concurrently with this final rule elsewhere 
in the Federal Register.
---------------------------------------------------------------------------

    \23\ WIOA secs. 159(c), 166(h), 167(c)(3), and 171(f) direct the 
Secretary of Labor to establish levels of performance for the 
relevant primary indicators of performance in WIOA sec. 116(b)(2)(A) 
for the Job Corps program, Indian and Native American programs, the 
National Farmworker Jobs Program, and the YouthBuild program, 
respectively.
---------------------------------------------------------------------------

B. Retention With the Same Employer for the Effectiveness in Serving 
Employers Performance Indicator in Sec.  677.155

Sec.  677.155 What are the primary indicators of performance under the 
Workforce Innovation and Opportunity Act?
    Section 677.155 sets forth the primary indicators of performance 
that the Departments use to evaluate the performance of WIOA's six core 
programs, as required by WIOA sec. 116(b)(2)(A)(i). These primary 
performance indicators apply to the six WIOA core programs (i.e., 
adult, dislocated worker, and youth programs, the AEFLA program, 
Wagner-Peyser Act programs, and the VR program). These primary 
performance indicators create a common language shared across the 
programs' performance measures, support system alignment, enhance 
programmatic decision-making, and help participants make informed 
decisions related to training, all of which are consistent with the 
purposes of WIOA as stated in WIOA sec. 2. Paragraphs 677.155(a)(1)(vi) 
and (c)(6) implement the sixth statutory performance indicator as 
described in WIOA sec. 116(b)(2)(A)(i)(VI), subject to WIOA sec. 
116(b)(2)(A)(iv), which requires the Departments to develop the 
indicator after consultation with the stakeholders listed at WIOA sec. 
116(b)(4)(B) and discussed above. This performance indicator measures 
program effectiveness in serving employers.
    In this final rulemaking, for the reasons discussed in the NPRM and 
in Section II.A. above, the Departments have decided to revise Sec.  
677.155(a)(1)(vi) to establish Retention with the Same Employer as the 
standard definition for measuring effectiveness in serving employers, 
the sixth performance indicator for all WIOA core programs. The final 
rulemaking removes the general title of ``effectiveness in serving 
employers''; \24\ defines Retention with the Same Employer as the 
percentage of participants who exited the program in unsubsidized 
employment and were employed by the same employer in the second and 
fourth quarters after exiting the program; clarifies that, for the six 
WIOA core programs, the indicator is a statewide indicator that is 
reported by one core program on behalf of all six core programs in the 
State; and references guidance to signal to States that the Departments 
will provide additional details and explanations for reporting on the 
effectiveness in serving employers performance indicator in joint 
guidance. The final rulemaking also updates Sec.  677.155(c)(6) to 
define effectiveness in serving employers as Retention with the Same 
Employer for the WIOA title I youth program in a manner that mirrors 
the definition for the other WIOA core programs in paragraph (a)(1)(vi) 
as just described.
---------------------------------------------------------------------------

    \24\ The regulations for definitions for the other WIOA 
performance indicators do not include descriptive or general names 
of the indicators; they simply provide the definitions of the 
indicators. For consistency with the regulations for the other 
indicators, final Sec.  677.155(a)(1)(vi) removes the name of the 
effectiveness in serving employers indicator and adds the 
definition.
---------------------------------------------------------------------------

    For the reasons discussed below, in response to multiple comments 
received to allow for the use of supplemental wage information in the 
definition of measuring effectiveness in serving employers, this final 
rulemaking removes references to wage records in Sec.  677.155 that had 
been proposed in the Joint WIOA Effectiveness in Serving Employers 
NPRM. This change clarifies that the sources of wage data are not 
limited, meaning they could be wage records or supplemental wage 
information. As noted above, the Departments also want to make clear 
the final rule uses the term ``unsubsidized employment'' to align the 
effectiveness in serving employers performance indicator to WIOA 
statutory language, specifically referring to unsubsidized employment 
in the second and fourth quarters after exit, which are key inputs to 
this indicator's definition of Retention with the Same Employer.
Support for Retention With the Same Employer
    Comments: Several commenters were generally supportive of the 
proposal to use Retention with the Same Employer as the definition for 
effectiveness in serving employers. Supportive comments include 
assertions that when an employee is performing their duties 
competently, their employer generally tries to retain the employee. 
Similarly, other commenters stated that Retention with the Same 
Employer demonstrates the effectiveness with which employee skills and 
training have been matched to employer needs. Another commenter argued 
that Retention with the Same Employer demonstrates a continued 
relationship between the employer and participants, as well as the 
success of WIOA customers, while the other two piloted approaches are 
based only on employer data and fail to capture job match 
effectiveness. Another commenter expressed support for the proposal 
because, in their view, it would benefit the workforce and promote cost 
savings for employers in the long term.
    Several commenters agreed with the Departments' conclusion that 
Retention with the Same Employer would be the least burdensome 
definition of the three piloted measures. Similarly, another commenter 
agreed that this definition would be the least burdensome approach 
because States already collect wage records for other WIOA-related 
reporting and because States would be able to coordinate data 
aggregation for the six core programs more easily with this measure 
than with the other two piloted measures. Another echoed this 
sentiment, adding that the measure would be based on data that is 
objective, already collected by many States, and that can be 
standardized across States and territories.
    Departments' Response: We appreciate commenters supporting 
Retention with the Same Employer as the definition for effectiveness in

[[Page 13822]]

serving employers. As discussed in more detail in Section II.A., we 
agree that this definition best aligns with WIOA employment performance 
indicators by using existing Participant Individual Record Layout 
(PIRL) terms and data elements (i.e., use of ``participants,'' 
``unsubsidized employment,'' and ``exit'') and measuring the same 
quarters as the employment rate indicators (i.e., the second and fourth 
quarters after program exit), is the least burdensome definition of the 
three piloted measures, effectively illustrates the workforce system's 
ability to serve employers by reducing new employee turnover, and 
minimizes the burden on States and employers in measuring effectiveness 
in serving employers.
Retention With the Same Employer Definition: Program Impacts
    Comments: Several commenters raised numerous points in asserting 
that adopting Retention with the Same Employer would adversely impact 
service delivery design and business outreach services. Commenters 
expressed opposition to measuring effectiveness in serving employers 
with Retention with the Same Employer, asserting that changing 
employers often enables individuals to seek jobs with higher pay or 
better benefits, which is a positive outcome but would reflect 
negatively on WIOA programs under the proposed definition. A few 
commenters asserted that, by negatively counting individuals who switch 
jobs, the proposed measure would incentivize programs to place 
individuals in jobs with minimal mobility, punish programs that provide 
individuals with skills and knowledge that enable them to seek higher 
paid jobs with other employers, and disincentivize programs from 
sharing better job placements because retention numbers would decrease 
if a participant switched to a better job after their initial 
placement.
    Other commenters shared these concerns, asserting that programs 
should not be punished if participants' employment growth is with a 
different employer from the one with which the individual is initially 
placed and that WIOA participants should not be trapped in a job for 
the sake of WIOA programs' performance indicators.
    Similarly, one commenter expressed concern that by incentivizing 
placing individuals in positions with limited mobility, the measure 
could serve to perpetuate or worsen racial and economic inequities or 
lead to worker exploitation, as well as further disadvantage job 
seekers with criminal records, undocumented immigrants, and individuals 
receiving income supplements conditioned on engaging in work 
activities.
    Another commenter reasoned that while retention indicates some 
level of employer satisfaction, it may not be the desired outcome for 
the job seeker, who may be in a low-wage position or need to work 
multiple jobs to earn a living wage.
    Another broad theme of opposition to the proposed measure is that 
Retention with the Same Employer primarily measures the success of a 
job seeker. A commenter asserted that success according to the proposed 
measure requires ongoing support of job seekers, not employers, which 
WIOA programs often provide, but that the employer inputs, such as 
wages, working conditions, and workplace culture, are not related to 
WIOA services. Similarly, another commenter asserted that the indicator 
would not measure or identify when an employer receives a service, 
stating that it would primarily reflect intervention with a client.
    Several commenters asserted that using the proposed definition 
could disincentivize employers to support and train employees in such a 
way that enhances employees' ability to advance into a better job with 
another employer. Other commenters asserted that a performance 
indicator that prioritizes Retention with the Same Employer would be 
particularly misaligned with the current economy, in which employers 
are offering bonuses, higher salaries, and other benefits to attract 
talent. Another commenter remarked that high costs of living have 
forced many employees to move from expensive metropolitan areas to less 
expensive rural areas, thus leaving their jobs.
    Several commenters raised concerns that Retention with the Same 
Employer is not a good fit for newer and smaller employers, younger 
workers, and certain sectors of the economy. One commenter said that 
while it considered the proposed definition to be the best of the three 
piloted definitions, measuring effectiveness in serving employers 
through Retention with the Same Employer would disincentivize programs 
from working with new or small employers because their employee 
retention history may be unknown and, thus, they may be seen as a risky 
partner.
    A couple of commenters asserted that the proposed definition would 
not be the best measure of effectiveness in serving employers for 
younger generations, who are increasingly populating the workforce, 
place a high value on work/life balance, and will readily leave a 
position for a better opportunity, or for gig-economy workers, who 
change jobs frequently in search of better opportunities.
    One commenter expressed concern that the proposed measure could 
negatively capture seasonal employment noting that some employers 
require seasonal employment so retention in the second and fourth 
quarters is not assessing the effectiveness of services provided to 
these employers. Similarly, another commenter noted that the metric 
does not recognize instances in which rapid replacements or temporary 
positions are necessary for fulfillment. The commenter noted that for 
those employers, skills training and WIOA services have little 
influence over retention rates. Similarly, another commenter asserted 
that the proposed measure would reflect negatively on WIOA programs in 
States where much of the workforce is transient.
    Departments' Response: The Departments acknowledge the wide range 
of concerns expressed by commenters that implementing the Retention 
with the Same Employer definition may have adverse impacts on job 
seeker services and business outreach. The Departments address these 
concerns below.
    Job mobility: The Departments note that an individual who moves to 
a new job with the same employer would be considered a successfully 
retained participant under this indicator because the indicator 
measures retention ``with the same employer'' in the second and fourth 
quarters; there is no requirement that the participant remain in the 
same employment status or position with the employer to count as a 
positive outcome. The Departments also note that the employer that will 
be measured for purposes of this indicator for this particular 
participant is not always the same employer that received services from 
a core program and initially hired the participant. The Departments 
also agree that many circumstances affect an employer's retention of 
employees, some of which may be outside the purview of WIOA services, 
including the general economy and business landscape of an area, which 
may include seasonal employers or other industries with cyclical work 
cycles that could impact calculated retention rates. These external 
economic impacts are likely not unique to one specific geographic area. 
If external economic factors were to affect the outcome of the 
indicator, they would be captured in the statistical adjustment model. 
Additionally, regarding States with a higher transient worker 
population or where individuals are more likely to

[[Page 13823]]

leave for a higher paying job, the Departments' statistical adjustment 
model will account for such differences as it adjusts for variations in 
economic conditions and participant characteristics. These adjustment 
differences by the statistical adjustment model will be critical when 
the Departments determine there are sufficient data to produce reliable 
results for performance assessment purposes with the effectiveness in 
serving employers indicator.
    The Departments acknowledge that individuals may leave for higher 
wages with a new employer, but States can seek to address these 
concerns in a variety of ways that are beneficial to both the employer 
and the participant, such as striving to find quality job placements or 
working with employers to develop career pathways and good jobs that 
more effectively incentivize participants they have hired to maintain 
their employment with the same employer. Despite these concerns and as 
discussed more fully in Section II.A., the Departments are adopting the 
Retention with the Same Employer definition of the indicator for 
multiple reasons, specifically because it: is the least burdensome 
since it uses data elements reported by States for other performance 
indicators; has a stable data collection mechanism in that the 
requisite data are already reported via an OMB-approved information 
collection request; aligns with other employment performance indicators 
in that it uses similar terminology and data elements; and demonstrates 
maintained relationships between employers and employees, thereby 
demonstrating that the services provided by the WIOA core programs not 
only meet the long-term needs of the participants but also the needs of 
employers in each State.
    Equity: The Departments disagree with the comment that the selected 
metric will potentially perpetuate or worsen racial and economic 
inequities or negatively impact those with justice system issues, 
immigrants, and those receiving income supplements conditioned on 
engaging in work activities. As discussed in other parts of this final 
rule, we believe the Retention with the Same Employer metric does allow 
for employment opportunities and upward mobility for all workers. To be 
clear, the metric measures the number of participants who remained with 
the same employer over a period of time, not necessarily in the same 
job position or even the same geographic location. Consistent with 
various requirements of WIOA, the Departments continually emphasize 
that States and local areas should serve all participants so that they 
may obtain unsubsidized and sustainable employment. For example, as 
discussed more fully in ``Requirements for Workforce Innovation and 
Opportunity Act (WIOA) State Plans for Program Years (PYs) 2024-2027,'' 
jointly issued by the Departments on October 31, 2023,\25\ when 
developing their annual plans, States and local areas should 
demonstrate how they will develop education, training, and career 
service strategies that better address and promote equity to improve 
access and outcomes for disadvantaged populations. Furthermore, serving 
all participants, including those with barriers to employment, so that 
they may obtain unsubsidized and sustainable employment is reflected in 
the WIOA primary indicators of performance that measure all 
participants' employment in the second and fourth quarters after exit. 
Given that the definition of effectiveness in serving employers adopted 
by this final rule uses the data obtained in these indicators, the 
effectiveness in serving employers indicator will also reflect States' 
service delivery to all WIOA participants, including those with 
barriers to employment.
---------------------------------------------------------------------------

    \25\ ETA, TEGL No. 04-23, ``Requirements for Workforce 
Innovation and Opportunity Act (WIOA) State Plans for Program Years 
(PY) 2024-2027,'' Oct. 31, 2023, https://www.dol.gov/agencies/eta/advisories/tegl-04-23; ED, OCTAE Program Memorandum 24-2, 
``Requirements for Workforce Innovation and Opportunity Act (WIOA) 
State Plans for Program Years (PY) 2024-2027,'' Oct. 31, 2023, 
https://www2.ed.gov/about/offices/list/ovae/pi/AdultEd/octae-program-memo-24-2.pdf; ED, RSA-TAC-24-02, ``Requirements for 
Workforce Innovation and Opportunity Act (WIOA) State Plans for 
Program Years (PY) 2024-2027,'' Oct. 31, 2023, https://rsa.ed.gov/sites/default/files/subregulatory/TAC-24-02.pdf.
---------------------------------------------------------------------------

    Another example is WIOA sec. 134(c)(3)(E), which requires that 
priority be given to recipients of public assistance, low-income 
individuals, and individuals who are basic skills deficient (including 
English language learners) when individualized career services and 
training services are provided using funds allocated to a local area 
for the WIOA title I Adult program. This priority of service 
requirement applies when providing these services under the title I 
Adult program at all times, regardless of the amount of funds available 
to provide services in the local area. WIOA requires States to develop 
criteria, policies, and procedures for applying this priority for 
purposes of the title I Adult program, including monitoring local 
areas' compliance with this priority (see 20 CFR 680.600 and TEGL No. 
19-16). Moreover, for the AEFLA and VR programs, section 427 of the 
General Education Provisions Act (20 U.S.C. 1228a) requires grantees to 
include in their applications--i.e., their WIOA State Plans--a 
description of how they will ensure participants' equitable access to 
and participation in the programs by addressing barriers based on 
gender, race, national origin, color, disability, and age. Lastly, WIOA 
permits States to develop and use internal metrics in addition to those 
reported to the Departments. This encourages States and local areas to 
develop and track additional measures that enhance internal service 
delivery policies, and continue to track the impact of any sector-
specific strategies particularly relevant to their State. Therefore, 
the Departments have concluded that the Retention with the Same 
Employer definition for the effectiveness in serving employers 
performance indicator will not contribute to racial and economic 
inequities or negatively impact WIOA core program participants.
    Counting services provided to employers: Some commenters suggested 
defining the measure as a count of the services delivered to employers. 
As discussed above in Section II.A, the Departments note that counting 
services would be measuring an input (effort) rather than an output 
(effectiveness). Aligning with the approach of all other indicators, 
Retention with the Same Employer measures output (results), whether an 
exiter is retained at the same employer in both the second and fourth 
quarters after exit, rather than a count of services to employers. The 
number of services does not necessarily provide a direct correlation to 
the effectiveness in serving employers. Therefore, the Departments have 
decided to use an outcome measure, such as retention of employees, as 
the desired goal to be measured through this indicator.
    Lack of inclusion of the job seeker: Commenters expressed concern 
that the chosen definition for this measure focused unnecessarily on 
services to employers to the detriment of job seekers. WIOA sec. 
116(b)(2)(A)(i)(VI) requires the Departments to assess ``effectiveness 
in serving employers.'' Therefore, this metric necessarily focuses on 
services to employers, not the job seekers. Nevertheless, Retention 
with the Same Employer highlights the alignment between employers and 
job seekers by measuring the workforce system's alignment with employer 
needs during the second and fourth quarters after a participant exits 
WIOA programs.
    Effectiveness in serving employers is one of six indicators of 
performance under WIOA; it is the only shared

[[Page 13824]]

indicator across core programs, and the only indicator that is not 
designed to measure job seeker outcomes. In other words, all other 
performance indicators (i.e., employment in the second and fourth 
quarters after exit, median earnings in the second quarter after exit, 
credential attainment, and measurable skill gains) are designed to 
assess job seeker outcomes. However, the Departments also recognize 
that a service delivery design solely focused on the effectiveness in 
serving employers performance indicator, without regard to job seeker 
needs, would be at risk of failing to meet other areas of program 
performance. Therefore, the Departments have concluded that the chosen 
definition for the effectiveness in serving employers performance 
indicator strikes the proper balance between the needs of employers and 
those of job seekers and, thus, will not have a detrimental impact on 
job seekers.
    Employer training: The Departments believe it more likely that 
employers provide training to encourage employees to advance within 
their own company. The performance indicator under WIOA is intended to 
measure the effectiveness of the WIOA core programs in serving 
employers. Retention with the Same Employer is calculated as the 
percentage of participants in unsubsidized employment who exited the 
program and were employed by the same employer in the second and fourth 
quarters after exiting the program. As such, the indicator is not 
designed to measure the internal training practices of employers, but 
rather the effectiveness of AJC services by reducing employee turnover 
within the first year of employment.
    Outreach to and working with smaller or newer employers: The 
Departments acknowledge the needs of new and small employers and have 
determined that the definition for effectiveness in serving employers 
makes no distinction about the size of the employer, and therefore is 
not a disincentive for working with employers of any size. The 
Departments encourage programs, at both the State and local levels, to 
work closely with new and small employers to find participants who 
match well with the employers' needs. Ultimately it is the 
responsibility of the programs to assist job seekers in finding 
meaningful, long-lasting employment opportunities. Moreover, the 
Retention with the Same Employer calculation is not restricted to 
employers who received a direct employer service through a WIOA core 
program, so there is no incentive for WIOA core programs to avoid 
providing services to new or small employers.
    The Departments acknowledge that individuals may leave for higher 
wages with a new employer, but there are a variety of ways in which 
States can seek to address these concerns in ways that are beneficial 
to both the employer and the participant, such as striving to find 
quality job placements or working with employers to develop career 
pathways and good jobs that more effectively incentivize participants 
they have hired to maintain their employment with the same employer. 
The Departments encourage provision of WIOA services to new and small 
employers to enhance employee retention. Examples of such services 
include, but are not limited to, the provision of labor market 
information to demonstrate what constitutes competitive wages and 
benefits in their industry, working with employers to develop career 
pathways for employees to pursue and advance in employment, providing 
technical assistance on the hiring of individuals with disabilities 
(including the requirements of the Americans with Disabilities Act), 
and sharing other research on the factors that increase retention 
rates. The Departments note that there is no restriction on working 
with new and small employers and expect that Retention with the Same 
Employer will lead to better services.
    Seasonality: In cases of temporary seasonal work, AJCs should 
strive to place participants into long-term employment opportunities 
when possible. While a seasonal employee will not be a positive outcome 
in the indicator, the statistical adjustment model will account for 
this, and the Departments do not expect States to achieve a 100 percent 
positive outcome.
Retention With the Same Employer and Other Aspects of Effectiveness in 
Serving Employers
    Another broad theme that commenters raised in opposition to the 
proposed measure was that it would not measure all of the aspects of 
effectiveness in serving employers. Their primary assertions were that 
outcomes may be skewed due to the inclusion or exclusion of specific 
populations, wage sources, or employers in the calculation.
    Comments: One commenter expressed concern that not all employers 
who receive a service from the local workforce development board would 
have the effectiveness of those services assessed using the Retention 
with the Same Employer definition. For example, the commenter stated 
that if a local workforce development board hosted a job fair and an 
employer hired someone who was not a WIOA participant, those services 
to the employer would not be taken into account.
    Commenters provided feedback regarding the pools of individuals and 
employers being measured in the proposed Retention with the Same 
Employer approach. They suggested that only employers that received a 
direct WIOA service be measured, that only targeted industries be 
included, that businesses that issue Worker Adjustment and Retraining 
Notification (WARN) Act notices be exempted, that participants employed 
by companies impacted by a qualified plant closing or mass layoff 
identified through the WARN Act Notification process if they lose or 
change employment locations be excluded, that employers that close or 
conduct layoffs during the reporting period be excluded from the 
measure's calculations, that the metric not include changes in employer 
caused by firms going bankrupt or downsizing, or that the measure 
extend beyond WIOA-funded programs.
    Another comment mentioned that the proposed rule will solely focus 
on dislocated workers and that the greater public workforce system will 
suffer as this rulemaking will not encourage collaboration where 
dislocated workers are not present.
    Some commenters noted that employers may have received no services. 
One commenter argued that while retention indicates some level of 
employer satisfaction, it does not speak to what business service an 
employer received. Similarly, a few commenters asserted that the 
performance indicated by the measure might not be a result of employers 
receiving a direct service from the workforce development system. 
Another commenter stated that the measure would say little about actual 
interactions between employers and their local workforce development 
board.
    One commenter asserted that the proposed measure would not reflect 
the effectiveness of direct employer interaction, because placement of 
participants at a specific employer is not the result of employer 
service delivery but of credential skills obtained through tuition 
assistance, and that the employers reflected in the measure may not 
have sought or received a service but simply had a job opening filled 
by a program participant. Several commenters asserted that the proposed 
measure has no mechanism for linking the retention of a particular 
employee with instances of employer services being provided, therefore 
only indirectly reflecting effectiveness in

