2690 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

DEPARTMENT OF LABOR

Employment and Training

Administration

20 CFR Part 645

RIN 1205–AB15

Welfare-to-Work (WtW) Grants

AGENCY: Employment and Training

Administration (ETA), DOL.

ACTION: Final Rule; Interim Final Rule,

Request for comments.

SUMMARY: The Department of Labor (the

Department) hereby issues a Final Rule

implementing the Welfare-to-Work

(WtW) grant provisions of Title IV, Part

A of the Social Security Act. This action

completes the rulemaking initiated by

the publication of the Interim Final Rule

(IFR1) on November 18, 1997. The Final

Rule revises the IFR1 to reflect public

comment, where appropriate. In

addition, many matters of concern

raised by commenters have been the

subject of legislative changes to the

WtW statute. Changes have been made

to reflect new statutory requirements for

these matters. Final Rule revisions to

IFR1 are discussed in detail in Section

II of this preamble.

In addition, the Department hereby

issues a new Interim Final Rule (IFR2)

implementing the Welfare-to-Work and

Child Support Amendments of 1999

(1999 Amendments) which Congress

passed on November 29, 1999 with the

Administration’s support. The 1999

Amendments, among other things,

significantly changed the eligibility

criteria for the Welfare-to-Work

program. In IFR2, we have made the

regulatory changes required by the 1999

Amendments. These changes are

discussed in Section III of this

preamble. The Department requests

public comment only on these new

provisions and changes.

So that all new changes to the WtW

regulations are contained in one place,

we are publishing the Final Rule and

IFR2 in one package.

DATES: Effective Dates: These

amendments will become effective on

February 12, 2001.

Comment Date: We invite comments

only on those changes that are the result

of the 1999 Amendments, contained in

IFR2. These changes are described in

Section III of this preamble. All

comments must be received by the

Department on or before March 12,

2001.

ADDRESSES: Written comments on the

changes to the regulations contained in

IFR2 (described in Section III of this

preamble) may be mailed or delivered to

the Division of Welfare-to-Work,

Employment and Training

Administration, 200 Constitution

Avenue, NW., Room N–4671,

Washington, DC 20210, Attention:

Dennis Lieberman. Comments may also

be submitted electronically by accessing

the WtW web address at http://

wtw.doleta.gov/amendcomments/

default.htm.

All comments will be made available

for public inspection and copying

during normal business hours at the

above address.

FOR FURTHER INFORMATION CONTACT: Mr.

Dennis Lieberman, Division of Welfareto-Work, U.S. Department of Labor, 200

Constitution Avenue, NW., Room N–

4671, Washington, DC 20210.

Telephone: (202) 693–3910 (voice) (this

is not a toll-free number) or 1–800–326–

2577 (TDD).

SUPPLEMENTARY INFORMATION: This

preamble is divided into four sections.

Section I provides general background

information. Section II discusses the

Final Rule promulgated in response to

comments received on the November

18, 1997, IFR1. Section III discusses the

new IFR2, implementing changes to the

WtW statute made by the 1999

Amendments. Section IV discusses

miscellaneous administrative

requirements, e.g., Paperwork Reduction

Act requirements.

In addition to the changes made based

upon the comments received, in order to

clarify policy and interpretation, we

have also made technical changes to

correct typographical errors, such as

consistent capitalization, abbreviations,

grammatical corrections and citations,

consistency with the regulations

implementing the nondiscrimination

and equal opportunity provisions of

WIA section 188, which was first

published in the Federal Register on

November 12, 1999 (64 FR 61692

through 61738, 29 CFR part 37). When

publishing a final rule following

comment period, it is customary to

publish only changes made to the rule,

however, in order to be more userfriendly, we are publishing the entire

Rule, including the changes made by

IFR2 as well as those parts that have not

been changed from IFR1. This means

that one document which contains all of

the regulations may be consulted rather

than needing to compare various

documents.

I. Background

Final Rule

On November 18, 1997, the

Employment and Training

Administration (ETA) published IFR1 in

the Federal Register to establish the

administrative framework for the

Department’s Welfare-to-Work (WtW)

program. IFR1 also provided an

opportunity for public comment.

Comments were received from 88

entities. The commenters included: 25

State government agencies, 6 city and/

or local government agencies, 3 Federal

agencies, 10 Private Industry Councils

(PICs), 14 local service providers, 4

private companies, 2 labor unions, 1

university and 16 non-profit

associations. Of the 16 non-profit

associations, 3 are national, bipartisan

associations representing State

legislatures, governors, or county

agencies, 7 are legal-aid associations,

and 2 are research institutions.

Responses also came from 7 other

sources, including private citizens.

We have reviewed and fully

considered these comments in

developing the Final Rule. The issues

raised are addressed, where appropriate,

in the Summary and Explanation of this

Final Rule (Section II, below).