[[Page 13825]]

serving employers and failing to inform strategic action to improve 
performance.
    The commenters further stated that the measure can be calculated 
without any employer services data. Other commenters stated that 
Retention with the Same Employer does not capture all services to an 
employer. A commenter critical of the proposed measure asserted that 
there are too many services provided to employers that are unrelated to 
a program-funded job seeker, and furthermore that employment status at 
program exit is unknown to local program operators. The commenter also 
asserted that the measure would not truly capture effectiveness because 
it is limited to program-funded job seekers and would not evaluate all 
employer services and is instead primarily a retention metric for WIOA-
funded job seekers.
    Similarly, one commenter expressed opposition to the proposed 
measure, arguing that because AJCs and workforce development boards 
refer a universal pool of candidates for job openings, it would be 
inappropriate to only measure success for WIOA-enrolled customers. 
Other commenters similarly criticized the proposed indicator because, 
while workforce systems will provide services to any job seeker, the 
only employers that would be captured are those that a WIOA-funded job 
seeker exits a program to be employed by. Another commenter noted that 
Retention with the Same Employer does not speak to acuity of placement 
(for example, how difficult the position was to fill, how in demand the 
position is, whether the role was seasonal specific and not intended to 
maintain retention, rarity of skill set, or time to hire). A different 
commenter relatedly suggested that combining Retention with the Same 
Employer with some measure of acuity (such as skill/education level of 
the position or time to placement) and the ability to filter for those 
employers who received a business service would improve the measure.
    Departments' Response: As noted previously, the Departments have 
determined that Retention with the Same Employer in both the second and 
fourth quarters after exit demonstrates a successful match between the 
job seeker and the employer. Moreover, the services delivered by core 
programs routinely benefit the broader employer community by increasing 
basic skills of the candidate pool, enhancing free job posting and 
search tools, and preparing workplaces and job seekers with 
disabilities for successful employment. WIOA participants who receive 
services that successfully prepare them to fill jobs that meet 
employers' needs benefit all the employers in the local economy, 
regardless of whether a specific employer directly received services 
from a WIOA core program.
    Regarding the pool of participants measured in this indicator, one 
commenter mentioned that this metric only utilizes dislocated workers, 
but that is incorrect. The indicator will include all WIOA core program 
participants, regardless of employment status at time of participation 
or program enrollment.
    Regarding whether the proposed indicator measures all aspects of 
effectiveness in serving employers, the Departments believe there are 
many aspects to employer effectiveness, some of which are very 
difficult to quantify and report. Therefore, the Departments chose one 
aspect of effectiveness that employers stated would be beneficial and 
can be measured across programs and States with minimal burden to 
employers--employee retention.
    The Retention with the Same Employer calculation of effectiveness 
in serving employers is not restricted to employers who received a 
direct employer service through a WIOA core program. However, the 
services delivered by core programs, whether to participants or to the 
employers themselves, routinely benefit the broader employer community 
by increasing basic skills of the candidate pool, enhancing free job 
posting and search tools, and preparing workplaces and job seekers with 
disabilities for successful employment.\26\ WIOA participants who 
receive services that successfully prepare them to fill jobs that meet 
employers' needs benefit all the employers in the local economy, 
regardless of whether a specific employer directly received services 
from a WIOA core program; therefore, the Departments have determined 
that excluding employers that have not received a WIOA core program 
service within the reporting period is not an appropriate holistic 
measure of the workforce system's impact on Retention with the Same 
Employer. In fact, such an approach would be contrary to the purpose of 
the performance measure itself. For example, it would be possible for a 
participant to obtain employment--from an employer that received 
services from a core program--as a result of services received from one 
of the six core programs, but change jobs within the first quarter 
after exiting the program to a new job with a different employer (that 
did not receive services from a WIOA core program) where the 
participant remained for at least a year. In these final regulations, 
the Departments define the effectiveness in serving employers 
performance indicator as the participant's Retention with the Same 
Employer in the second and fourth quarters after exiting the program. 
In other words, in this example, the employer that will be measured for 
purposes of this indicator for this particular participant is not the 
same employer that received services from a core program and initially 
hired the participant. Furthermore, the Departments acknowledge that 
this metric is one of many aspects of effectiveness in serving 
employers, but believe that retention is an important aspect to measure 
as stated by employer representatives during stakeholder engagements. 
States are encouraged to measure effectiveness in serving employers in 
other methods that are not required to be submitted officially to the 
Departments for performance accountability, consistent with WIOA sec. 
116(b)(1)(A)(ii).
---------------------------------------------------------------------------

    \26\ For example, 34 CFR 361.3 authorizes State VR agencies to 
expend VR funds on the costs of providing VR services and 
administering the program. According to 34 CFR 361.5(c)(2)(iii) and 
(iv), administrative costs include providing information about the 
VR program to the public (which, for purposes of this final rule, 
would include the broader employer community) and technical 
assistance and support services to other State agencies, private 
nonprofit organizations, and businesses and industries. In addition, 
34 CFR 361.49(a)(4) permits State VR agencies to provide technical 
assistance to businesses that are seeking to employ individuals with 
disabilities. There is no requirement the business be seeking to 
hire a current VR program participant.
---------------------------------------------------------------------------

    The Departments disagree with the suggestion that the metric should 
exclude cases where the participants are employed with employers that 
have a mass layoff or issue WARN notices. We did not exclude these 
employers because it is not practical to exclude them from the measure 
calculation. This is due to the limitations of the information that is 
currently available in State wage records, which will be the typical 
source for States to collect the required inputs for this metric. To 
the extent that States are concerned that this could impact results, 
the Departments anticipate the statistical adjustment model \27\ will 
take into account this

[[Page 13826]]

concern. For this and other reasons, the Departments will not negotiate 
targets for this indicator at 100 percent.
---------------------------------------------------------------------------

    \27\ Pursuant to WIOA sec. 116(b)(3)(A)(viii), the Departments 
developed an objective statistical adjustment model that is used to 
both negotiate expected levels of performance for each of the 
performance indicators to be incorporated into the approved Unified 
or Combined State Plan or State Plan modification (WIOA sec. 
116(b)(3)(A)(iv)), and for purposes of determining the adjusted 
levels of performance for each indicator at the end of the Program 
Year (WIOA sec. 116(b)(3)(A)(vii)). For more detailed information 
about the statistical adjustment model, see the negotiations and 
sanctions guidance in TEGL No. 11-19, Change 1, and related ED 
guidance. ETA, TEGL No. 11-19, Change 1, ``Negotiations and 
Sanctions Guidance for the Workforce Innovation and Opportunity Act 
(WIOA) Core Programs,'' May 10, 2023; https://www.dol.gov/agencies/eta/advisories/tegl-11-19-change-1; ED, OCTAE Program Memorandum 20-
2, ``Negotiations and Sanctions Guidance for the Workforce 
Innovation and Opportunity Act (WIOA) Core Programs,'' May 10, 2023, 
https://www2.ed.gov/about/offices/list/ovae/pi/AdultEd/octae-program-memo-20-2.pdf, ED, OCTAE Program Memorandum 20-2, Attachment 
I ``Calculation--Overall State Indicator and Program Scores,'' May 
10, 2023, https://www2.ed.gov/about/offices/list/ovae/pi/AdultEd/octae-program-memo-20-2-attachments.pdf; ED, RSA-TAC-20-02, 
``Negotiations and Sanctions Guidance for the Workforce Innovation 
and Opportunity Act (WIOA) Core Programs,'' May 10, 2023, https://rsa.ed.gov/sites/default/files/subregulatory/RSA-TAC-20-02_0.pdf
---------------------------------------------------------------------------

    With regard to the concern that the definition of Retention with 
the Same Employer only indirectly reflects the effectiveness in serving 
employers and is not useful in informing strategic action to improve 
performance, the Departments note that this metric does not prevent 
States from including the information they feel is necessary in their 
strategic plans. States should incorporate labor market information, 
such as which occupations and industries are in demand, in their 
strategic plans. The Departments believe that information such as 
whether WIOA participants retain employment is important data to 
consider when States strategically plan outreach, business services, 
and participant service delivery design. Therefore, in terms of 
strategic planning at the State or local level, this metric will 
indicate the types of jobs participants are entering and retaining 
employment with, which may provide some indication of job quality. If a 
State's outcome results for the Retention with the Same Employer metric 
are below target, strategic policies can be made to ensure participants 
are entering long-term sustainable unsubsidized employment at a higher 
rate.
    With regard to concerns that the Retention with the Same Employer 
indicator does not measure acuity of the WIOA participant's job 
placement, the Departments continue to acknowledge that this metric is 
one of many aspects of assessing effectiveness in serving employers. As 
noted above, States are encouraged to measure effectiveness in serving 
employers in other methods that are not required to be submitted to the 
Departments for performance accountability.
    Comments: Commenters also expressed concerns about implementing one 
measure only and that one measure, or one data point, may not address 
all the facets of the effectiveness in serving employers indicator. 
Commenters also said that Retention with the Same Employer was not the 
best indicator of a program's success in serving employers.
    One commenter expressed opposition to the proposed definition, 
asserting that it will be impacted by variables outside the control of 
State workforce agencies, such as ``talent migration.'' Similarly, 
another commenter asserted that many reasons that an employee might 
choose to leave a position within two quarters have little to do with 
how effectively the employer was served by the system.
    One commenter asserted that the proposed measure is not a good 
indicator of WIOA program performance because it is significantly 
impacted by employers' choices as to wages, working conditions, and 
workplace culture, over which WIOA programs have little control. 
Another commenter expressed similar concerns, asserting that retention 
depends on employers and employees learning to communicate effectively 
and employees getting along, adapting to company culture, acquiring new 
skills, and being satisfied with their job, which AJCs cannot control. 
A third commenter echoed these concerns, adding that factors such as 
labor shortages likely encourage employees to switch employers.
    One commenter stated that long-term employee retention is not 
solely about initial placement after exiting a program, asserting that 
commitment is required by both the employee and employer, and 
concluding that as a measure of effectiveness in serving employers, 
Retention with the Same Employer would not be able to prove or disprove 
the success of a program.
    Another commenter asserted that the proposed measure could deter 
local workforce development board and one-stop center staff from taking 
a customer-based approach to career services and thus skew the results 
of the statistical adjustment model.
    Departments' Response: The Departments recognize that there are 
many factors, beyond the control of the WIOA core programs, that can 
impact a participant's Retention with the Same Employer. For that 
reason, as discussed more fully in Section II.A. above, the Departments 
considered other approaches during the 6-year pilot period and 
encouraged States to devise their own State-specific approaches to 
measuring effectiveness of serving employers. After considering all the 
evidence, the Departments considered the options of implementing more 
than one metric to measure effectiveness in serving employers, but 
determined a single indicator approach was most logistically feasible, 
aligned with the existing performance indicator structure, and resulted 
in lowest burden to grantees; this single indicator is set forth in 
this final rule at 20 CFR 677.155(a)(1)(vi) and (c)(6).
    Single data point: The reason for selecting this one metric (and 
not a combination of measures) is that it is most applicable across the 
differing mandates and program designs of all six core programs, uses 
existing joint PIRL data elements, and effectively illustrates the 
broad impact of the workforce system's ability to serve employers by 
reducing new employee turnover through effective job placement. 
Commenters to the proposed rule have provided several alternatives to 
the proposed measure, which are described in this document, and States 
are encouraged to internally adopt any of those suggested metrics that 
will provide feedback on the success of efficiently serving employers. 
To reduce burden on States, and to ensure that all States can 
accurately report on the data elements required, the Departments have 
decided to use one measure for the effectiveness in serving employers 
performance indicator, using existing common data elements across all 
core programs.
    The Departments acknowledge the challenges related to developing an 
indicator that reflects the efforts of multiple programs, avoids 
additional collection and reporting burden, and results in stable data 
that can be assessed across programs. The Departments note that 
Retention with the Same Employer has the benefit of aligning with two 
of the three employment-related performance indicators, specifically 
the employment in the second and fourth quarters after exit indicators 
that measure the employment outcomes of program participants. As such, 
it promotes the statutory purpose of WIOA to ``support the alignment of 
workforce investment . . . in support of a comprehensive, accessible, 
and high-quality workforce development system in the United States.'' 
WIOA sec. 2(2). The alignment of definitions, data elements, and 
performance indicators with one another, as the Departments have done 
with the Retention with the Same Employer metric for measuring the 
effectiveness in serving employers indicator, improves the 
comprehensiveness of the workforce development system in each State and 
nationwide. Information such as whether WIOA participants are retained 
in job placement is important data to

[[Page 13827]]

consider when States strategically plan outreach, business services, 
and participant service delivery design to ensure that the workforce 
system is matching employers with skilled workers to meet business 
needs, thereby satisfying another purpose of WIOA, as set forth in WIOA 
sec. 2(2), which is to ``provide America's employers with the skilled 
workers the employers need to succeed in a global economy.''
    Addressing all factors of effectiveness in serving employers: The 
Departments agree that many circumstances affect an employer's 
retention of employees, some of which may be outside the purview of 
WIOA services, including the general economy and business landscape of 
an area. However, an indication that an employee maintains employment 
with the same employer in both the second and fourth quarters after 
exiting from a WIOA program demonstrates a level of success for 
employers (i.e., successfully preparing participants to fill jobs that 
meet employers' needs). Retention of an employee reduces the costs to 
the employer associated with employee turnover and retraining, which is 
enhanced when participants are placed in jobs aligned to their skills 
and career goals.
    Commenters also said that Retention with the Same Employer was not 
the best indicator of a program's success in serving employers. 
Retention with the Same Employer is a measure of the workforce system's 
alignment with employer needs and is measured during the second and 
fourth quarters after a participant exits WIOA programs. The 
Departments acknowledge that individuals may leave for higher wages 
with a new employer, but there are a variety of ways in which States 
can seek to address these concerns that are beneficial to both the 
employer and the participant, such as striving to find quality job 
placements or working with employers to develop career pathways and 
good jobs that more effectively incentivize participants they have 
hired to maintain their employment with the same employer.
    The Departments acknowledge that the limitations for Retention with 
the Same Employer could include the unintended consequence that this 
approach may be at odds with an employee seeking a higher paying job or 
employment benefits. It is possible that a significant percentage of 
participants will not be counted in the numerator for this indicator. 
However, many of those participants who have left their current 
employer for another will contribute toward improved performance on 
employment-based indicators, such as median earnings. Moreover, as 
discussed above, the Departments believe that Retention with the Same 
Employer accomplishes the goals of WIOA with the least burden on the 
States.
    Regarding the comment that service delivery approaches taken by 
local workforce development boards and one-stop staff to assist 
employers will skew the statistical adjustment model outcomes, the 
Departments disagree and note that the model does in fact account for 
results of these employer engagements.
    Effectiveness in serving employers is one of six indicators of 
performance under WIOA; it is the only shared indicator across core 
programs, and the only indicator that is not designed to measure job 
seeker outcomes. Local workforce development boards and one-stop center 
staff delivering services solely focused on the effectiveness in 
serving employers indicator without regard to job seeker needs would be 
at risk of failing to meet other areas of program performance. The 
statistical adjustment model will account for economic factors 
affecting the Retention with the Same Employer indicator in the State 
and local areas. Therefore, the Departments have concluded that States 
will still focus on providing quality services to job seekers.
Questions and Requests for Clarifications About Calculations, Data 
Sources, Wage Records, and External Factors That Impact the Measure
    Comments: Commenters suggested that the calculation for the 
Retention with the Same Employer measure be expanded to include 
supplemental wage information. One commenter asserted that by relying 
exclusively on wage records, the measure will produce an incomplete 
picture of the effectiveness of the WIOA system because it would 
obscure the ways WIOA programs serve employers by developing employees 
with the skills to respond flexibly and creatively to changing working 
challenges, whether for the same employer or a different one.
    Some commenters were concerned that local providers do not know the 
status of a participant's employment at exit. A few commenters stated 
that workforce programs may not receive hiring outcome information and 
may be unable to report information for Wagner-Peyser Act participants.
    Another commenter asked how common exit would apply to this measure 
and which programs' exit date will be used to determine this measure 
when an individual participant is co-enrolled in more than one core 
partner program.
    One commenter recommended that the Departments explore methods of 
capturing data that demonstrate employment success for self-employed 
individuals and individuals employed by the Federal Government. 
Relatedly, another commenter recommended not limiting the performance 
indicator to individuals with wage records but rather expanding it to 
include participants whose employment can be verified by other means, 
specifically the same supplemental data sources as are permitted for 
the other primary performance indicators, such as information provided 
to case managers. Other commenters cautioned that wage records are not 
readily available for Federal, military, and self-employment, asserting 
that this would lead to negative performance results in States with 
high proportions of individuals seeking these types of employment or 
necessitate statistical adjustments. Similarly, another commenter 
questioned if Federal agencies would provide additional wage data 
sources on individuals employed by the military, Postal Service, or 
Federal Government.
    Some commenters discussed whether State Wage Interchange System 
(SWIS) data could be used to collect and report on the proposed 
measure, given that SWIS data show how many employees work across State 
lines, a figure that becomes increasingly important in the post-
pandemic shift to remote work. Another commenter expressed concerns 
about being able to match employers consistently in wage data and noted 
that during the pilot period their concerns over the Retention with the 
Same Employer measure caused them to choose the Repeat Business 
Customer and Employer Penetration rates for reporting. The commenter 
noted that the approach had the lowest adoption rate (per the Joint 
WIOA Effectiveness in Serving Employers NPRM) of the three pilot 
measures, suggesting that other States may have shared the commenter's 
concerns about choosing it.
    Departments' Response: The Departments agree that supplemental wage 
information could play a vital role when wage records are either 
unavailable for a participant or difficult to obtain. For this reason, 
we revise Sec.  677.155(a)(1)(vi) and (c)(6) of this joint final rule 
to remove the requirement that wage records be used to document a 
participant's employment status for purposes of the effectiveness in 
serving employers performance indicator. This change allows for the 
effectiveness in serving employers indicator to include the same data 
sources as the other

[[Page 13828]]

WIOA employment-based primary indicators of performance, including 
supplemental wage information. The Departments also agree that core 
programs will be able to obtain wage data for performance reporting 
purposes through the SWIS Clearinghouse for those participants employed 
across State lines.
    Regarding the commenter's observation that the fewest number of 
States selected Retention with the Same Employer measure for the pilot 
and the commenter's interpretation that this lowest adoption rate 
indicates that States did not think it was a useful measure, the 
Departments did not inquire why States chose certain measures during 
the pilot period, and note that there is no evidence that a lower 
adoption rate correlates with a lack of usefulness in measuring 
effectiveness in serving employers in the State. The Departments note 
that Retention with the Same Employer was the easiest measure to 
implement based on it being calculated from existing PIRL elements. 
Therefore, it is plausible that fewer States chose to pilot this 
measure because they already knew how to calculate this measure and 
would not have needed to test how to implement it in their State. They 
may have wanted to assess how the two other pilot measures would work. 
The Departments cannot determine if this was the case, but it seems 
reasonable that this possibility could have led to the lower adoption 
rate for the Retention with the Same Employer measure.
    Measuring only WIOA-funded programs: Regarding the comments that 
stated measuring only WIOA core programs was not a reflection of the 
effectiveness of the workforce system's services to employers, the 
performance indicator under WIOA is intended to measure the 
effectiveness of the WIOA core programs in serving employers. While 
States and organizations may provide services to employers through 
other programs, it is appropriate in this instance to limit the metric 
to those participants who have exited from WIOA-funded programs.
    Use of supplemental wage information: The Departments proposed that 
the effectiveness in serving employers indicator only include 
participants whose employment status is obtainable through wage records 
because wage records are the least burdensome records to use; States 
already have these records for other WIOA-required reporting purposes, 
and they are the most standardized and statistically valid records 
available. Most employers are covered through unemployment insurance 
(UI) wage records and therefore wage records remain the most accurate 
and least burdensome method of calculating this indicator.
    However, the Departments acknowledge that certain categories of 
employment, such as entrepreneurial employment, Federal employment, 
employment with the U.S. Postal Service and the military, and farmwork, 
are not reflected in State UI wage record databases. Additionally, 
participants are not required to provide Social Security numbers, which 
are needed to use wage records, to obtain services and some 
participants may be reluctant to share this information. WIOA's 
regulations and implementing guidance authorize the use of supplemental 
wage information for the calculation of the median earnings indicator. 
See TEGL No. 26-16.\28\
---------------------------------------------------------------------------

    \28\ The Departments issued joint guidance on June 1, 2017, 
``Guidance on the use of Supplemental Wage Information to implement 
the Performance Accountability Requirements under the Workforce 
Innovation and Opportunity Act,'' TEGL No. 26-16, OCTAE Program 
Memorandum 17-6, and RSA-TAC-17-04, that describes the Departments' 
protocols on the use and reporting of supplemental wage information.
---------------------------------------------------------------------------

    To ensure that effectiveness in serving these additional employers 
is assessed, the Departments concur with commenters that the Retention 
with the Same Employer measure should be expanded to include the number 
of participants with wage records or supplemental wage information who 
exit during the reporting period and were employed by the same employer 
during the second quarter after exit and the fourth quarter after exit 
DIVIDED by the number of participants with wage records or supplemental 
wage information who exit and were employed during the second quarter 
after exit. Organizations collecting supplemental wage information for 
the purposes of calculating Retention with the Same Employer must be 
able to ascertain that the participant's wage information reflects the 
same establishment (which may include tax documents, payroll records, 
employer records, and follow-up surveys from program participants) in 
both the second and fourth quarters after exit.
    Questions about program exit: Regarding commenters' concern about 
local providers not knowing a participant's employment status at 
program exit, the Departments note that States already report this 
information to the Departments. Additionally, the Departments 
understand that there are mechanisms in place that local providers use 
to track participants' employment status after program exit. Local 
providers interested in monitoring their performance in this area may 
wish to leverage existing follow-up practices to identify if 
participants who have exited services are employed, and to work with 
cognizant State agencies to monitor their performance.
    Regarding the commenter's question about common exit, the 
implementation of this definition for the effectiveness in serving 
employers performance indicator will not alter existing policy around 
common exit dates. The Departments will release future guidance 
regarding implementation of the common exit date for participants 
enrolled in multiple core programs.
    Comments: A commenter questioned how the proposed measure would 
apply to employees changing positions to subsidiaries of the same 
company, as well as how it would count individuals working part time in 
order to maintain Social Security eligibility, because the commenter 
interpreted the proposal as covering full-time employment only. Another 
commenter similarly asserted that when determining whether a 
participant is employed with the same employer in the second and fourth 
quarters after exit, the Departments should take into account all 
establishments and physical addresses of the employer, to ensure that 
employees who move locations are still counted as being employed by the 
same employer.
    Departments' Response: The Departments clarify that employment is 
not required to be full-time. The determination whether someone is 
employed with the same employer will typically be based on an employer 
identification number, such as the Federal Employer Identification 
Number (FEIN) or tax ID found in the individual's wage record. For the 
specific scenario raised by the commenter, a participant who is 
employed by the same employer in a different physical location would 
count positively in the numerator of the metric if the FEIN/tax ID is 
the same. The Departments acknowledge that if the FEIN/tax ID is 
different for a subsidiary of a given employer, the participant may not 
be captured as a positive outcome by using wage records alone and would 
require the collection of supplemental wage information to verify 
Retention with the Same Employer.
    Comments: One commenter recommended that individuals who maintained 
employment with a different employer but at a higher wage be included 
in the numerator in the calculation, as this indicates the success of 
the employee and the quality of

[[Page 13829]]

training from their initial employer. The commenter also recommended 
excluding from the Retention with the Same Employer performance measure 
participants who have changed employers but increased their wages 
between the second and fourth quarters after exit, because doing 
otherwise would disincentivize upward mobility. Another commenter 
recommended measuring retention within the same industry rather than 
with the same employer.
    Another commenter was concerned that retention of employees may 
vary based on ``right-to-work'' rules, working conditions, pay and 
benefits, production volumes, or any number of business factors that 
occur well after interaction with the workforce system. Commenters also 
voiced concerns that variations in economic conditions would impact 
States' ability to meet targets for the effectiveness in serving 
employers indicator because of downturns in the local economy and 
specific industries that were in-demand and used by the system are 
suddenly experiencing layoffs.
    Departments' Response: The Departments acknowledge the alternatives 
commenters presented. However, these alternatives do not reflect the 
effectiveness of services to the employer that originally hired the 
participant. Including individuals who moved from one employer to 
another and obtained a higher wage does not demonstrate success in 
serving the individual's employer in the second quarter as that 
employer would need to repeat the process of recruitment and referrals 
and undertake the cost of hiring and training a new employee. 
Similarly, including individuals who are within the same industry in 
the second and fourth quarters after exit but not with the same 
employer, results in the same issue--the individual's first employer 
needs to rehire and train a new employee.
    The Departments recognize that there are numerous factors in a 
participant's ability and willingness to remain employed with the same 
employer, including those mentioned by the commenter, such as pay/
benefits, work volumes, temporary jobs, industry and economic 
variations, and unexpected layoffs. Because of this, it is very likely 
a State's suggested target from the statistical adjustment model will 
never be 100 percent, just like the other five indicators of 
performance.
    As noted earlier, there are a variety of ways in which States can 
seek to address these concerns that are beneficial to both the employer 
and the participant, such as striving to find quality job placements or 
working with employers to develop career pathways and good jobs that 
more effectively incentivize participants they have hired to maintain 
their employment with the same employer.
    Regarding the comments on the effects of economic conditions, the 
Departments agree that many circumstances affect an employer's 
retention of employees, some of which may be outside the purview of 
WIOA services, including the general economy and business landscape of 
an area. The Departments acknowledge that different States experience 
different economic conditions. As noted above, the statistical 
adjustment model will account for economic factors impacting Retention 
with the Same Employer outcomes for WIOA core programs, so that no 
State is unfairly impacted by its economic conditions.
    Comments: A commenter recommended shortening the amount of time 
that the system tracks workers with the same employer or to 
simultaneously track job quality to mitigate the potential consequence 
that the proposed measure could trap workers in poor-quality jobs or 
incentivize the WIOA system to push workers into any job instead of 
high-quality jobs.
    Another commenter recommended that the Departments consider labor 
market trends or other relevant information in a State or region when 
negotiating performance for individuals who leave a position for a 
higher wage or better benefits. Several commenters similarly 
recommended adjusting the performance indicator to count individuals 
who leave positions and achieve higher wages, better benefits, or 
better working conditions as successes.
    One commenter raised cautions ``that [the Retention with the Same 
Employer measure] is subject to variation in industry and sector 
economic conditions, and that it may have a negative impact on 
sensitivity to industry sectors targeted by State and local workforce 
agencies.'' Another commenter stated that the proposed measure could 
lead to employers ``cherry-picking'' employees who they believe could 
lead to higher retention rates. The commenter suggested that to 
mitigate this potential effect, the Departments could require States to 
submit reports on the demographics of WIOA participants to ensure there 
are no negative changes by race, ethnicity, or gender among workers 
between reporting periods that do not correspond to similar changes in 
the local labor market.
    To avoid disincentivizing the use of WIOA funding for transitional 
jobs, a commenter recommended excluding such jobs from the performance 
indicator. The commenter cited studies showing that transitional job 
programs have significant positive impacts for workers, families, 
communities, and employers, such as reducing poverty rates 
substantially, particularly for Black and Hispanic workers.
    Another commenter recommended increasing access to and sharing of 
information between workforce partners, to enable agencies to track 
employer retention information, and developing best practices and a 
unified reporting structure among WIOA agencies.
    Departments' Response: The Departments will not be shortening the 
amount of time for tracking participant outcomes in the Retention with 
the Same Employer metric. Determining whether an individual is still 
employed with the same employer in the second and fourth quarters after 
exit allows the Departments to assess whether the individual stayed 
with the employer, which leads to savings for the employer as the 
employer would not need to undergo the rehiring and retraining process. 
The second-and-fourth-quarter time frame allows the Departments to 
assess whether employers benefit from the WIOA system. Additionally, 
using information collected for other WIOA indicators of performance 
under the same established time frames reduces reporting burden for the 
States.
    Additionally, as discussed throughout this document, the 
Departments note that effectiveness in serving employers is oriented to 
the employer experience rather than the participant experience. The 
proposed metric may encourage promotional opportunities from within the 
original employer.
    For these reasons, the Departments believe the established time 
frames are appropriate to demonstrate Retention with the Same Employer.
    Regarding commenters' concerns about labor market trends, including 
variations in industry and sector economic conditions, the Departments 
are aware of external factors that influence the outcome of this 
measure. The Departments will adjust for those external factors in the 
statistical adjustment model, and those adjustments will play a key 
role when the Departments determine they have sufficient data to 
produce reliable results for assessing performance of the effectiveness 
of serving employers indicator.
    The Departments appreciate comments regarding participants who 
leave positions for higher paying job opportunities. While this is a 
benefit to

[[Page 13830]]

participants and should be encouraged, this also leaves employers with 
the need to fill open vacancies. The Departments will continue to 
evaluate wage growth after exit and the statistical adjustment model 
will account for participants who leave a position for a higher-paying 
job. This metric, like all WIOA indicators of performance, will never 
be targeted at 100 percent for this reason.
    The Departments considered the alternative definition of Retention 
with the Same Employer commenters suggested--including as a success the 
individuals who have higher wages in the fourth quarter after exit even 
though they are working at a different employer. However, the 
Departments decided not to adopt this definition because in these 
situations, an employer still has a need to fill an open vacancy. The 
Departments recognize that while this is a benefit to participants, it 
is not assessing how the workforce system served employers. Therefore, 
the Departments determined this is not an appropriate method of 
assessing the effectiveness in serving employers.
    Effectiveness in serving employers is measured after the 
participants exit a program. Regarding potential exclusion of 
participants placed in transitional jobs, the Departments note that 
transitional jobs are a participant level service that would prevent a 
participant from exiting, and therefore are not included in the 
calculation of the measure. Therefore, this definition of the indicator 
does not disincentivize use of transitional jobs as a service strategy.
    Regarding other potential exclusions for the measure, consistent 
with the Departments' rationale in Section II.A. above, the Departments 
believe that simplicity in the measure calculation is important, both 
in terms of collecting data that reflect the real world of employment, 
and consistency with the other participant employment and earnings 
indicators of performance. Therefore, the measure calculation will not 
include exclusions other than those mentioned for existing WIOA 
indicators of performance. Additionally, the commenter mentioned 
benefits to the participant, but not to the employer who experiences 
turnover and needs to re-fill a position. The Retention with the Same 
Employer measure advocated for by business customers and employers in 
stakeholder engagements, alignment with the other WIOA participant 
employer performance measures/indicators, and support due to strengths 
over weaknesses of the measures assessed in the Final Pilot Study 
Report can best meet the system's goals for assessing and ensuring the 
effectiveness in servicing employers, the workforce system's dual or 
equal customer served by the workforce system.
    Regarding analysis of this metric by race, ethnicity, or gender, 
the Departments currently collect these data elements and will report 
outcomes by each of these. The existing WIOA indicators of performance 
are already reported by these data elements in the Departments' 
respective annual reports.
    After consideration of the comments, as discussed above the 
Departments have decided to revise the definition of Retention with the 
Same Employer in this final rule to remove reference to wage records, 
thereby permitting States to include individuals in the metric who may 
not have wage records but who are still employed with the same employer 
in the second and fourth quarters after exit. This revision allows 
States to use supplemental wage information to capture these 
individuals.
    Final Sec.  677.155(a)(1)(vi) and (c)(6) implement the changes as 
outlined in the proposed rule with one modification to remove the term 
``wage records,'' thereby allowing for the use of supplemental wage 
information, and adds a clarification that participants tracked by this 
performance measure are those in unsubsidized employment during the 
second quarter who exit from the program. While the nature of wage 
records would have limited this indicator to unsubsidized employment 
without explicitly stating the requirement, the removal of the wage 
record requirement, thereby enabling States to use supplemental wage 
information for reporting purposes, necessitates the addition of 
language limiting the indicator to those in unsubsidized employment in 
order to align this indicator with the other employment-based 
indicators, all of which track the percentage of participants in 
unsubsidized employment at either the second or fourth quarter after 
exiting from a program. In so doing, the Departments ensure that the 
employment reported, for purposes of assessing the effectiveness in 
serving employers, is that which is consistent with the purpose of WIOA 
sec. 2 (e.g., to increase the prosperity of workers and employers, the 
economic growth of communities, and the global competitiveness of the 
United States).

C. Adjusted Levels of Performance for WIOA Core Programs--Changes to 
Sec.  677.190

Sec.  677.190 When are sanctions applied for failure to achieve 
adjusted levels of performance?
    Currently, 20 CFR 677.190 details the circumstances under which 
sanctions are applied when WIOA core programs fail to achieve adjusted 
levels of performance. Paragraph (c) sets forth criteria the 
Departments use to determine which States have met adjusted levels of 
performance: (1) the overall State program score (Sec.  677.190(c)(1)); 
(2) the overall State indicator score (Sec.  677.190(c)(3)); and (3) 
the individual indicator score (Sec.  677.190(c)(5)).
    In this final rulemaking the Departments revise Sec.  677.190 to 
include the effectiveness in serving employers performance indicator in 
the criteria for determining if a State has failed to meet adjusted 
levels of performance as part of the overall State indicator score. 
Final Sec.  677.190 establishes conforming language regarding the 
assessment of effectiveness in serving employers as a statewide 
performance indicator, as expressed in the Joint WIOA Final Rule, and 
the definition for effectiveness in serving employers proposed in Sec.  
677.155(a)(1)(vi) and (c)(6). Final Sec.  677.190(c)(1) excludes the 
effectiveness in serving employers performance indicator from the 
calculation of an overall State program score, which compares a 
program's results regarding the other primary indicators of performance 
with the adjusted levels of performance for that program. This final 
rulemaking adds two paragraphs to Sec.  677.190(c)(3) to ensure the 
effectiveness in serving employers performance indicator's sole use as 
a shared statewide indicator. Final Sec.  677.190(c)(3)(i) specifies 
that the overall State indicator score is the average of the 
percentages achieved of the adjusted levels of performance by all the 
core programs on the performance indicator and would exclude the 
effectiveness in serving employers performance indicator from this 
calculation. Final Sec.  677.190(c)(3)(ii) adopts in regulations the 
recommendation in the joint guidance that one core program report 
performance data for the effectiveness in serving employers performance 
indicator on behalf of all six core programs. Final Sec.  
677.190(c)(3)(ii) also establishes that the indicator would be assessed 
only as an overall State indicator score, the State indicator score for 
effectiveness in serving employers is calculated as the statewide 
percentage

[[Page 13831]]

achieved of the statewide adjusted level of performance, and includes 
mention of guidance to signal to States that the Departments will 
provide additional details and explanations for reporting on the 
effectiveness in serving employers performance indicator in joint 
guidance. Final Sec.  677.190(c)(5) specifies that the Departments will 
not include the effectiveness in serving employers performance 
indicator when calculating individual indicator scores. Finally, as the 
Joint WIOA Effectiveness in Serving Employers NPRM explained, 
consistent with how the Departments have implemented the provisions for 
the other five performance indicators, the effectiveness in serving 
employers performance indicator will not be included in sanctions 
determinations until the Departments collect a minimum of 2 years of 
performance data, develop a statistical adjustment model that yields 
reliable estimates for the indicator, provide additional guidance 
regarding the process for negotiating this joint indicator, and then 
negotiate performance levels for the indicator.
    The Departments received no comments on the proposed exclusion of 
effectiveness in serving employers from the overall State program score 
in Sec.  677.190(c)(1) and the proposed exclusion of effectiveness in 
serving employers when calculating individual indicator scores in Sec.  
677.190(c)(5). The Departments received several comments regarding 
provisions for the statewide nature of the effectiveness in serving 
employers performance indicator in Sec.  677.190(c)(3)(ii), application 
of this indicator at the local level, performance level negotiation and 
the statistical adjustment model, and inclusion of the effectiveness in 
serving employers indicator in sanctions determinations. These comments 
are discussed below. No changes are made to proposed Sec.  677.190; the 
final rule implements Sec.  677.190 as proposed.
Support for the Implementation of a Shared Statewide Indicator
    Comments: Several commenters expressed support for the proposed use 
of a shared outcome for all core programs. One commenter stated that 
the shared outcome measure supports the WIOA reporting goal and also 
reduces the burden of collecting data.
    Departments' Response: We appreciate commenters supporting 
effectiveness in serving employers as a shared outcome for all WIOA 
core partner programs. We agree that this definition best aligns with 
WIOA employment performance indicators by utilizing already existing 
PIRL elements and minimizes the burden on States and employers in 
measuring the effectiveness in serving employers.
    Comments: Several commenters opposed the provisions, urging that 
Retention with the Same Employer should not be a shared outcome and 
should be reported for each of the six core programs individually. A 
few of these commenters discussed the difficulties of reporting the 
measure as a shared outcome, particularly the specifics of creating and 
implementing a unified statistical adjustment model that accounts for 
program- and State-level differences. The commenters described the 
particular challenge and burden for States that did not pilot the 
proposed measure or do not currently have a shared data system across 
core programs. One commenter noted that the different performance 
indicators arise from different reporting systems, which further 
complicates the process of unifying the reporting into a shared outcome 
model. Another commenter described the issues of incorporating data 
from the separate systems for title II and title IV, incorporating 
other data from referrals placed by job seeker teams outside the State, 
and a lack of Social Security number collection by the State agency 
responsible for title II programs in the State. Other commenters noted 
that while many States are reporting this measure, not all do so with 
the coordination and full contribution of title II data, and asserted 
that some States' title II programs that are not currently reporting 
this data on title II students will need additional time to update data 
match agreements and data reporting processes in order to participate 
in State reporting. One different commenter noted that the performance 
measure is not defined by statute as a shared system-wide measure and 
suggested that sharing confidential data across State programs may not 
be supported by State laws. The commenter further asserted that 
complying with the varied reporting deadlines for different programs 
might be difficult under a unified model. This commenter also expressed 
concern about the costs and time associated with developing a system 
that combines data across all programs. Further, the commenter said, to 
successfully capture data from multiple agencies, States that are not 
already doing so would need to establish a cross-agency data system or 
statewide longitudinal data system (SLDS), which may require costs for 
set-up, storage, management, and maintenance. The commenter cited a 
recent evaluation that indicated that a comprehensive SLDS project 
would take 3 years to establish and cost $1 million to $3 million for 
staffing and technology.
    Departments' Response: The Departments recognize that there are 
challenges in coordinating the reporting of data across agencies, but 
also note that reporting this indicator as a shared measure supports 
closer alignment, increased coordination, and improved data sharing 
across State agencies, which are important parts of the vision and 
purpose of WIOA, and the Departments will work with States towards 
realizing this vision. In fact, the Departments' guidance details the 
requirements set forth in WIOA, specifically that closer alignment, 
increased coordination, and improved data sharing across State agencies 
in reporting on the WIOA core performance indicators are an important 
part of the vision of WIOA. See TEGL No. 10-16, Change 1. Current and 
further resources to provide technical assistance and guidance,\29\ and 
community of practice tools \30\ will be provided to support States in 
the collection of required performance data, as well as supplemental 
data, and development of State plans \31\ to ensure accountability of 
service provision.
---------------------------------------------------------------------------