Provisions of the IFR1 that neither

elicited comments nor were affected by

subsequent legislative action are not

addressed in the discussion the Final

Rule. Those provisions are addressed in

the Summary and Explanation of IFR1,

published at 62 FR 61589–61602 (Nov.

18, 1997).

Interim Final Rule (IFR2)

The Clinton-Gore Administration

worked closely with Congress to enact

the 1999 Amendments that make several

significant changes to the WtW grant

programs. These significant changes

include changes in the eligibility

requirements for both long-term welfare

recipients and non-custodial parents of

low-income children, an addition to the

list of allowable activities that may be

conducted under WtW, and the

streamlining of WtW reporting

requirements. The 1999 Amendments

took effect on January 1, 2000, for

competitive grantees and on July 1,

2000, for formula grantees, although

with certain restrictions on outlays of

Federal WtW funds until October 1,

2000. For Indian and Native American

WtW grantees, the 1999 Amendments

were effective on the day of enactment,

November 29, 1999.

To allow for public comment, we are

issuing the regulatory provisions

promulgated as a direct result of the

1999 Amendments as a new Interim

Final Rule. The new provisions open for

comment under the IFR2 are discussed

below in Section III of this preamble.

Note: As this document went to press, the

DOL/HHS/Education Appropriations bill for

FY 2001 was enacted, containing provisions

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2691

to extend by two years the period in which

WtW grant funds may be spent and to delete

the authority for the $50 million for

performance bonuses. We have retained the

performance bonus criteria in this Rule in the

event of future funding for this purpose, but

no bonus grants will be made in FY 2001.

II. Summary and Explanation—Final

Rule

This section contains a discussion of

the comments we received during the

comment period established in the

November 18, 1997, IFR1. The headings

in this section are the same as they

appeared in the IFR1 for ease of

reference. Many of the comments on

IFR1 addressed areas which were

changed by intervening technical

amendments to the WtW statute. For

example, on November 13, 1997, shortly

before the publication of the IFR1,

Congress extended, to three years, the

time period for the expenditure of WtW

matching funds (originally discussed in

§ 645.320) (Pub. L. 105–78). Congress

also changed the time period for

obligating WtW funds after a grant

award (originally discussed in

§ 645.320) from one to three years, and

made this change retroactive to the date

of passage of the Balanced Budget Act

of 1997 (Pub. L. 105–33), i.e., August 5,

1997. The main concerns commenters

raised about the eligibility criteria for

noncustodial parents in § 645.212 were

initially resolved through a technical

amendment included in the Child

Support Performance and Incentive Act

of 1998 (Pub. L. 105–200) and later

superseded by the 1999 Amendments

discussed in Section III of this

preamble. President Clinton’s FY 2001

budget has proposed providing grantees

an additional two years to spend

existing resources.

The Transportation Equity Act for the

21st century (TEA–21) (Pub. L. 105–178)

allows the Federal WtW funds to be

used as matching funds for the

Department of Transportation’s ‘‘Job

Access and Reverse Commute’’ program.

Under Pub. L. 105–277 (Omnibus

Consolidated and Emergency

Supplemental Appropriations Act,

1999), Congress made changes to the

WtW program to reflect the transition

from the Job Training Partnership Act

(JTPA) (Pub. L. 97–300, as amended, 29

U.S.C. 1501, et seq.) to the Workforce

Investment Act of 1998 (WIA) (Pub. L.

105–220, 29 U.S.C. 2801, et seq.). These

changes are reflected in new or revised

definitions under § 645.120 regarding

the particular circumstances of the

different service areas.

Summary of Changes in the Final Rule

Some commenters suggested that we

provide more specific direction,

especially about identifying allowable

program activities and allowable items

for State matching funds. Other

commenters recommended that we

clarify and expand the workforce

protections available to the participants

in the program. Those recommendations

received careful consideration and

revisions were made, where

appropriate, as discussed in the

Summary and Explanation (Section II,

below).

Many commenters recommended

changes in the IFR1 provisions, such as

those establishing eligibility and the

‘‘work first’’ approach, that could not be

accommodated because the suggested

changes would be inconsistent with the

underlying statute. Congressional action

would be required to accommodate

these comments.

The WtW program will operate during

the period in which the Workforce

Investment Act supersedes the Job

Training Partnership Act. WIA requires

significant changes in the workforce

development system at the State and

local levels. The WtW program is a

required partner in the One-Stop

system, which is the basic service

delivery system for the new workforce

investment system. This system is

intended to provide services to all

individuals seeking assistance,

including welfare recipients. The

participation of the WtW program in the

One-Stop system will entail cooperative

relationships with other agency partners

through memoranda of understanding

(MOU). Although WtW is separately

funded, One-Stop centers will operate

so that individuals receive a seamless

array of services. A final rule

implementing WIA was published in

the Federal Register on August 11, 2000

(20 CFR parts 652, 660–671). The WtW

Final Rule adds guidance at §§ 645.220

and 645.430 about the relationship

between WtW and the One-Stop

delivery system under WIA in response

to comments on how the two programs

will interact. Also, the WtW IFR1

definition of ‘‘administrative costs’’ has

been revised so that it more closely

parallels the concept of functionality in

the definition of this term at 20 CFR

667.220 of the WIA regulations.