    \29\ ETA, ``WIOA Technical Assistance Resources and Tools,'' 
https://www.dol.gov/agencies/eta/Performance/resources (last visited 
July 31, 2023).
    \30\ S. Spaulding, et al., ``Measuring the Effectiveness of 
Services to Employers: Options for Performance Measures under the 
Workforce Innovation and Opportunity Act,'' Jan. 2021, https://wdr.doleta.gov/research/FullText_Documents/ETAOP2021-17%20Measures%20of%20Effectiveness%20in%20Serving%20Employers_Final%20Report.pdf.
    \31\ ETA, ``WIOA Plans, Waivers, & Performance,'' https://www.dol.gov/agencies/eta/wioa/plans-waivers-performance (last 
visited July 31, 2023).
---------------------------------------------------------------------------

    Additionally, since this is an annual measure, with alignment of 
performance accountability reporting to consolidate reporting across 
WIOA core programs and alleviate variation in deadlines for common 
reporting, the Departments do not consider individual program reporting 
deadlines to be an issue. Finally, the Departments note that all 
reporting is due to the agencies on the same date so that there should 
not be issues with reporting deadline differences.
    The Departments note that there will be challenges in developing a 
statistical adjustment model for any definition of this measure and 
there is no reason to believe the development would be any less 
challenging if the Departments were to select an alternative definition 
for this indicator or to assess this indicator by program.
    States are not required to collect this information using an SLDS. 
States are

[[Page 13832]]

not required to share confidential data across programs to report on 
this measure. However, the sharing of confidential data across programs 
is a permissible approach for reporting on the effectiveness in serving 
employers performance indicator, if the State does so in accordance 
with State and Federal law requirements. Performance accountability 
reporting across WIOA core programs will continue to be conducted in 
the current manner for all of the six primary WIOA core programs 
indicators of performance and measures, including collection and 
sharing of data as necessary to retain the integrity of the data 
collected for the Retention with the Same Employer effectiveness in 
serving employers performance indicator.
    With regard to concerns about reporting by title II programs for a 
single, statewide outcome for all WIOA core programs on the Retention 
with the Same Employer measure, the State's title II program would be 
expected to provide the data it has collected for title II participants 
who were employed in the second and fourth quarters to the State agency 
responsible for reporting on the effectiveness in serving employers 
indicator. If the State's title II program does not have access to the 
information required to determine Retention with the Same Employer 
through a data match, the State agency responsible for reporting on the 
indicator would use the data provided by the State's title II program 
to determine Retention with the Same Employer.
    Comments: A few commenters recommended that this measure be 
reported and assessed just as the other five are reported and assessed: 
across programs and indicator scores. The commenter stated that if 
effectiveness in serving employers is measured only at the system level 
using a single target, as the Departments proposed, programs that 
achieved less than 90 percent of target on this one measure for 2 years 
in a row would be sanctioned. The commenter asserted that such a result 
would not be consistent with the Departments' original intent of 
leveling sanctions in cases of ``catastrophic failures on a single 
measure (<50% of target)'' or ``systemic performance issues in a 
program or in a measure across programs (average of <90% of target).'' 
The commenter, expressing concern about the proposal resulting in 
programs facing significantly greater risk of sanction, thus 
recommended that the standard of 90 percent of target not be applied to 
the effectiveness in serving employers measure if it is treated as a 
shared outcome.
    Departments' Response: The Departments agree that State performance 
falling below 90 percent of the adjusted level of performance on this 
measure for 2 consecutive years would be subject to sanctions. However, 
at a systemic level, this is no different than it is for any other 
primary indicator of performance where 2 consecutive years of averaging 
below 90 percent of the adjusted level of performance across programs 
for an indicator would be subject to sanctions. Since the Departments 
are assessing this indicator as a shared outcome across all programs in 
a State, the individual indicator score assessments do not apply. 
Therefore, performance failure where an individual indicator score 
falls below 50 percent does not apply. Additionally, because the 
statistical adjustment model will be used to establish the adjusted 
level of performance, the risks of failure due to low performance 
resulting from external factors will be mitigated.
    Comments: One commenter asserted measuring outcomes at the 
individual program and workforce area levels does not discourage 
statewide coordination and collaboration but rather provides for both 
accountability for poor performance and credit for performance success, 
which promotes coordination across programs and contributes to 
continuous improvement.
    Departments' Response: The Departments acknowledge that 
coordination and collaboration are indeed occurring in many States. 
However, the comments received on the proposed rule as well as feedback 
during the pilot phase have underscored the need for increased 
collaboration and coordination and highlighted the partnership benefits 
that additional shared performance accountability incentives would 
yield.
    Comments: Several commenters stated that the effectiveness in 
serving employers performance indicator should not be applied at the 
local level and recommended restricting its application in that 
context. Commenters discussed the restriction on including the 
indicator in individual score calculations, asserting that States 
should not be allowed to set and evaluate local operator targets for 
the shared outcome indicator, to include effectiveness in serving 
employers as part of the calculation to determine the individual 
indicator scores for a local workforce area, or to assess these 
indicators to determine sanctions on local areas or local operators. 
The commenters expressed concern that sanctioned States might pass on 
``punishments'' from the sanctions to local operators. Acknowledging 
that State performance necessarily aggregates the performance of 
individual local and State program operators, the commenters 
nevertheless asserted that local operators would bear too high a cost 
from the unintended consequences of performance failure if the measure 
is applied as proposed. Another commenter suggested that the indicator 
should only apply at the State level as local workforce development 
areas that have administrative oversight for non-core programs cannot 
rely on outcomes achieved by the title II program, Wagner-Peyser Act 
programs (title III), and VR program (title IV) to help achieve 
performance goals set for achieving the ``more robustly defined'' 
statewide performance target. The commenter requested further guidance 
to States on this point.
    Departments' Response: WIOA sec. 116(c)(1)(A)(i) requires that all 
of the primary indicators of performance, including the effectiveness 
in serving employers indicator, must be applied at the local level for 
the WIOA title I programs (Adult, Dislocated Worker, and Youth). 
Therefore, States must apply the effectiveness in serving employers 
indicator at the local level. Furthermore, Sec.  677.205(a) provides 
that ``[e]ach local area in a State under WIOA title I is subject to 
the same primary indicators of performance for the core programs for 
WIOA title I under Sec.  677.155(a)(1) and (c) that apply to the 
State.'' The Departments are not changing this provision in this 
rulemaking; therefore, the same definition and method of assessing 
performance applies at the local level. The Departments will provide 
updates to any guidance related to this as needed.
Sanctions Determinations
    Comments: Several commenters supported the proposal to delay the 
inclusion of the effectiveness in serving employers indicator in 
sanctions determinations and suggested that the Departments should 
consider an even longer time period than proposed to collect the data. 
Commenters noted that not all States currently work with WIOA title I 
data and that extra time might be required to facilitate the data 
inclusion. Other commenters noted that this additional time would be 
particularly helpful in determining targets. One commenter suggested a 
specific extension of at least an additional year of data collection 
and reasoned that the additional time frame would allow States to 
implement the necessary methods of data collection, particularly if 
they did not pilot the proposed measure; learn from other States that 
have implemented the statewide

[[Page 13833]]

measure; and train personnel on implementing the data collection and 
sharing requirements.
    Departments' Response: The Departments will implement this 
indicator similarly to how other indicators have been approached under 
WIOA. This will include providing technical assistance to States to 
ensure that they have the systems in place that are necessary to begin 
reporting on this indicator according to timelines that the Departments 
will establish and announce in guidance following the finalization of 
this rulemaking.
    The Departments note that sanctions only occur after 2 consecutive 
years of performance failures for the same score. Furthermore, the 
implementation of performance assessments requires a minimum of 2 years 
of data before the Departments would use a statistical adjustment model 
in the negotiations process, and any potential implementation of 
performance assessments would be conditional upon having sufficient 
data to produce an objective statistical adjustment model. The metric 
uses existing data collected in the PIRL; States have been required to 
collect this information since the inception of the jointly 
administered performance accountability system established in WIOA sec. 
116. The Departments believe there is sufficient time built into the 
implementation process and are not extending the implementation time 
frame currently.
    Comments: One commenter questioned if an effectiveness in serving 
employers indicator dropped below a certain threshold could trigger a 
probation period for additional oversight by the Departments, possibly 
including sanctions as well.
    Departments' Response: The Departments appreciate the commenter's 
suggestion and note that the first year of failure to meet 90 percent 
of a State's adjusted level of performance on the effectiveness in 
serving employers indicator would trigger required technical 
assistance, including a corrective action plan, and the second 
consecutive year of failure in this same manner would result in a 
sanction against the Governor's Reserve for statewide activities under 
the title I adult, dislocated worker, and youth formula programs under 
WIOA sec. 116(f)(1)(B). The Departments reiterate that this indicator 
will be treated similarly to how other indicators have been approached 
under WIOA.
    Comments: Several commenters questioned whether the sanctions would 
be leveraged only against State set-aside title I allocations, 
expressing concern that the penalty would be inequitable if it impacted 
all six core programs.
    Departments' Response: As is the case for each of the six primary 
indicators of performance, WIOA sec. 116(f)(1)(B) requires that the 
application of sanctions is against the Governor's Reserve for 
statewide activities under the title I adult, dislocated worker, and 
youth formula programs. The Departments recognize the commenters' 
concerns regarding funding and sanctions being tied to individual 
programs; however, WIOA sec. 116(f)(1)(B) makes clear that the 
sanctions are imposed against the Governor's Reserve for statewide 
activities under the title I adult, dislocated worker, and youth 
formula programs regardless of which of the six core programs' 
performance constitutes a failure giving rise to the sanction. 
Therefore, given the explicit statutory requirement, the Departments do 
not have the authority to do as these commenters suggest. No change to 
the regulatory text was made in response to these comments.
Statistical Adjustment Model
    Comments: Several commenters recommended ensuring that the 
statistical adjustment model accounts for fluctuations in employment 
rates caused by the seasonal and migrant workforces, particularly in 
the construction, agriculture, and hospitality sectors. Similarly, 
another commenter recommended that the statistical adjustment model 
incorporate factors such as self-employment, temporary employment, 
transitioning job seekers, and gig workers. The commenter further 
recommended that the Departments consider external factors that would 
cause measurement deviations, such as participants seeking immediate 
employment to avoid hardship, participants accepting a better job offer 
with sustainable wages or benefits, and participants seeking 
opportunities to upgrade their skills.
    One commenter stated that the proposed measure would require 
additional statistical adjustments, that it would be subject to 
variations based on sector and economic conditions, and that it would 
not reflect current workforce trends like increases in self-employment. 
Another commenter expressed similar concerns about the measure's 
ability to accurately capture effectiveness in serving employers given 
particular economic conditions and differences across industries. A 
third commenter likewise asserted that the indicator would be subject 
to fluctuating economic conditions.
    One commenter recommended that the Departments consider additional 
factors in the final rule, including: factors that can affect the 
median tenure of workers, which is lower for younger people; difficulty 
in accounting for differences among regions, such as areas with 
relatively greater or fewer employment opportunities; inconsistencies 
among reporting platforms; differences in tracking timelines and 
reporting requirements among workforce partners; and the possibility 
that employer retention rates can increase or decrease without changes 
in levels of employer services being provided.
    Departments' Response: The Departments thank the commenters for 
these recommendations. The Departments acknowledge the commenters' 
recommendations and note that the statistical adjustment model will 
address the commenters' concerns. The Departments will conduct a 
thorough development process for the statistical adjustment model for 
this indicator, as has been and continues to be done in the development 
of the model for the other five primary indicators of performance. The 
Departments will provide updates to the appropriate performance 
guidance and technical assistance for reporting on this indicator.
Request for Guidance
    Comments: Commenters requested that the Departments provide 
grantees with defined methods for gathering and reporting the relevant 
data to ensure that all programs collect and report the data 
consistently. Another commenter asked for guidance on how performance 
negotiations would be handled in States without centralized 
organization into one agency, specifically if the designated State 
workforce agency will complete the negotiations for this statewide 
measure in such cases. Another commenter noted that retention with 
employers during the second and fourth quarters after exit is reported 
on the RSA 911 and the PIRL and suggested that the Departments use 
State ETA 9169 reports to collect the percentage of retention, a 
practice that it said would reduce any duplicate reporting. Another 
commenter asked multiple questions related to implementation of the 
Retention with the Same Employer measure, namely how it would affect 
the reporting requirements outlined in TEGL No. 10-16, Change 2, 
Attachment IV, Table B; what the impacts would be for the defined 
services to business since those measures would no longer be required 
to be reported; and how

[[Page 13834]]

employer establishments would be reported.
    Departments' Response: The Departments appreciate these comments 
and note that the Departments will provide detailed information on 
these requirements through ICRs, guidance, instructions, and technical 
assistance relating to definitions, data collection and reporting, 
negotiations, and local level application of this primary indicator of 
performance.
    The Departments made no changes to proposed Sec.  677.190; the 
final rule implements Sec.  677.190 as proposed.

III. Regulatory Analysis and Review

A. Executive Orders 12866 (Regulatory Planning and Review), 13563 
(Improving Regulation and Regulatory Review), and 14094 (Modernizing 
Regulatory Review) and Subtitle E of the Small Business Regulatory 
Enforcement Fairness Act of 1996

    Under Executive Order (E.O.) 12866, the Office of Information and 
Regulatory Affairs (OIRA) determines whether a regulatory action is 
significant and, therefore, subject to the requirements of the E.O. and 
review by OMB. See 58 FR 51735 (Oct. 4, 1993). Section 1(b) of E.O. 
14094 amends section 3(f) of E.O. 12866 to define a ``significant 
regulatory action'' as an action that is likely to result in a rule 
that may: (1) have an annual effect on the economy of $200 million or 
more (adjusted every 3 years by the Administrator of OIRA for changes 
in gross domestic product), or adversely affect in a material way the 
economy, a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, territorial, or 
Tribal governments or communities); (2) create a serious inconsistency 
or otherwise interferes with an action taken or planned by another 
agency; (3) materially alter the budgetary impact of entitlements, 
grants, user fees, or loan programs, or the rights and obligations of 
recipients thereof; or (4) raise legal or policy issues for which 
centralized review would meaningfully further the President's 
priorities or the principles set forth in the E.O. See 88 FR 21879 
(Apr. 11, 2023). This final rule is a significant regulatory action 
under section 3(f) of E.O. 12866, as amended by E.O.14094.
    E.O. 13563 directs agencies to propose or adopt a regulation only 
upon a reasoned determination that its benefits justify its costs; the 
regulation is tailored to impose the least burden on society, 
consistent with achieving the regulatory objectives; and, in choosing 
among alternative regulatory approaches, the agency has selected those 
approaches that maximize net benefits. E.O. 13563 recognizes that some 
benefits are difficult to quantify and provides that, where appropriate 
and permitted by law, agencies may consider and discuss qualitatively 
values that are difficult or impossible to quantify, including equity, 
human dignity, fairness, and distributive impacts.
1. Outline of the Analysis
    Section III.A.2 provides a summary of the results of the RIA. 
Section III.A.3 describes the need for the final rule, and Section 
III.A.4 describes the process used to estimate the costs and cost 
savings of the final rule and the general inputs used, such as wages 
and number of affected entities. Section III.A.5 explains how the 
provisions of the final rule will result in quantified costs and cost 
savings and presents the calculations the Departments used to estimate 
them. In addition, Section III.A.5 describes the qualitative benefits 
of the final rule. Section III.A.6 summarizes the estimated first-year 
and 10-year total and annualized costs, cost savings, and net costs of 
the final rule. Finally, Section III.A.7 describes the regulatory 
alternatives considered when developing the final rule.
2. Analysis Summary
    The Departments estimate that the final rule will result in costs 
and cost savings. As shown in Exhibit 2, the final rule is expected to 
have an annualized quantified cost of $44,208 and a total 10-year 
quantifiable cost of $310,497 at a discount rate of 7 percent.\32\ The 
final rule is estimated to have annualized quantified cost savings of 
$2.30 million and total 10-year quantifiable cost savings of $16.13 
million at a discount rate of 7 percent.\33\ The Departments estimate 
that the final rule will result in an annualized net quantified cost 
savings of $2.25 million and a total 10-year net cost of $15.82 
million, both at a discount rate of 7 percent and expressed in 2022 
dollars.\34\
---------------------------------------------------------------------------

    \32\ The final rule would have an annualized cost of $38,607 and 
a total 10-year cost of $329,323 at a discount rate of 3 percent in 
2022 dollars.
    \33\ The final rule would have an annualized cost savings of 
$2.21 million and a total 10-year cost savings of $18.85 million at 
a discount rate of 3 percent in 2022 dollars.
    \34\ The final rule would have an annualized net cost savings of 
$2.17 million and a total 10-year cost of $18.52 million at a 
discount rate of 3 percent in 2022 dollars.

           Exhibit 2--Estimated Monetized Costs, Cost Savings, and Net Cost Savings of the Final Rule
                                                [2022 $millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                     Net cost
                                                                       Costs       Cost savings       savings
----------------------------------------------------------------------------------------------------------------
Undiscounted 10-Year Total......................................           $0.35          $21.46          $21.11
10-Year Total with a Discount Rate of 3%........................            0.33           18.85           18.52
10-Year Total with a Discount Rate of 7%........................            0.31           16.13           15.82
10-Year Average.................................................            0.03            2.15            2.11
Annualized at a Discount Rate of 3%.............................            0.04            2.21            2.17
Annualized at a Discount Rate of 7%.............................            0.04            2.30            2.25
----------------------------------------------------------------------------------------------------------------

    The cost of the final rule is associated with rule familiarization 
and the requirement to calculate and report Retention with the Same 
Employer for the effectiveness in serving employers performance 
indicator for 57 States and 78 VR agencies.\35\ No longer requiring 
States to collect, calculate, and report for two alternative 
definitions of the effectiveness in serving employers performance 
indicator and instead requiring States to calculate and report only the 
Retention with the Same Employer definition of the indicator will 
contribute to the cost savings of the final rule. See the costs and 
cost savings subsections of Section III.A.5 (Subject-by-Subject 
Analysis) below for a

[[Page 13835]]

detailed explanation. To be clear, however, the Departments' decision 
with respect to this final rule was not based on the cost savings but 
rather on the programmatic and data benefits described previously in 
Sections II.A and II.B above.
---------------------------------------------------------------------------

    \35\ Consistent with WIOA sec. 3(56) and 20 CFR 677.150(d), the 
use of the term ``States'' in this RIA refers to the 50 States; the 
District of Columbia; Puerto Rico; and the outlying areas of 
American Samoa, Guam, the Commonwealth of the Northern Mariana 
Islands, and the U.S. Virgin Islands; and the Republic of Palau, a 
country in free association with the United States. See also 
footnote 8 supra.
---------------------------------------------------------------------------

    The Departments cannot quantify the benefits of the final rule; 
therefore, Section III.A.5 (Subject-by-Subject Analysis) describes the 
benefits qualitatively.
    Comments that the Departments received regarding the RIA set forth 
in the proposed rule are summarized and responded to below.
    Comments: A commenter expressed concern about the costs and time 
associated with developing a system that combines data across all 
programs. Further, the commenter said, to successfully capture data 
from multiple agencies, States that are not already doing so would need 
to establish a cross-agency data system or SLDS, which may require 
costs for set-up, storage, management, and maintenance. The commenter 
cited a recent evaluation that indicated that a comprehensive SLDS 
project would take 3 years to establish and cost $1 million to $3 
million for staffing and technology.
    Departments' Response: The Departments estimate the costs of the 
requirements of the final rule, which are to calculate and report the 
Retention with the Same Employer indicator. Those costs include the 
time for programming and reporting. Currently, States report on two of 
the three pilot measures for effectiveness in serving employers. 
Therefore, States are already reporting effectiveness in serving 
employers measures that include data across all core programs in the 
State. In other words, this is not a new approach for reporting data 
for this indicator and, thus, is familiar to States. The Retention with 
the Same Employer measure is not requiring the establishment of a 
cross-agency data system.
    Comments: A commenter said that although using the proposed 
measure, Retention with the Same Employer, may require less 
administrative costs than the other piloted alternatives, meeting the 
performance goals would be difficult and thus negate the cost savings.
    Departments' Response: Retention with the Same Employer supports 
meeting performance goals as it is a valid measure of WIOA's core 
programs' effectiveness in serving employers with lesser administrative 
costs. As discussed in the qualitative benefits section of the RIA, 
Retention with the Same Employer demonstrates a continued relationship 
between the employer and participants who have exited WIOA core 
programs. While many circumstances can have an impact on an employer's 
retention of employees, an indication that an employee is still working 
for the same employer in both the second and fourth quarters after 
exiting from a WIOA program demonstrates a level of success for both 
parties, as retention of an employee reduces the costs to the employer 
associated with employee turnover and retraining (see also the 
Departments' Responses to comments in Section II.B). In terms of 
meeting the performance goals, the Departments disagree that meeting 
the target for this measure will be more difficult compared to the 
other piloted alternatives. As would be true for all the piloted 
measures and like the other primary indicators of performance, the 
statistical adjustment model will adjust based on actual values from 
the States, and therefore the Departments do not believe this 
definition of the indicator will be more difficult to achieve success 
than any of the other indicators.
3. Need for Regulation
    In the Joint WIOA Final Rule, the Departments described a phased 
approach, which included a pilot study, to defining in regulation the 
sixth statutory performance indicator--effectiveness in serving 
employers--required by WIOA. This final rulemaking is necessary to 
complete implementation of the performance accountability requirements 
as discussed in the Joint WIOA Final Rule and required by statute. 
Specifically, States, under the Departments' joint guidance, piloted 
the following definitions for the effectiveness in serving employers 
performance indicator:
    <bullet> Retention with the Same Employer: Percentage of 
participants with wage records who exit from WIOA core programs and 
were employed by the same employer in the second and fourth quarters 
after exit.
    <bullet> Repeat Business Customer: Percentage of employers who have 
used WIOA core program services more than once during the last three 
reporting periods.
    <bullet> Employer Penetration: Percentage of employers using WIOA 
core program services out of all employers in the State.
    The Departments are establishing Retention with the Same Employer 
as the standard definition of the effectiveness in serving employers 
performance indicator to complete implementation of the WIOA 
performance accountability requirements to assess the effectiveness of 
States and local areas in achieving positive outcomes.
4. Analysis Considerations
a. WIOA Core Programs
    The Departments estimated the costs and cost savings of the final 
rule relative to the existing baseline (i.e., the current practices for 
complying with the joint WIOA performance accountability regulations 
and the Departments' joint guidance). WIOA sec. 116 establishes the 
requirement for performance indicators and performance reporting 
requirements to assess the effectiveness of the WIOA core programs 
enumerated in WIOA sec. 116(b)(3)(A)(ii) in serving employers. The core 
programs include adult, dislocated worker, and youth programs under 
title I of WIOA; the AEFLA program under title II; programs authorized 
under the Wagner-Peyser Act as amended by WIOA title III; and the VR 
program authorized under title I of the Rehabilitation Act as amended 
by WIOA title IV. The analysis refers to the WIOA title I and Wagner-
Peyser Act programs jointly as the DOL programs.
    The baseline consists of the combination of piloted approaches for 
effectiveness in serving employers that States collected in 2021 and 
would be expected to continue to report in the absence of this final 
rule. The baseline uses DOL historical data on the number of States 
that report each combination of the three piloted approaches for the 
effectiveness in serving employers performance indicator. Exhibit 3 
displays DOL data from 2017 through 2021 on the existing effectiveness 
in serving employers approach combinations. The Departments used the 
most recent year of State data reported for PY 2021 to define the 
existing baseline of States reporting combinations of approaches to the 
effectiveness in serving employers performance indicator.

[[Page 13836]]



            Exhibit 3--State Reporting Combinations of Effectiveness in Serving Employers Definitions
----------------------------------------------------------------------------------------------------------------
                                                  Retention with
                                  Retention with     the same         Repeat         All three
                                     the same       employer +       business      effectiveness   Total states
                                    employer +        repeat        customer +      in serving       reporting
                                     employer        business        employer        employers
                                    penetration      customer       penetration     approaches
----------------------------------------------------------------------------------------------------------------
2017............................              12               5              17              10              44
2018............................              10              10              17              15              52
2019............................               9              11              18              14              52
2020............................               9              12              20              15              56
2021............................              10               9              22              16              57
----------------------------------------------------------------------------------------------------------------

    In accordance with the RIA guidance articulated in OMB's Circular 
A-4 and consistent with the Departments' practices in previous 
rulemakings, this RIA focuses on the likely consequences of the final 
rule (i.e., costs and cost savings that accrue to entities affected). 
The analysis covers 10 years (from 2024 through 2033) to ensure it 
captures major costs and cost savings that accrue over time. The 
Departments express all quantifiable impacts in 2022 dollars and use 
discount rates of 3 and 7 percent, pursuant to OMB Circular A-4.
    Exhibit 4 presents the number of entities that are expected to be 
affected by the final rule. The Departments provide these estimates and 
use them throughout this analysis to estimate the costs and cost 
savings of the final rule.

   Exhibit 4--WIOA Core Programs--Number of Affected Entities by Type
------------------------------------------------------------------------
                       Entity type                            Number
------------------------------------------------------------------------
DOL Programs:
    States..............................................              57
    Local Workforce Development Boards (WDBs)...........             580
AEFLA Program:
    States..............................................              57
    Local AEFLA providers \36\..........................           1,719
VR Program:
    VR agencies.........................................              78
------------------------------------------------------------------------

b. Compensation Rates
    In Section III.A.5 (Subject-by-Subject Analysis), the Departments 
present the costs, including labor, associated with the implementation 
of the provisions of the final rule. Exhibits 5a through 5c present the 
hourly compensation rates for the occupational categories expected to 
experience a change in level of effort (workload) due to the final 
rule. We used the BLS mean hourly wage rate for State and local 
employees.<SUP>37 38</SUP> We also used the wage rate from the Office 
of Personnel Management's Salary Table for the 2022 General Schedule 
for Federal employees in the management analyst occupation (Grade 14, 
Step 5).\39\ To reflect total compensation, wage rates include nonwage 
factors, such as overhead and fringe benefits (e.g., health and 
retirement benefits). For all labor groups (i.e., local, State, and 
Federal governments), we used an overhead rate of 17 percent.\40\ For 
the State and local sectors, we used a fringe benefits rate of 62 
percent, which represents the ratio of average total compensation to 
average wages for State and local government workers in March 2022.\41\ 
For the Federal Government, we used a fringe benefits rate of 63 
percent.\42\ We then multiplied the sum of the loaded wage factor and 
overhead rate by the corresponding occupational category wage rate to 
calculate an hourly compensation rate.\43\
---------------------------------------------------------------------------

    \36\ Local AEFLA providers include local educational agencies; 
community-based organizations; faith-based organizations; libraries; 
community, junior, and technical colleges; 4-year colleges and 
universities; correctional institutions; and other agencies and 
institutions.
    \37\ BLS, ``May 2022 National Industry-Specific Occupational 
Employment and Wage Estimates: NAICS 999200--State Government, 
excluding schools and hospitals (OEWS Designation),'' https://www.bls.gov/oes/current/naics4_999200.htm (last updated April 25, 
2023).
    \38\ BLS, ``May 2022 National Industry-Specific Occupational 
Employment and Wage Estimates: NAICS 999300--Local Government, 
excluding schools and hospitals (OEWS Designation),'' https://www.bls.gov/oes/current/naics4_999300.htm (last updated April 25, 
2023).
    \39\ Office of Personnel Management, ``Salary Table 2022,'' 
https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2022/GS_h.pdf (last visited Aug. 29, 2023).
    \40\ Cody Rice, U.S. Environmental Protection Agency, ``Wage 
Rates for Economic Analyses of the Toxics Release Inventory 
Program,'' June 10, 2002, https://www.regulations.gov/document?D=EPA-HQ-OPPT-2014-0650-0005.
    \41\ BLS, ``Employer Costs for Employee Compensation--March 
2022,'' June. 16, 2022, https://www.bls.gov/news.release/archives/ecec_06162022.pdf. Calculated using Table 1. Employer Costs for 
Employee Compensation by ownership.
    \42\ DOL, ``Workforce Innovation and Opportunity Act (WIOA) 
Common Performance Reporting'' OMB Control No. 1205-0526, https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202012-1205-003 (last 
visited Aug. 29, 2023).
    \43\ The hourly compensation rates presented in Exhibit 5a, 
Exhibit 5b, and Exhibit 5c are rounded. Calculations used throughout 
the RIA use the unrounded value. Therefore, numbers may not sum due 
to rounding for the convenience of the reader.

                                                   Exhibit 5a--Compensation Rates for Local Employees
                                                                         [2022$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Hourly
                          Position                            Grade level    Base hourly      Loaded wage factor       Overhead costs      compensation
                                                                              wage rate                                                        rate
                                                                                      (a)                      (b)                   (c)   d = a + b + c
--------------------------------------------------------------------------------------------------------------------------------------------------------
Management Analyst..........................................          N/A          $43.61   $27.04 ($43.61 x 0.62)       $7.41 ($43.61 x          $78.06
                                                                                                                                   0.17)
Database Administrator......................................          N/A          $49.01   $30.39 ($49.01 x 0.62)       $8.33 ($49.01 x          $87.73
                                                                                                                                   0.17)
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 13837]]


                                                   Exhibit 5b--Compensation Rates for State Employees
                                                                         [2022$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Hourly
                          Position                            Grade level    Base hourly      Loaded wage factor       Overhead costs      compensation
                                                                              wage rate                                                        rate
                                                                                      (a)                      (b)                   (c)   d = a + b + c
--------------------------------------------------------------------------------------------------------------------------------------------------------
Management Analyst..........................................          N/A          $35.31   $21.89 ($35.31 x 0.62)       $6.00 ($35.31 x          $63.20
                                                                                                                                   0.17)
Staff Trainer...............................................          N/A          $39.31   $24.37 ($39.31 x 0.62)       $6.68 ($39.31 x          $70.36
                                                                                                                                   0.17)
Rehabilitation Counselor....................................          N/A          $27.31   $16.93 ($27.31 x 0.62)       $4.64 ($27.31 x          $48.88
                                                                                                                                   0.17)
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                  Exhibit 5c--Compensation Rates for Federal Employees
                                                                         [2022$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Hourly
                          Position                            Grade level    Base hourly      Loaded wage factor       Overhead costs      compensation
                                                                              wage rate                                                        rate
                                                                                      (a)                      (b)                   (c)   d = a + b + c
--------------------------------------------------------------------------------------------------------------------------------------------------------
Management Analyst..........................................  GS-14, Step          $52.12   $32.84 ($52.12 x 0.63)       $8.86 ($52.12 x          $93.82
                                                                        5                                                          0.17)
--------------------------------------------------------------------------------------------------------------------------------------------------------

5. Subject-by-Subject Analysis
    The Departments' analysis below covers the estimated costs and cost 
savings of the final rule.
c. Costs
    The following sections describe the costs of the final rule.\44\
---------------------------------------------------------------------------

    \44\ Numbers may not sum due to rounding for the convenience of 
the reader.
---------------------------------------------------------------------------

(1) WIOA Core Programs Rule Familiarization
    State- and local-level DOL programs, State- and local-level AEFLA 
programs, and State VR agencies will need to familiarize themselves 
with the new regulations. Consequently, this will impose a one-time 
cost in the first year.
    To estimate the first-year cost of rule familiarization at the 
State level, the Departments multiplied the estimated number of 
management analysts (1) by the time required to read and review the 
rule (1 hour), and by the applicable hourly compensation rate ($63.20/
hour). We multiplied this result by the sum of the number of States 
(57) for the DOL programs, the number of States (57) for the AEFLA 
programs, and the number of VR agencies (78). This calculation yields 
$12,135 in one-time labor costs, which is equal to an average annual 
cost of $1,214 over the 10-year analysis period.
    At the local level for the DOL programs, the Departments multiplied 
the estimated number of management analysts (1) by the time required to 
read and review the rule (1 hour), by the applicable hourly 
compensation rate ($78.06/hour), and by the number of local WDBs (580). 
This calculation yields $45,276 in one-time labor costs, which is equal 
to an average annual cost of $4,528 over the 10-year analysis 
period.\45\
---------------------------------------------------------------------------

    \45\ Numbers may not sum due to rounding for the convenience of 
the reader.
---------------------------------------------------------------------------

    At the local level for the AEFLA programs, the Departments 
multiplied the estimated number of management analysts (1) by the time 
required to read and review the rule (1 hour), by the applicable hourly 
compensation rate ($78.06/hour), and by the number of local AEFLA 
providers (1,719). This calculation yields $134,188 in one-time labor 
costs, which is equal to an average annual cost of $13,419 over the 10-
year analysis period.
    The sum of these costs yields a total one-time labor cost of 
$191,600 for State- and local-level DOL programs, State- and local-
level AEFLA programs, and State VR agencies to read and review the new 
rule. Over the 10-year period of analysis, these estimated one-time 
costs result in an average annual cost of $19,160 undiscounted, or 
$22,461 and $27,279 at discount rates of 3 and 7 percent, respectively. 
Exhibit 6 summarizes the above calculations.

                        Exhibit 6--WIOA Core Programs, Rule Familiarization One Time Cost
----------------------------------------------------------------------------------------------------------------
                                                     Number of
             Agency                 Management      management      Loaded wage   Population \1\     Total \2\
                                   analyst hours     analysts          rate
----------------------------------------------------------------------------------------------------------------
State-level DOL.................               1               1          $63.20              57          $3,602
Local-level DOL.................               1               1           78.06             580          45,276
State-level AEFLA...............               1               1           63.20              57           3,602
Local-level AEFLA...............               1               1           78.06           1,719         134,188
State-level VR..................               1               1           63.20              78           4,930
                                 -------------------------------------------------------------------------------
    Total Initial Cost..........  ..............  ..............  ..............  ..............         191,600
----------------------------------------------------------------------------------------------------------------
\1\ Population figures represent States (57) and VR agencies (78).
\2\ Numbers may not sum due to rounding for the convenience of the reader.


[[Page 13838]]

(2) Calculating and Reporting Retention With the Same Employer
    WIOA sec. 116(b)(2)(A)(i)(VI) provides that the sixth primary 
indicator of performance will be an indicator that measures program 
effectiveness in serving employers, which WIOA sec. 116(b)(2)(A)(iv) 
directs the Departments to establish. Currently, under the Departments' 
joint guidance, States must report at least two of the following three 
approaches to measuring effectiveness in serving employers: Retention 
with the Same Employer, Employer Penetration, and Repeat Business 
Customer. All States will be required to adopt the same approach to 
measure effectiveness in serving employers: Retention with the Same 
Employer. Seventeen States do not currently report the Retention with 
the Same Employer approach to the effectiveness in serving employers 
performance indicator.\46\ These 17 States will have new costs 
associated with setting up procedures to calculate and report Retention 
with the Same Employer and annual costs associated with continuing to 
calculate and report Retention with the Same Employer. To estimate the 
cost of establishing Retention with the Same Employer as the 
effectiveness in serving employers performance indicator, the 
Departments followed the assumptions used to estimate the pilot cost of 
the Retention with the Same Employer approach to effectiveness in 
serving employers in the 2016 Joint WIOA Final Rule. However, we 
updated those assumptions for this analysis by removing the cost of 
collecting data (4 hours) because all States are already collecting the 
required data in the baseline. We then increased the number of hours we 
assume State-level DOL programs require for one-time costs of 
programming (from 4 to 6 hours) based on the Departments' experience 
with initial costs for programming following the Joint WIOA Final Rule. 
The assumptions and costs are summarized as follows:
---------------------------------------------------------------------------

    \46\ Thirty-five States report Retention with the Same Employer 
according to DOL data. DOL collects data on 52 of 57 States defined 
in this analysis. DOL assumes the remaining 5 States report the 
cheapest combination of pilot approaches (Retention with the Same 
Employer + Employer Penetration), resulting in the RIA assuming 40 
States report Retention with the Same Employer.
---------------------------------------------------------------------------

    At the Federal level for the DOL core programs, the Departments 
estimate the one-time labor cost associated with calculating and 
reporting Retention with the Same Employer by multiplying the estimated 
number of GS-14, Step 5 management analysts (one) by the time required 
for technical assistance development (8 hours) and by the hourly 
compensation rate ($93.82/hour). This calculation results in a one-time 
labor cost of $751.
    The Departments estimated DOL's annual labor costs for calculating 
and reporting Retention with the Same Employer by multiplying the 
estimated number of GS-14, Step 5 management analysts (one) by the time 
required for technical assistance delivery (4 hours) and by the hourly 
compensation rate ($93.82/hour). This calculation results in an annual 
labor cost of $375.
    At the State level for the DOL core programs, the Departments 
estimated the one-time labor cost associated with calculating and 
reporting Retention with the Same Employer by multiplying the estimated 
number of management analysts (one) by the time required for 
programming (6 hours) and by the hourly compensation rate ($63.20/
hour). We multiplied the labor cost ($379) by the number of States (57) 
to estimate this one-time cost at $21,616.
    The Departments estimated the State-level DOL core programs' annual 
labor cost associated with calculating and reporting Retention with the 
Same Employer by multiplying the estimated number of management 
analysts (one) by the time required for Federal reporting (4 hours) and 
by the hourly compensation rate ($63.20/hour). We multiplied the labor 
cost ($253) by the number of States (57) to estimate this annual cost 
at $14,411.
    At the Federal level for the AEFLA program, the Departments 
estimated the one-time labor cost associated with calculating and 
reporting Retention with the Same Employer by multiplying the estimated 
number of GS-14, Step 5 management analysts (one) by the time required 
for technical assistance development (8 hours) and by the hourly 
compensation rate ($93.82/hour). This calculation results in a one-time 
labor cost of $751.
    The Departments estimated AEFLA's annual labor cost for calculating 
and reporting Retention with the Same Employer at the Federal level by 
multiplying the estimated number of GS-14, Step 5 management analysts 
(one) by the time required for technical assistance delivery (4 hours) 
and by the hourly compensation rate ($93.82/hour). This calculation 
results in an annual labor cost of $375.
    At the State level for the AEFLA program, the Departments estimated 
the one-time labor cost associated with calculating and reporting 
Retention with the Same Employer by multiplying the estimated number of 
management analysts (one) by the time required for programming and data 
collection (6 hours) and by the hourly compensation rate ($63.20). We 
multiplied the labor cost ($379) by the number of States (57) to 
estimate this one-time cost at $21,616.\47\
---------------------------------------------------------------------------

    \47\ Numbers may not sum due to rounding for the convenience of 
the reader.
---------------------------------------------------------------------------

    The Departments estimated the State-level AEFLA program's annual 
labor cost associated with calculating and reporting Retention with the 
Same Employer by multiplying the estimated number of management 
analysts (one) by the time required for Federal reporting (4 hours) and 
by the hourly compensation rate ($63.20/hour). We multiplied the labor 
cost ($53) by the number of States (57) to estimate this annual cost at 
$14,411.
    At the Federal level for the VR program, the Departments estimated 
the one-time labor cost associated with calculating and reporting 
Retention with the Same Employer by multiplying the estimated number of 
GS-14, Step 5 management analysts (one) by the time required for 
technical assistance development (8 hours) and by the hourly 
compensation rate ($93.82/hour). This calculation results in a one-time 
labor cost of $751.
    The Departments estimated the annual labor costs associated with 
calculating and reporting Retention with the Same Employer at the 
Federal level for the VR program by multiplying the estimated number of 
GS-14, Step 5 management analysts (one) by the time required for 
technical assistance delivery (4 hours) and by the hourly compensation 
rate ($93.82/hour). This calculation results in an annual labor cost of 
$375.
    At the State level for the VR program, the Departments estimated 
the one-time labor cost associated with calculating and reporting 
Retention with the Same Employer by multiplying the estimated number of 
management analysts (one) by the time required for programming (6 
hours) and by the hourly compensation rate ($63.20/hour). We multiplied 
the labor cost ($379) by the number of VR agencies (78) to estimate 
this one-time cost at $29,580.
    The Departments estimated the State-level VR program's annual labor 
cost associated with calculating and reporting Retention with the Same 
Employer by multiplying the estimated number of management analysts 
(one) by the time required for Federal reporting (4 hours) and by the 
hourly compensation rate ($63.20/hour). We multiplied the labor cost 
($253) by the number of VR agencies (78) to estimate this annual cost 
of $19,720.

[[Page 13839]]

    The sum of these one-time costs of the retention measure yields 
$75,064 for individuals from the Federal- and State-level DOL core 
programs, AEFLA program, and VR program. In addition, the sum of the 
annual costs associated with calculating and reporting Retention with 
the Same Employer for these entities yields $49,667 per year. Exhibits 
7a and 7b summarize the above calculations.

                           Exhibit 7a--Retention With the Same Employer, Initial Cost
----------------------------------------------------------------------------------------------------------------
                                    Management       Number of
             Agency                analyst hours    management      Loaded wage   Population \2\     Total \3\
                                        \1\          analysts          rate
----------------------------------------------------------------------------------------------------------------
Federal-level DOL...............               8               1          $93.82              NA            $751
State-level DOL.................               6               1           63.20              57          21,616
Federal-level AEFLA.............               8               1           93.82              NA             751
State-level AEFLA...............               6               1           63.20              57          21,616
Federal-level VR................               8               1           93.82              NA             751
State-level VR..................               6               1           63.20              78          29,580
                                 -------------------------------------------------------------------------------
    Total Initial Cost..........  ..............  ..............  ..............  ..............          75,064
----------------------------------------------------------------------------------------------------------------
\1\ Management analysts on the Federal level are GS-14, Step 5.
\2\ Population figures represent States (57) and VR agencies (78).
\3\ Numbers may not sum due to rounding for the convenience of the reader.


                            Exhibit 7b--Retention With the Same Employer, Annual Cost
----------------------------------------------------------------------------------------------------------------
                                    Management       Number of
             Agency                analyst hours    management      Loaded wage   Population \2\     Total \3\
                                        \1\          analysts          rate
----------------------------------------------------------------------------------------------------------------
Federal-level DOL...............               4               1          $93.82              NA            $375
State-level DOL.................               4               1           63.20              57          14,411
Federal-level AEFLA.............               4               1           93.82              NA             375
State-level AEFLA...............               4               1           63.20              57          14,411
Federal-level VR................               4               1           93.82              NA             375
State-level VR..................               4               1           63.20              78          19,720
                                 -------------------------------------------------------------------------------
    Total Annual Cost...........  ..............  ..............  ..............  ..............          49,667
----------------------------------------------------------------------------------------------------------------
\1\ Management analysts on the Federal level are GS-14, Step 5.
\2\ Population figures represent States (57) and VR agencies (78).
\3\ Numbers may not sum due to rounding for the convenience of the reader.

    The costs in Exhibits 7a and 7b represent the costs for all 57 
States to report the Retention with the Same Employer approach to the 
effectiveness in serving employers performance indicator. Currently, 40 
States already report Retention with the Same Employer. The remaining 
17 States will face costs with having to start reporting Retention with 
the Same Employer. We therefore multiply the total one-time costs 
($75,064) and annual costs ($49,667) by the 29.8 percent of States not 
currently reporting the retention measure (17 out of 57) yielding 
$22,387 in one-time costs and an additional $14,813 in annual costs to 
increase the number of States reporting the retention measure from 40 
to all 57.
    The estimated total cost from requiring all States to report 
Retention with the Same Employer over the 10-year period is $155,704 
undiscounted, or $137,723 and $118,898 at discount rates of 3 and 7 
percent, respectively, with an annualized cost over the 10-year period 
of $16,145 and $16,928 at discount rates of 3 and 7 percent, 
respectively.
d. Cost Savings
    The following sections describe the cost savings of the final rule.
(1) Summary of Approach
    The pilot program announced in the 2016 Joint WIOA Final Rule 
required States to report two of the three approaches for measuring 
effectiveness in serving employers. Under this final rule States will 
no longer face costs associated with collecting the information 
required to calculate the Employer Penetration or Repeat Business 
Customer approaches to the effectiveness in serving employers 
performance indicator. To estimate the cost savings, we first update 
the costs associated with collecting each of these pilot approaches 
following the assumptions used to estimate the cost of the Retention 
with the Same Employer pilot approach in the 2016 Joint WIOA Final 
Rule. We then estimate the cost savings under the final rule associated 
with the proportion of States that will no longer report the various 
combinations of the pilot approaches that States report in the 
baseline.
    Currently, 15 States report Retention with the Same Employer and 
Employer Penetration, 9 States report Retention with the Same Employer 
and Repeat Business Customer, 22 States report Employer Penetration and 
Repeat Business Customer, and 16 States report all 3 approaches to 
defining the effectiveness in serving employers performance indicator. 
To estimate cost savings, we first estimate the annual cost of all 57 
States collecting data for, calculating, and reporting the percentage 
of employers using services out of all employers in the State (Employer 
Penetration) and the percentage of repeat employers using services 
within the previous 3 years (Repeat Business Customer). We then 
multiply the annual cost by the percentage of States currently using 
the pilot approach to estimate the cost savings. Below, we present the 
updated costs associated with all 57 States reporting each pilot 
approach, and then present the cost savings associated with the 
proportion of States no longer reporting them.

[[Page 13840]]

(2) Employer Penetration: Percentage of Employers Using Services Out of 
All Employers in the State
    Under the pilot program, States must use two of three specified 
approaches to measure effectiveness in serving employers. The final 
rule will only require States to collect data for, calculate, and 
report the first approach (Retention with the Same Employer). This 
section calculates the cost for all 57 States to collect data, 
calculate, and report Employer Penetration and then uses these costs to 
estimate cost savings for the proportion of States that will no longer 
report Employer Penetration under the final rule.
    At the Federal level for the DOL core programs, the Departments 
estimated the annual labor cost associated with Employer Penetration by 
multiplying the estimated number of GS-14, Step 5 management analysts 
(one) by the time required for technical assistance delivery (4 hours) 
and by the hourly compensation rate ($93.82/hour). This calculation 
results in an annual labor cost of $375.
    At the State level for the DOL core programs, the Departments 
estimated Employer Penetration's annual labor cost by multiplying the 
estimated number of management analysts (one) by the sum of time 
required for data collection (4 hours), providing training and 
technical assistance to Local WDBs (3 hours), and Federal reporting (4 
hours) and by the hourly compensation rate ($63.20/hour). We multiplied 
the labor cost ($695) by the number of States (57) to estimate this 
annual cost at $39,629.
    For local-level DOL core programs, the Departments estimated the 
annual labor cost for Employer Penetration by multiplying the estimated 
number of management analysts (one) by the time required for data 
collection (4 hours) and by the hourly compensation rate ($78.06/hour). 
We multiplied the labor cost ($312) by the number of Local WDBs (580) 
to estimate this annual cost at $181,104.
    At the Federal level for the AEFLA program, the Departments 
estimated the annual labor cost associated with Employer Penetration by 
multiplying the estimated number of GS-14, Step 5 management analysts 
(one) by the time required for technical assistance delivery (4 hours) 
and by the hourly compensation rate ($93.82/hour). This calculation 
results in an annual labor cost of $375.
    At the State level for the AEFLA program, the Departments estimated 
Employer Penetration's annual labor cost by multiplying the estimated 
number of management analysts (one) by the sum of time required for 
data collection (4 hours), providing training and technical assistance 
to local AEFLA providers (3 hours), and Federal reporting (4 hours) and 
by the hourly compensation rate ($63.20/hour). We multiplied the labor 
cost ($695) by the number of States (57) to estimate this annual cost 
at $39,629.
    For the local-level AEFLA program, the Departments estimated the 
annual labor cost for Employer Penetration by multiplying the estimated 
number of management analysts (one) by the time required for data 
collection (4 hours) and by the hourly compensation rate ($78.06/hour). 
We multiplied the labor cost ($312) by the number of local AEFLA 
providers (1,719) to estimate this annual cost at $536,754.\48\
---------------------------------------------------------------------------

    \48\ Numbers may not sum due to rounding for the convenience of 
the reader.
---------------------------------------------------------------------------

    At the Federal level for the VR program, the Departments estimated 
the annual labor cost associated with Employer Penetration by 
multiplying the estimated number of GS-14, Step 5 management analysts 
(one) by the time required for technical assistance delivery (4 hours) 
and by the hourly compensation rate ($93.82/hour). This calculation 
results in an annual labor cost of $375.
    At the State level for the VR program, the Departments estimated 
Employer Penetration's annual labor cost by multiplying the estimated 
number of management analysts (one) by the time required for Federal 
reporting (4 hours) and by the hourly compensation rate ($63.20/hour). 
In addition, we added the estimated number of rehabilitation counselors 
(62 assistants) by the time required for data collection (1 hour each) 
and by the hourly compensation rate ($48.88/hour). We summed the labor 
cost for both categories and multiplied it ($3,284) by the number of VR 
agencies (78) to estimate this annual cost at $256,127.
    Summing these annual costs for all 57 States to calculate and 
report Employer Penetration yields $1,054,369 per year for the Federal-
, State-, and local-level DOL core programs and AEFLA programs and the 
State-level VR programs. The Departments used the updated costs in 
Exhibit 8 to estimate the cost savings for States that will no longer 
report this pilot approach.

                                                         Exhibit 8--Employer Penetration, Annual
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            Loaded wage
                  Agency                         Labor category \1\            Hours          Workers          rate       Population \2\     Total \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Federal-level DOL.........................  Management Analyst..........               4               1          $93.82              NA            $375
State-level DOL...........................  Management Analyst..........              11               1           63.20              57          39,629
Local-Level DOL...........................  Management Analyst..........               4               1           78.06             580         181,104
Federal-level AEFLA.......................  Management Analyst..........               4               1           93.82              NA             375
State-level AEFLA.........................  Management Analyst..........              11               1           63.20              57          39,629
Local-Level AEFLA.........................  Management Analyst..........               4               1           78.06           1,719         536,754
Federal-level VR..........................  Management Analyst..........               4               1           93.82              NA             375
State-level VR............................  Management Analyst..........               4               1           63.20              78          19,720
State-level VR............................  Rehab Counselor.............               1              62           48.88              78         236,407
                                                                         -------------------------------------------------------------------------------
    Annual Total..........................  ............................  ..............  ..............  ..............  ..............       1,054,369
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Management analysts on the Federal level are GS-14, Step 5.
\2\ Population figures represent States (57), VR agencies (78), and AEFLA providers (1,719).
\3\ Numbers may not sum due to rounding for the convenience of the reader.


[[Page 13841]]

(3) Repeat Business Customer: Percentage of Repeat Employers Using 
Services Within the Previous 3 Years
    This section calculates the cost for all 57 States to collect data, 
calculate, and report the Repeat Business Customer approach to the 
effectiveness in serving employers performance indicator. The 
Departments use these costs to estimate cost savings for the proportion 
of States that will no longer report this pilot approach under the 
final rule.
    At the Federal level for the DOL core programs, the Departments 
estimated the annual labor cost associated with Repeat Business 
Customer by multiplying the estimated number of GS-14, Step 5 
management analysts (one) by the time required for technical assistance 
delivery (4 hours) and by the hourly compensation rate ($93.82/hour). 
This calculation results in an annual labor cost of $375.
    At the State level for the DOL core programs, the Departments 
estimated Repeat Business Customer's annual labor cost by multiplying 
the estimated number of management analysts (one) by the sum of time 
required for data collection (4 hours), providing training and 
technical assistance to Local WDBs (3 hours), and Federal reporting (4 
hours) and by the hourly compensation rate ($63.20/hour). We multiplied 
the labor cost ($695) by the number of States (57) to estimate this 
annual cost at $39,629.
    For the local-level DOL core programs, the Departments estimated 
the annual labor cost for Repeat Business Customer by multiplying the 
estimated number of management analysts (one) by the time required for 
data collection (6 hours) and by the hourly compensation rate ($78.06/
hour). We multiplied the labor cost ($468) by the number of Local WDBs 
(580) to estimate this annual cost at $271,655.
    At the Federal level for the AEFLA program, the Departments 
estimated the annual labor cost associated with Repeat Business 
Customer by multiplying the estimated number of GS-14, Step 5 
management analysts (one) by the time required for technical assistance 
delivery (4 hours) and by the hourly compensation rate ($93.82/hour). 
This calculation results in an annual labor cost of $375.
    At the State level for the AEFLA program, the Departments estimated 
Repeat Business Customer's annual labor cost by multiplying the 
estimated number of management analysts (one) by the sum of time 
required for data collection (4 hours), providing training and 
technical assistance to local AEFLA providers (3 hours), and Federal 
reporting (4 hours) and by the hourly compensation rate ($63.20/hour). 
We multiplied the labor cost ($695) by the number of States (57) to 
estimate this annual cost at $39,629.
    For the local-level AEFLA program, the Departments estimated the 
annual labor cost for Repeat Business Customer by multiplying the 
estimated number of management analysts (one) by the time required for 
data collection (6 hours) and by the hourly compensation rate ($78.06/
hour). We multiplied the labor cost ($468) by the number of local AEFLA 
providers (1,719) to estimate this annual cost at $805,130.
    At the Federal level for the VR program, the Departments estimated 
the annual labor cost associated with Repeat Business Customer by 
multiplying the estimated number of GS-14, Step 5 management analysts 
(one) by the time required for technical assistance delivery (4 hours) 
and by the hourly compensation rate ($93.82/hour). This calculation 
results in an annual labor cost of $375.
    At the State level for the VR program, the Departments estimated 
Repeat Business Customer's annual labor cost by multiplying the 
estimated number of management analysts (one) by the time required for 
Federal reporting (4 hours) and by the hourly compensation rate 
($63.20/hour). In addition, we added the estimated number of 
rehabilitation counselors (62 counselors) by the time required for data 
collection (1 hour each) and by the hourly compensation rate ($48.88/
hour). We summed the labor cost for both categories ($3,284) and 
multiplied it by the number of VR agencies (78) to estimate this annual 
cost of $256,127.
    Summing these annual costs for all States to calculate and report 
Repeat Business Customer yields $1,413,298 per year for the Federal-, 
State-, and local-level DOL core programs and AEFLA programs and the 
State-level VR programs. The Departments used the updated costs in 
Exhibit 9 to estimate the cost savings for States to no longer report 
this pilot approach.

                                                       Exhibit 9--Repeat Business Customer, Annual
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            Loaded wage
                  Agency                         Labor category \1\            Hours          Workers          rate       Population \2\     Total \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Federal-level DOL.........................  Management Analyst..........               4               1          $93.82              NA            $375
State-level DOL...........................  Management Analyst..........              11               1           59.70              57          39,629
Local-Level DOL...........................  Management Analyst..........               6               1           73.67             580         271,655
Federal-level AEFLA.......................  Management Analyst..........               4               1           93.82              NA             375
State-level AEFLA.........................  Management Analyst..........              11               1           59.70              57          39,629
Local-Level AEFLA.........................  Management Analyst..........               6               1           73.67           1,719         805,130
Federal-level VR..........................  Management Analyst..........               4               1           93.82              NA             375
State-level VR............................  Management Analyst..........               4               1           59.70              78          19,720
State-Level VR............................  Rehab Counselor.............               1              62           47.94              78         236,407
                                                                         -------------------------------------------------------------------------------
    Annual Total..........................  ............................  ..............  ..............  ..............  ..............       1,413,298
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Management analysts on the Federal level are GS-14, Step 5.
\2\ Population figures represent States (57), VR agencies (78), and AEFLA providers (1,719).
\3\ Numbers may not sum due to rounding for the convenience of the reader.


[[Page 13842]]

(4) Summary of Cost Savings
    Under the final rule, the 15 States that currently report only the 
Retention with the Same Employer and Employer Penetration pilot 
approaches will have cost savings from no longer having to collect data 
for, calculate, and report Employer Penetration. Multiplying the annual 
cost for all 57 States to collect data for, calculate, and report 
Employer Penetration ($1,054,369) by the 26.3 percent of States 
reporting these two pilot approaches only (15 out of 57) yields annual 
cost savings of $277,466.
    The 9 States currently reporting only the Retention with the Same 
Employer and Repeat Business Customer pilot approaches will have cost 
savings from no longer collecting data for, calculating, and reporting 
Repeat Business Customer. Multiplying the annual cost for all 57 States 
to collect data for, calculate, and report Repeat Business Customer 
($1,413,298) by the 15.8 percent of States reporting these two pilot 
approaches only (9 out of 57) yields annual cost savings of $223,152.
    The 22 States currently reporting only Employer Penetration and 
Repeat Business Customer and the 16 States currently reporting all 
three pilot approaches to the effectiveness in serving employers 
performance indicator will have cost savings from no longer collecting 
data for, calculating, and reporting both Employer Penetration and 
Repeat Business Customer. Multiplying the sum of annual costs for all 
57 States to collect data for, calculate, and report both Employer 
Penetration and Repeat Business Customer ($2,467,667) by the 38.6 
percent of States reporting Employer Penetration and Repeat Business 
Customer only and by the 28.1 percent of States reporting all three 
approaches yields annual cost savings of $952,433 and $692,679, 
respectively.
    Summing these annual cost savings yields total annual cost savings 
for all 57 States of $2,145,729 from the final rule. The Departments 
estimate total cost savings over the 10-year period at $21,457,293 
undiscounted, or $18,852,612 and $16,125,654 at discount rates of 3 and 
7 percent, respectively. At discount rates of 3 and 7 percent, the 10-
year period results in annualized cost savings of $2,210,101 and 
$2,295,930, respectively.
e. Qualitative Benefits Discussion
(1) General Benefits of Measuring Effectiveness in Serving Employers
    The Departments cannot quantify the final rule's benefits 
associated with improving the WIOA core programs' effectiveness in 
serving employers. Measuring effectiveness in serving employers allows 
the DOL, AEFLA, and VR programs to set goals, monitor, and learn how to 
serve employers more effectively.\49\ Reporting a measure of 
effectiveness in serving employers also helps Federal, State, and local 
policymakers evaluate program performance and inform future policy 
changes to better meet program goals, particularly providing employers 
with skilled workers and other services.
---------------------------------------------------------------------------

    \49\ S. Spaulding, et al., ``Measuring the Effectiveness of 
Services to Employers: Options for Performance Measures under the 
Workforce Innovation and Opportunity Act,'' Jan. 2021, https://wdr.doleta.gov/research/FullText_Documents/ETAOP2021-17%20Measures%20of%20Effectiveness%20in%20Serving%20Employers_Final%20Report.pdf.
---------------------------------------------------------------------------

    The Departments cannot quantify these estimated benefits because we 
do not have quantitative data on how the effectiveness in serving 
employers performance measure has influenced program implementation and 
how much it will influence future policies.
(2) Specific Benefits of Reporting Retention With the Same Employer
    Requiring all States to calculate and report Retention with the 
Same Employer as the effectiveness in serving employers performance 
indicator will make it easier to compare WIOA core programs' 
effectiveness in serving employers performance across States and ensure 
all States have an indicator of job turnover and match quality between 
workers exiting WIOA core programs and employers. Retention with the 
Same Employer demonstrates a continued relationship between the 
employer and participants who have exited WIOA core programs. While 
many circumstances can have an impact on an employer's retention of 
employees, an indication that an employee is still working for the same 
employer in both the second and fourth quarters after exiting from a 
WIOA program demonstrates a level of success for both parties, as 
retention of an employee reduces the costs to the employer associated 
with employee turnover and retraining. Thus, reporting Retention with 
the Same Employer can help inform design and implementation of program 
services to reduce job turnover and improve employer-employee match 
quality. Improved matching and reduced turnover allow employees and 
employers to operate closer to their productive potential and can make 
it more worthwhile for employers to invest in training their employees 
and for employees to invest in learning employer-specific skills.
6. Summary of the Analysis
    Exhibit 10 summarizes the estimated total costs and cost savings of 
the final rule over the 10-year analysis period. Discontinuing 
reporting of Employer Penetration and Repeat Business Customer has the 
largest effect as a cost savings. The Departments estimate the total 
net cost savings of the final rule at $16,125,654 at a discount rate of 
7 percent.

          Exhibit 10--Estimated 10-Year Monetized Costs and Cost Savings of the Final Rule by Provision
                                                [2022 $millions]
----------------------------------------------------------------------------------------------------------------
                                                                                                  Total net cost
                            Provision                                  Cost        Cost savings       savings
----------------------------------------------------------------------------------------------------------------
Rule Familiarization............................................           $0.13  ..............  ..............
Reporting Retention with the Same Employer......................            0.16  ..............  ..............
No Longer Reporting Other Measures..............................  ..............          $21.46  ..............
Undiscounted....................................................            0.35           21.46          $21.11
With a Discount Rate of 3%......................................            0.33           18.85           18.52
With a Discount Rate of 7%......................................            0.31           16.13           15.82
----------------------------------------------------------------------------------------------------------------

    The Departments estimate the annualized costs of the final rule at 
$44,208 and the annualized cost savings at $2,295,930, at a discount 
rate of 7 percent. The Departments estimate the final rule will result 
in an annualized net quantifiable cost savings of $2,251,723 and a 
total 10-year net cost savings of $15,815,157, both at a

[[Page 13843]]

discount rate of 7 percent and expressed in 2022 dollars. Exhibit 11 
summarizes the estimated total costs and cost savings of the final rule 
over the 10-year analysis period.

           Exhibit 11--Estimated Monetized Costs, Cost Savings, and Net Cost Savings of the Final Rule
                                                     [2022$]
----------------------------------------------------------------------------------------------------------------
                       Year/total                              Costs          Costs savings     Net cost savings
----------------------------------------------------------------------------------------------------------------
2024...................................................           $213,987         $2,145,729         $1,931,742
2025...................................................             14,813          2,145,729          2,130,916
2026...................................................             14,813          2,145,729          2,130,916
2027...................................................             14,813          2,145,729          2,130,916
2028...................................................             14,813          2,145,729          2,130,916
2029...................................................             14,813          2,145,729          2,130,916
2030...................................................             14,813          2,145,729          2,130,916
2031...................................................             14,813          2,145,729          2,130,916
2032...................................................             14,813          2,145,729          2,130,916
2033...................................................             14,813          2,145,729          2,130,916
Undiscounted 10-Year Total.............................            347,304         21,457,293         21,109,989
10-Year Total with a Discount Rate of 3%...............            329,323         18,852,612         18,523,289
10-Year Total with a Discount Rate of 7%...............            310,497         16,125,654         15,815,157
10-Year Average........................................             34,730          2,145,729          2,110,999
Annualized with a Discount Rate of 3%..................             38,607          2,210,101          2,171,495
Annualized with a Discount Rate of 7%..................             44,208          2,295,930          2,251,723
----------------------------------------------------------------------------------------------------------------

7. Regulatory Alternatives
    The Departments considered two alternatives to the proposed 
definition of the effectiveness in serving employers performance 
indicator. First, the Departments considered requiring use of the 
Employer Penetration pilot approach, which reports the percentage of 
employers using services out of all employers in the State. This 
approach would have required counts of services provided to employers, 
requiring States and local areas to report unique counts of individual 
employers receiving services through WIOA's programs. Employer 
Penetration would require a more data-intensive analysis than the 
proposed approach of Retention with the Same Employer. Employer 
Penetration would have the benefit of capturing the extent to which 
employers within a State are engaged with WIOA-funded services and 
would provide State programs an incentive to work with additional 
employers. As discussed earlier in Section II.A (Pilot Programs for 
WIOA Core Programs), on behalf of the Departments, DOL commissioned an 
examination of State experiences with the various approaches through a 
third-party contractor (the Final Pilot Study Report discussed 
elsewhere in this final rule), which found weaknesses in this pilot 
approach, including (1) an emphasis on quantity rather than quality or 
intensity of the employer service provided; (2) reliability issues 
associated with data entry and the process to count unique 
establishments; (3) measurement of program output rather than outcome; 
(4) potential for creation of perverse incentives to prioritize program 
breadth rather than depth in service and delivery; and (5) a lack of 
sensitivity to industry sectors targeted by State and local workforce 
agencies.\50\ The Departments estimated the costs and cost savings of 
this alternative using the same method as the proposed approach. That 
is, the Departments used the estimated cost of collecting data, 
calculating, and reporting Employer Penetration, and then estimated the 
cost for the proportion of States that would need to start using this 
approach to reporting effectiveness in serving employers (4 States). 
Exhibit 12 summarizes these calculations below.
---------------------------------------------------------------------------

    \50\ S. Spaulding, et al., ``Measuring the Effectiveness of 
Services to Employers: Options for Performance Measures under the 
Workforce Innovation and Opportunity Act,'' Jan. 2021, page 68, 
https://wdr.doleta.gov/research/FullText_Documents/ETAOP2021-17%20Measures%20of%20Effectiveness%20in%20Serving%20Employers_Final%20Report.pdf.

                                                  Exhibit 12--Summary of Regulatory Alternative 1 Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                         Adjusted cost    Adjusted cost
                                                                                                                           estimates:       estimates:
                                                                  Number of      Updated 2016 cost   Updated 2016 cost    updated cost     updated cost
                     Non-reported measure                           states      estimates: initial   estimates: annual   estimates x (#   estimates x (#
                                                                                       cost                cost          states  / 57),   states / 57),
                                                                                                                          initial cost     annual cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Employer Penetration.........................................               4            $264,215          $1,054,369          $18,541          $73,991
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Costs include calculating and reporting Employer Penetration and 
rule familiarization for WIOA core programs. The Departments estimate 
the total cost of the first alternative over the 10-year period at 
$876,059 undiscounted, or $786,242 and $692,209 at discount rates of 3 
and 7 percent, respectively, and an annualized cost of the 10-year 
period at $92,172 and $98,555 with discount rates of 3 and 7 percent, 
respectively.
    To calculate cost savings the Departments used the estimated cost 
of collecting data for, calculating, and reporting the two other 
effectiveness in serving employers approaches (Retention with the Same 
Employer and

[[Page 13844]]

Repeat Business Customer), and then estimated the cost savings for the 
proportion of States that would transition from their existing 
reporting combination of two or three effectiveness in serving 
employers approaches to the single Employer Penetration approach to the 
performance indicator. Exhibit 13 summarizes these calculations below.

                          Exhibit 13--Summary of Regulatory Alternative 1 Cost Savings
----------------------------------------------------------------------------------------------------------------
                                                                                                Adjusted cost
                                                                                              savings estimates:
                                                           Number of     Updated 2016 cost       updated cost
                   Reported measures                        states       estimates: annual      estimates x (#
                                                                            cost savings        states / 57):
                                                                                             annual cost savings
----------------------------------------------------------------------------------------------------------------
Employer Penetration + Retention with the Same                      15              $49,667              $13,070
 Employer.............................................
Employer Penetration + Repeat Business Customer.......              22            1,413,298              545,483
Retention with the Same Employer + Repeat Business                   9            1,462,965              230,994
 Customer (No Employer Penetration)...................
All Three.............................................              16            1,462,965              410,657
----------------------------------------------------------------------------------------------------------------

    The Departments estimated the total cost savings associated with 
the first alternative over the 10-year period at $12,002,050 
undiscounted, or $10,545,132 and $9,019,820 at discount rates of 3 and 
7 percent, respectively, with an annualized cost savings associated 
with the first alternative over the 10-year period at $1,236,211 and 
$1,284,219 with discount rates of 3 and 7 percent, respectively.
    We estimate the first regulatory alternative to result in total net 
cost savings over the 10-year period of $11,125,992 undiscounted, or 
$9,758,890 and $8,327,611 at discount rates of 3 and 7 percent, 
respectively, with an annualized net cost savings of the 10-year period 
at $1,144,040 and $1,185,664 with discount rates of 3 and 7 percent, 
respectively.
    The Departments considered a second regulatory alternative that 
would require the use of the Repeat Business Customer approach to the 
effectiveness in serving employers performance indicator, which reports 
the percentage of employers receiving services in a year who also 
received services within the previous 3 years. This approach to the 
effectiveness in serving employers measure requires counts of services 
provided to employers through WIOA's core programs. Repeat Business 
Customer requires a more data-intensive analysis than the proposed 
approach of Retention with the Same Employer. Repeat Business Customer 
captures the extent to which employers within a State can find workers 
and the employer's level of satisfaction with the public workforce 
system services. The Departments, in the Final Pilot Study Report, 
found weaknesses in this pilot approach, including that it (1) may 
provide a disincentive to reach out to new employers; (2) is subject to 
variation in industry and sector economic conditions; and (3) may 
require a statistical adjustment model to mitigate the weaknesses and 
improve implementation and interpretation.\51\ The Departments 
estimated the costs and cost savings of this alternative using the same 
method as the proposed approach. That is, the Departments used the 
estimated cost of collecting data, calculating, and reporting Repeat 
Business Customer, and then estimated the cost for the proportion of 
States that would need to start using this approach to reporting 
effectiveness in serving employers (10 States). Exhibit 14 summarizes 
these calculations below.
---------------------------------------------------------------------------

    \51\ S. Spaulding, et al., ``Measuring the Effectiveness of 
Services to Employers: Options for Performance Measures under the 
Workforce Innovation and Opportunity Act,'' Jan. 2021, page 67, 
https://wdr.doleta.gov/research/FullText_Documents/ETAOP2021-17%20Measures%20of%20Effectiveness%20in%20Serving%20Employers_Final%20Report.pdf.

                                                  Exhibit 14--Summary of Regulatory Alternative 2 Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                         Adjusted cost    Adjusted cost
                                                                                                                           estimates:       estimates:
                                                                     Number of       Updated 2016    Updated 2016 cost    updated cost     updated cost
                      Non-reported measure                             states      cost estimates:   estimates: annual   estimates x (#   estimates x (#
                                                                                     initial cost          cost          states / 57),    states / 57),
                                                                                                                          initial cost     annual cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Repeat Business Customer........................................              10         $260,613          $1,413,298          $45,722         $247,947
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Costs include the cost of calculating and reporting Repeat Business 
Customer and the cost of rule familiarization for WIOA core programs. 
The Departments estimated the total cost of the second alternative over 
the 10-year period at $2,468,844 undiscounted, or $2,167,864 and 
$1,852,753 at discount rates of 3 and 7 percent, respectively, with an 
annualized cost of the 10-year period at $254,140 and $263,790 with 
discount rates of 3 and 7 percent, respectively.
    To calculate cost savings, the Departments used the estimated cost 
of collecting data for, calculating, and reporting the two other 
effectiveness in serving employers approaches (Retention with the Same 
Employer and Employer Penetration), and then estimated the cost savings 
for the proportion of States that would transition from their existing 
reporting combination of two or three effectiveness in serving 
employers approaches to the single Repeat Business Customer approach to 
the performance indicator. Exhibit 15 summarizes these calculations 
below.

[[Page 13845]]



                          Exhibit 15--Summary of Regulatory Alternative 2 Cost Savings
----------------------------------------------------------------------------------------------------------------
                                                                                                Adjusted cost
                                                                                              savings estimates:
                                                           Number of     Updated 2016 cost       updated cost
                   Reported measures                        states       estimates: annual      estimates x (#
                                                                            cost savings        states / 57):
                                                                                             annual cost savings
----------------------------------------------------------------------------------------------------------------
Repeat Business Customer + Retention with the Same                   9              $49,667               $7,842
 Employer.............................................
Repeat Business Customer + Employer Penetration.......              22            1,054,369              406,950
Employer Penetration + Retention with the Same                      15            1,104,036              290,536
 Employer (No Repeat Business Customer)...............
All Three.............................................              16            1,104,036              309,905
----------------------------------------------------------------------------------------------------------------

    The Departments estimated total cost savings associated with the 
second alternative over the 10-year period is $10,152,326 undiscounted, 
or $8,919,944 and $7,729,709 at discount rates of 3 and 7 percent, 
respectively with an annualized cost savings associated with the second 
alternative over the 10-year period is $1,045,690 and $1,086,299 with 
discount rates of 3 and 7 percent, respectively.
    The Departments estimate the second regulatory alternative to 
result in total net cost savings over the 10-year period of $7,683,482 
undiscounted, or $6,752,081 and $5,776,955 at discount rates of 3 and 7 
percent, respectively, with an annualized net cost savings of the 10-
year period at $791,550 and $822,508 with discount rates of 3 and 7 
percent, respectively.
    Exhibit 16 summarizes the estimated net cost savings associated 
with the three considered approaches to the effectiveness in serving 
employers performance indicator (i.e., the three piloted approaches). 
The Departments prefer the proposed approach of requiring the use of 
Retention with the Same Employer because it has data more readily 
available, and, therefore, is less burdensome. The Retention with the 
Same Employer approach better aligns with workforce system goals of 
supporting employer-employee job match quality and reducing turnover 
without the weaknesses associated with the other two approaches to 
defining the effectiveness in serving employers performance indicator.

               Exhibit 16--Estimated Monetized Costs of the Final Rule and Regulatory Alternatives
                                                [2021 $millions]
----------------------------------------------------------------------------------------------------------------
                                                                                    Regulatory      Regulatory
                                                                    Final rule     alternative 1   alternative 2
----------------------------------------------------------------------------------------------------------------
Total 10-Year Net Cost Savings..................................           $21.1           $11.1            $7.7
Total with 3% Discount..........................................            18.5             9.8             6.8
Total with 7% Discount..........................................            15.8             8.3             5.8
Annualized with 3% Discount.....................................            2.17            1.14            0.79
Annualized with 7% Discount.....................................            2.25            1.19            0.82
----------------------------------------------------------------------------------------------------------------

B. Regulatory Flexibility Act, Small Business Regulatory Enforcement 
Fairness Act, and Executive Order 13272 (Proper Consideration of Small 
Entities in Agency Rulemaking)

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., 
as amended by the Small Business Regulatory Enforcement Fairness Act of 
1996, Public Law 104-121 (Mar. 29, 1996), requires Federal agencies 
engaged in rulemaking to consider the impact of their proposals on 
small entities, consider alternatives to minimize that impact, and 
solicit public comment on their analyses. The RFA requires the 
assessment of the impact of a regulation on a wide range of small 
entities, including small businesses, not-for-profit organizations, and 
small governmental jurisdictions. Agencies must perform a review to 
determine whether a proposed or final rule would have a significant 
economic impact on a substantial number of small entities. 5 U.S.C. 603 
and 604. The RFA permits an agency, in lieu of preparing such an 
analysis, to certify that the rulemaking is not expected to have a 
significant economic impact on a substantial number of small entities. 
5 U.S.C. 605.
    The Departments determined that the final rule will not have a 
significant economic impact on a substantial number of small entities 
because any impacted small entities are already receiving financial 
assistance under the WIOA program and likely would continue to do so. 
The Departments have certified this to the Chief Counsel for Advocacy, 
Small Business Administration, pursuant to the RFA. 5 U.S.C. 605.
1. Affected Small Entities
    The WIOA title I adult, dislocated worker, and youth program 
grantees, the WIOA title II State-level AEFLA grantees, Wagner-Peyser 
Act grantees (under the Wagner-Peyser Act as amended by WIOA title 
III), and VR program grantees (under the Rehabilitation Act as amended 
by WIOA title IV), are State government agencies and, therefore, are 
not considered small entities. However, the final rule could have a 
minimal impact on a variety of AEFLA local providers, some of which are 
small entities by U.S. Small Business Administration (SBA) size 
standards: \52\ (1) local educational agencies (NAICS 611710; $24.0 
million); (2) community-based organizations (NAICS 813410; $9.5 
million); (3) faith-based organizations (NAICS 813110; $13.0 million); 
(4) libraries (NAICS 519210; $21.0 million); (5) community, junior 
(NAICS 611210; $32.5 million), and technical colleges (NAICS 611519; 
$21.0 million); (6) 4-year colleges and universities (NAICS 611310; 
$34.5

[[Page 13846]]

million); (7) correctional institutions (NAICS 922410; NA \53\); (8) 
other institutions, such as medical and special institutions not 
designed for justice-involved individuals (NAICS 623210; $19.0 
million); and (9) other public or private nonprofit agencies or 
institutions (NAICS 813319; $18.0 million).
---------------------------------------------------------------------------

    \52\ SBA, ``Table of size standards,'' effective March 17, 2023, 
https://www.sba.gov/document/support-table-size-standards (last 
visited September 13, 2023). Dollar values provided in parentheses 
are the SBA average annual receipts small entity threshold (2022 
dollars) for the relevant NAICS code.
    \53\ There is no SBA size standard for this NAICS code.
---------------------------------------------------------------------------

    Comments: Some commenters stated that the proposed rule assumes the 
only small entities affected by the rule would be AEFLA local program 
operators. However, the commenters said, in Michigan, local program 
operators of title I adult, dislocated worker, and youth programs, 
title II AEFLA programs, and title III Wagner-Peyser Act programs all 
meet the definition of small entities.
    Departments' Response: This RFA section includes a discussion of 
the multiple types of small entities that may be affected by the rule, 
including local educational agencies (NAICS 611710), community-based 
organizations (NAICS 813410), public or private non-profit agencies or 
institutions (NAICS 813319), and additional local AEFLA provider 
classifications discussed in the RFA that might be implicated. The only 
cost of the final rule to these entities is $73.67 for rule 
familiarization, which would pose a de minimis cost for even the 
smallest entity.
2. Impact on Small Entities
    The final rule definition of the effectiveness in serving employers 
performance indicator will have a minimal impact on AEFLA local 
providers. Each local AEFLA provider is expected to incur a $78.06 cost 
to review the rule. The $78.06 cost to review the rule is a de minimis 
burden on the entities incurring the cost, including the smallest 
entities subject to the rule. For example, the smallest category of 
community-based organization (NAICS 813410--civic and social 
organizations) has annual revenue of $58,521 in 2022 dollars.\54\ They 
would therefore spend only 0.13 percent of their annual revenue on this 
cost. Amongst the smallest category of libraries (NAICS 519120--
libraries and archives) this cost would also be 0.13 percent of the 
average entity's annual revenue of $58,581 in 2022 dollars.\55\
---------------------------------------------------------------------------

    \54\ The smallest category are entities with less than $100,000 
in annual revenue. Revenue data from U.S. Census Bureau ``Statistics 
of U.S. Businesses,'' http://www.census.gov/programs-surveys/susb/data.html (last updated May 10, 2022).
    \55\ Ibid.
---------------------------------------------------------------------------

    Local AEFLA providers are not estimated to incur any new costs, 
beyond the cost to review the rule, to report Retention with the Same 
Employer. Some local AEFLA providers may incur net cost savings if they 
currently report Employer Penetration or Repeat Business Customer. 
Local AEFLA providers that currently report Employer Penetration will 
incur cost savings of $312 and local AEFLA providers that currently 
report Repeat Business Customer will incur cost savings of $468. 
Therefore, some local AEFLA providers would have net cost savings of 
between $233.94 (= $312-$78.06) and $389.94 (= $468-$78.06) depending 
on the measure they currently report. For these local AEFLA providers 
the net cost savings would still be less than 1% of revenue (0.40% and 
0.67% respectively for the smallest categories of entities in NAICS 
813410 and NAICS 519120).\56\ Federal transfer payments to States would 
fully finance the minor WIOA program cost burdens on grantees that 
would result from the final rule. Therefore, the Departments hereby 
certify that the final rule will not have a significant economic impact 
on a substantial number of small entities.
---------------------------------------------------------------------------

    \56\ For NAICS 813410 average revenue is $58,521 for entities 
with less than $100,000 in revenue and for NAICS 519120 average 
revenue is $58,581 for entities with less than $100,000 in revenue. 
0.4% and 0.67% is based on either net savings of $233.94 or $389.94 
(0.40 = 233.94 / 58,521; 0.67 = 389.94 / 58,521).
---------------------------------------------------------------------------

C. Paperwork Reduction Act of 1995

    The purposes of the Paperwork Reduction Act of 1995 (PRA), 44 
U.S.C. 3501 et seq., include minimizing the paperwork burden on 
affected entities. The PRA requires certain actions before an agency 
can adopt or revise a collection of information, including publishing 
for public comment a summary of the collection of information and a 
brief description of the need for and proposed use of the information.
    As part of their continuing efforts to reduce paperwork and 
respondent burden, the Departments conduct a preclearance consultation 
program to provide the general public and Federal agencies with an 
opportunity to comment on proposed and continuing collections of 
information in accordance with the PRA. See 44 U.S.C. 3506(c)(2)(A). 
This activity helps to ensure that (1) the public understands the 
Departments' collection instructions; (2) respondents can provide the 
requested data in the desired format; (3) reporting burden (time and 
financial resources) is minimized; (4) collection instruments are 
clearly understood; and (5) the Departments can properly assess the 
impact of collection requirements on respondents. Furthermore, the PRA 
requires all Federal agencies to analyze proposed regulations for 
potential time burdens on the regulated community created by provisions 
in the proposed regulations that require any party to obtain, maintain, 
retain, report, or disclose information. The information collection 
requirements also must be submitted to OMB for approval.
    A Federal agency may not conduct or sponsor a collection of 
information unless it is approved by OMB under the PRA and displays a 
currently valid OMB control number. The public also is not required to 
respond to a collection of information unless it displays a currently 
valid OMB control number. In addition, notwithstanding any other 
provisions of law, no person will be subject to penalty for failing to 
comply with a collection of information if the collection of 
information does not display a currently valid OMB control number. See 
44 U.S.C. 3512.
    The final rule revises ETA 9169, WIOA Statewide and Local 
Performance Report Template approved under OMB Control Number 1205-
0526. The revision requires ``Retention with the Same Employer'' as the 
only definition of the effectiveness in serving employers performance 
indicator in the WIOA Common Performance Reporting ICR by an entity 
that reports to the Departments on behalf of the State. Data elements 
for the collection and calculation for the two other piloted 
definitions of the effectiveness in serving employers performance 
indicator--Repeat Business Customer and Employer Penetration--are 
removed from the ICR, along with the corresponding breakouts of the 
employer services that comprise them. No other changes were proposed 
for this ICR in the Joint WIOA Effectiveness in Serving Employers NPRM. 
In accordance with the PRA, the Departments submitted the associated 
ICR to OMB in concert with the publishing of the proposed rule, and 
provided the public with a 60-day opportunity to submit comments on the 
ICR, either directly to the Departments or to OMB, which began with the 
submission of the ICR to OMB. The Departments and OMB received no 
comments on the proposed changes.
    Agency: DOL-ETA.
    Title of Collection: Workforce Innovation and Opportunity Act 
(WIOA) Common Performance Reporting.
    Type of Review: Revision of an approved ICR.
    OMB Control Number: 1205-0526.

[[Page 13847]]

    Description: The final rule requires Retention with the Same 
Employer as the only definition of the effectiveness in serving 
employers performance indicator in ETA 9169, WIOA Statewide and Local 
Performance Report Template by an entity that reports to the 
Departments on behalf of the State. Data elements for the collection 
and calculation for the two other piloted definitions of the 
effectiveness in serving employers performance indicator--Repeat 
Business Customer and Employer Penetration--are to be removed from the 
ICR, along with the corresponding breakouts of the employer services 
that comprise them. This package is unchanged except to remove the data 
elements discussed above. The final rule makes no other changes to this 
ICR.
    Affected Public: State Governments.
    Obligation to Respond: Required to Obtain or Retain Benefits.
    Frequency: Annually.
    Estimated Total Annual Respondents: 19,114,129.
    Estimated Total Annual Responses: 38,216,054.
    Estimated Total Annual Burden Hours: 9,863,057.
    Estimated Total Annual Other Burden Costs: $34,594,532.
    Authority for the Information Collection: 20 CFR 677.155(a)(1)(vi), 
and 34 CFR 361.155(a)(1)(vi) and 463.155(a)(1)(vi).

D. Executive Order 13132 (Federalism)

    E.O. 13132 aims to guarantee the division of governmental 
responsibilities between the Federal Government and the States and to 
further the policies of the Unfunded Mandates Reform Act of 1995 
(UMRA). Accordingly, E.O. 13132 requires executive departments and 
agencies to ensure that the principles of federalism guide them in the 
formulation and implementation of policies. Further, agencies must 
adhere to constitutional principles, examine the constitutional and 
statutory authority supporting a regulation that would limit the 
policymaking discretion of the States, and assess the need for such a 
regulation. To the extent practicable, agencies must consult State and 
local officials before implementing any such regulation.
    E.O. 13132 further provides that agencies must implement a 
regulation that limits the policymaking discretion of the States only 
where there is constitutional and statutory authority for the 
regulation, and it addresses a problem of national significance. For a 
regulation administered by the States, the Federal Government must 
grant the States the maximum administrative discretion possible to 
avoid intrusive Federal oversight of State administration, and agencies 
must adhere to special requirements for a regulation that pre-empts 
State law. E.O. 13132 also sets forth the procedures agencies must 
follow for certain regulations with federalism implications, such as 
preparation of a summary impact statement.
    Accordingly, the Departments reviewed this WIOA-required final rule 
for federalism implications and have concluded that none exist in this 
rulemaking. This joint final rule does not contain any substantial 
direct effects on States, on the relationships between the States, or 
on the distribution of power and responsibilities among the various 
levels of government as described by E.O. 13132. Therefore, the 
Departments concluded that this final rule does not have a sufficient 
federalism implication to warrant the preparation of a summary impact 
statement.

E. Unfunded Mandates Reform Act of 1995

    UMRA directs agencies to assess the effects of Federal regulatory 
actions on State, local, and Tribal governments, and the private 
sector. A Federal mandate is any provision in a regulation that imposes 
an enforceable duty upon State, local, or Tribal governments, or 
imposes a duty upon the private sector.
    Following the consideration of the above factors, the Departments 
concluded this joint final rule contains no unfunded Federal mandates, 
as defined in 2 U.S.C. 658(6) to include either a ``Federal 
intergovernmental mandate'' or a ``Federal private sector mandate.'' 
Reporting Retention with the Same Employer as the effectiveness in 
serving employers performance indicator as proposed does not place any 
additional burdens on State, local, and Tribal governments because the 
WIOA core programs already collect and report the necessary 
information. Furthermore, Federal program funding triggers the 
reporting requirement; therefore, the Departments provide funding for 
any associated reporting mandate. Private training entities participate 
as a provider under a WIOA core program on a purely voluntary basis, 
and voluntarily assume the information collection.

F. Executive Order 13175 (Indian Tribal Governments)

    The Departments reviewed this final rule under the terms of E.O. 
13175 and DOL's Tribal Consultation Policy and have determined that it 
would have Tribal implications, because the proposed regulations would 
have substantial direct effects on: one or more Indian Tribes; the 
relationship between the Federal Government and Indian Tribes; or the 
distribution of power and responsibilities between the Federal 
Government and Indian Tribes. Therefore, DOL has prepared a Tribal 
summary impact statement. Because the Tribal implications of this final 
rule relate only to DOL Indian and Native American (INA) program 
grantees, DOL has printed the requisite Tribal summary impact statement 
in the DOL-specific effectiveness in serving employers final rule 
published elsewhere in this issue of the Federal Register, which 
proposes related changes for effectiveness in serving employers to 
DOL's INA program regulations.

List of Subjects

20 CFR Part 677

    Employment, Grant programs--labor.

34 CFR Part 361

    Administrative practice and procedure, Grant programs--education, 
Grant programs--social programs, Reporting and recordkeeping 
requirements, Vocational rehabilitation.

34 CFR Part 463

    Adult education, Grant programs--education.

    For the reasons discussed in the preamble, the Employment and 
Training Administration amends 20 CFR part 677 as follows:

PART 677--PERFORMANCE ACCOUNTABILITY UNDER TITLE I OF THE WORKFORCE 
INNOVATION AND OPPORTUNITY ACT

0
1. The authority citation for part 677 continues to read as follows:

    Authority: Secs. 116, 189, and 503 of Pub. L. 113-128, 128 Stat. 
1425 (Jul. 22, 2014).

Subpart A--State Indicators of Performance for Core Programs

0
2. Amend Sec.  677.155 by revising paragraphs (a)(1)(vi) and (c)(6) to 
read as follows:


Sec.  677.155  What are the primary indicators of performance under the 
Workforce Innovation and Opportunity Act?

    (a) * * *
    (1) * * *
    (vi) The percentage of participants in unsubsidized employment 
during the second quarter after exit from the program who were employed 
by the same employer in the second and fourth

[[Page 13848]]

quarters after exit. For the six core programs, this indicator is a 
statewide indicator reported by one core program on behalf of all six 
core programs in the State, as described in guidance.
* * * * *
    (c) * * *
    (6) The percentage of participants in unsubsidized employment 
during the second quarter after exit from the program who were employed 
by the same employer in the second and fourth quarters after exit. For 
the six core programs, this indicator is a statewide indicator reported 
by one core program on behalf of all six core programs in the State, as 
described in guidance.

Subpart B--Sanctions for State Performance and the Provision of 
Technical Assistance

0
3. Amend Sec.  677.190 by revising paragraph (c) to read as follows:


Sec.  677.190  When are sanctions applied for failure to achieve 
adjusted levels of performance?

* * * * *
    (c) Whether a State has failed to meet adjusted levels of 
performance will be determined using the following criteria:
    (1) The overall State program score, which is expressed as the 
percent achieved, compares the actual results achieved by a core 
program on the primary indicators of performance, except for the 
effectiveness in serving employers indicator described in Sec.  
677.155(a)(1)(vi), to the adjusted levels of performance for that core 
program. The average of the percentages achieved of the adjusted level 
of performance for each of the primary indicators, except for the 
effectiveness in serving employers indicator described in Sec.  
677.155(a)(1)(vi), by a core program will constitute the overall State 
program score.
    (2) However, until all indicators for the core program have at 
least 2 years of complete data, the overall State program score will be 
based on a comparison of the actual results achieved to the adjusted 
level of performance for each of the primary indicators that have at 
least 2 years of complete data for that program.
    (3) The overall State indicator score, which is expressed as the 
percent achieved, compares the actual results achieved on a primary 
indicator of performance by all core programs in a State to the 
adjusted levels of performance for that primary indicator.
    (i) The average of the percentages achieved of the adjusted level 
of performance by all of the core programs on that indicator will 
constitute the overall State indicator score, except for the 
effectiveness in serving employers indicator described in Sec.  
677.155(a)(1)(vi).
    (ii) The overall State indicator score for effectiveness in serving 
employers, as reported by one core program on behalf of all six core 
programs in the State, as described in guidance, is a statewide 
indicator that reflects the performance for all core programs. It is 
calculated as the statewide percentage achieved of the statewide 
adjusted level of performance.
    (4) However, until all indicators for the State have at least 2 
years of complete data, the overall State indicator score will be based 
on a comparison of the actual results achieved to the adjusted level of 
performance for each of the primary indicators that have at least 2 
years of complete data in a State.
    (5) The individual indicator score, which is expressed as the 
percent achieved, compares the actual results achieved by each core 
program on each of the individual primary indicators to the adjusted 
levels of performance for each of the program's primary indicators of 
performance, except for the effectiveness in serving employers 
indicator described in Sec.  677.155(a)(1)(vi).
* * * * *
    For the reasons stated in the preamble, the Department of Education 
amends 34 CFR parts 361 and 463 as follows:

PART 361--STATE VOCATIONAL REHABILITATION SERVICES PROGRAM

Subpart E--Performance Accountability Under Title I of the 
Workforce Innovation and Opportunity Act

0
4. The authority citation for part 361, subpart E continues to read as 
follows:

    Authority:  Secs. 116, 189, and 503 of Pub. L. 113-128, 128 
Stat. 1425 (Jul. 22, 2014).

0
5. Amend Sec.  361.155 by revising paragraphs (a)(1)(vi) and (c)(6) to 
read as follows:


Sec.  361.155  What are the primary indicators of performance under the 
Workforce Innovation and Opportunity Act?

    (a) * * *
    (1) * * *
    (vi) The percentage of participants in unsubsidized employment 
during the second quarter after exit from the program who were employed 
by the same employer in the second and fourth quarters after exit. For 
the six core programs, this indicator is a statewide indicator reported 
by one core program on behalf of all six core programs in the State, as 
described in guidance.
* * * * *
    (c) * * *
    (6) The percentage of participants in unsubsidized employment 
during the second quarter after exit from the program who were employed 
by the same employer in the second and fourth quarters after exit. For 
the six core programs, this indicator is a statewide indicator reported 
by one core program on behalf of all six core programs in the State, as 
described in guidance.

0
6. Amend Sec.  361.190 by revising paragraph (c) to read as follows:


Sec.  361.190  When are sanctions applied for failure to achieve 
adjusted levels of performance?

* * * * *
    (c) Whether a State has failed to meet adjusted levels of 
performance will be determined using the following criteria:
    (1) The overall State program score, which is expressed as the 
percent achieved, compares the actual results achieved by a core 
program on the primary indicators of performance, except for the 
effectiveness in serving employers indicator described in Sec.  
361.155(a)(1)(vi), to the adjusted levels of performance for that core 
program. The average of the percentages achieved of the adjusted level 
of performance for each of the primary indicators, except for the 
effectiveness in serving employers indicator described in Sec.  
361.155(a)(1)(vi), by a core program will constitute the overall State 
program score.
    (2) However, until all indicators for the core program have at 
least 2 years of complete data, the overall State program score will be 
based on a comparison of the actual results achieved to the adjusted 
level of performance for each of the primary indicators that have at 
least 2 years of complete data for that program.
    (3) The overall State indicator score, which is expressed as the 
percent achieved, compares the actual results achieved on a primary 
indicator of performance by all core programs in a State to the 
adjusted levels of performance for that primary indicator.
    (i) The average of the percentages achieved of the adjusted level 
of performance by all of the core programs on that indicator will 
constitute the overall State indicator score, except for the 
effectiveness in serving employers indicator described in Sec.  
361.155(a)(1)(vi).
    (ii) The overall State indicator score for effectiveness in serving 
employers, as reported by one core program on

[[Page 13849]]

behalf of all six core programs in the State, as described in guidance, 
is a statewide indicator that reflects the performance for all core 
programs. It is calculated as the statewide percentage achieved of the 
statewide adjusted level of performance.
    (4) However, until all indicators for the State have at least 2 
years of complete data, the overall State indicator score will be based 
on a comparison of the actual results achieved to the adjusted level of 
performance for each of the primary indicators that have at least 2 
years of complete data in a State.
    (5) The individual indicator score, which is expressed as the 
percent achieved, compares the actual results achieved by each core 
program on each of the individual primary indicators to the adjusted 
levels of performance for each of the program's primary indicators of 
performance, except for the effectiveness in serving employers 
indicator described in Sec.  361.155(a)(1)(vi).
* * * * *

PART 463--ADULT EDUCATION AND FAMILY LITERACY ACT

Subpart I--Performance Accountability Under Title I of the 
Workforce Innovation and Opportunity Act

0
7. The authority citation for part 463, subpart I continues to read as 
follows:

    Authority:  Secs. 116, 189, and 503 of Pub. L. 113-128, 128 
Stat. 1425 (Jul. 22, 2014).

0
8. Amend Sec.  463.155 by revising paragraphs (a)(1)(vi) and (c)(6) to 
read as follows:


Sec.  463.155  What are the primary indicators of performance under the 
Workforce Innovation and Opportunity Act?

    (a) * * *
    (1) * * *
    (vi) The percentage of participants in unsubsidized employment 
during the second quarter after exit from the program who were employed 
by the same employer in the second and fourth quarters after exit. For 
the six core programs, this indicator is a statewide indicator reported 
by one core program on behalf of all six core programs in the State, as 
described in guidance.
* * * * *
    (c) * * *
    (6) The percentage of participants in unsubsidized employment 
during the second quarter after exit from the program who were employed 
by the same employer in the second and fourth quarters after exit. For 
the six core programs, this indicator is a statewide indicator reported 
by one core program on behalf of all six core programs in the State, as 
described in guidance.

0
9. Amend Sec.  463.190 by revising paragraph (c) to read as follows:


Sec.  463.190  When are sanctions applied for failure to achieve 
adjusted levels of performance?

* * * * *
    (c) Whether a State has failed to meet adjusted levels of 
performance will be determined using the following criteria:
    (1) The overall State program score, which is expressed as the 
percent achieved, compares the actual results achieved by a core 
program on the primary indicators of performance, except for the 
effectiveness in serving employers indicator described in Sec.  
463.155(a)(1)(vi), to the adjusted levels of performance for that core 
program. The average of the percentages achieved of the adjusted level 
of performance for each of the primary indicators, except for the 
effectiveness in serving employers indicator described in Sec.  
463.155(a)(1)(vi), by a core program will constitute the overall State 
program score.
    (2) However, until all indicators for the core program have at 
least 2 years of complete data, the overall State program score will be 
based on a comparison of the actual results achieved to the adjusted 
level of performance for each of the primary indicators that have at 
least 2 years of complete data for that program.
    (3) The overall State indicator score, which is expressed as the 
percent achieved, compares the actual results achieved on a primary 
indicator of performance by all core programs in a State to the 
adjusted levels of performance for that primary indicator.
    (i) The average of the percentages achieved of the adjusted level 
of performance by all of the core programs on that indicator will 
constitute the overall State indicator score, except for the 
effectiveness in serving employers indicator described in Sec.  
463.155(a)(1)(vi).
    (ii) The overall State indicator score for effectiveness in serving 
employers, as reported by one core program on behalf of all six core 
programs in the State, as described in guidance, is a statewide 
indicator that reflects the performance for all core programs. It is 
calculated as the statewide percentage achieved of the statewide 
adjusted level of performance.
    (4) However, until all indicators for the State have at least 2 
years of complete data, the overall State indicator score will be based 
on a comparison of the actual results achieved to the adjusted level of 
performance for each of the primary indicators that have at least 2 
years of complete data in a State.
    (5) The individual indicator score, which is expressed as the 
percent achieved, compares the actual results achieved by each core 
program on each of the individual primary indicators to the adjusted 
levels of performance for each of the program's primary indicators of 
performance, except for the effectiveness in serving employers 
indicator described in Sec.  463.155(a)(1)(vi).
* * * * *

Julie Su,
Acting Secretary of Labor.
Miguel A. Cardona,
Secretary of Education.
[FR Doc. 2024-03278 Filed 2-22-24; 8:45 am]
BILLING CODE 4510-FN-P; 4000-01-P