Also, this Final Rule acknowledges

the definitions contained in the new

Temporary Assistance for Needy

Families (TANF) regulations published

in the Federal Register on April 12,

1999 (45 CFR part 260, et seq.).

Specifically, the TANF regulations

define ‘‘cash assistance’’ at 45 CFR

260.30, and explain the terms

‘‘assistance’’ and ‘‘WtW cash assistance’’

at 45 CFR 260.31 and 260.32,

respectively. Many comments on the

WtW IFR1 related to the subject of

‘‘assistance’’ due to its effect on the

TANF five-year time limit and WtW

eligibility. We formulated a definition of

‘‘TANF assistance’’ for use in WtW

eligibility determination guided by the

Department of Health and Human

Services’ (DHHS) new TANF regulations

and we refer to that rule in our response

to comments. This change is discussed

in more detail below.

Finally, we note that the 1999

Amendments have superseded, in some

cases, changes we might have made

strictly in response to the comments.

The 1999 Amendments have made

significant changes which simplify the

WtW eligibility criteria, for example,

which require new provisions, those are

established in the IFR2. Section III of

this preamble discusses the new

regulatory provisions which are open to

public comment as a result of the 1999

Amendments.

Responses to Specific Comments on

IFR1

Subpart A—Scope and Purpose

What Definitions Apply to this Part?

(§ 645.120)

Section 645.120 sets forth definitions

applicable to the Welfare-to-Work

program. The phrase ‘‘political

subdivisions of a State,’’ identified in

§ 645.500 as eligible applicants for

competitive grants, was not defined.

One commenter notes that the varied

terms for ‘‘political subdivision’’ used in

the Solicitation for Grant Applications

(SGA) for competitive grants, such as

‘‘political subdivision of a State,’’ and

‘‘unit of general purpose local

government,’’ are confusing, and

suggested that we define this phrase.

Response: We agree that the terms

used to describe eligible applicants for

competitive grants should be

consistently defined in the SGA and the

regulations, and have included a

definition for the phrase ‘‘political

subdivision’’ in the Final Rule. Under

this new provision, ‘‘political

subdivision’’ means a unit of general

purpose local government, as provided

for in State laws and/or Constitution,

which has the power to levy taxes and

spend funds and which also has general

corporate and police powers. This

definition is consistent with the

definition in the SGA for Welfare-toWork Competitive Grants published in

the Federal Register on January 26,

1999.

2692 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

For similar reasons, the definition of

‘‘private entity’’ which appeared in the

January 26, 1999, SGA has been added

to § 645.120 in the Final Rule, so that

the meaning of the term is clearly

expressed. ‘‘Private entity’’ means any

organization, public or private, which is

not a Local Board, PIC or alternate

administering agency or a political

subdivision of a State.

Another commenter suggested that

the Department amend language used

throughout the IFR1 to include ‘‘or

alternate administering agency’’ after

each reference to a (PIC). The

commenter was concerned that readers

would believe that only PICs serve as

WtW administering agencies. As noted

in § 645.210 of the IFR1, an alternate

administering agency is one designated

by the Governor and approved by the

Secretary under § 645.400 of this part.

Response: For the sake of clarity, we

have made the suggested change, but

have generally replaced the term ‘‘PIC’’

with the WIA term ‘‘local board’’ in this

phrase. Under WIA (Pub. L. 105–220)

(20 CFR, Part 652, et al.) passed in

August, 1998, local workforce

investment boards (local boards) have

replaced PIC’s in most places, and the

JTPA service delivery areas used by the

WtW program may undergo change as

WIA is implemented and local

workforce investment areas are

designated in their place. Also, Pub. L.

105–277 (Omnibus Consolidated and

Emergency Supplemental

Appropriations Act, 1999) amended the

Social Security Act (SSA) to revise the

WtW definitions of PIC (section

403(5)(D)(ii)), Service Delivery Area

(section 403(5)(D)(iii)), and Chief

Elected Official (section

403(5)(A)(vii)(I)). Therefore, in light of

the legislative changes and the comment

discussed above, the corresponding

IFR1 definitions have been revised so

that they refer to both the JTPA and

WIA terminology in order to bridge the

transition from JTPA to WIA. In this

preamble, however, we generally use

the term ‘‘local board’’ to refer to these

entities.

Definition of TANF Assistance. The

WtW program exists within the larger

framework of the TANF program

administered by DHHS which provides

benefits in the form of cash or other

assistance to eligible families and

individuals, as well as a range of

benefits and services consistent with the

goals of the TANF law. In the preamble

of IFR1, we stated that we would follow

the lead of DHHS in defining certain

terms, including ‘‘assistance.’’ What

constitutes ‘‘assistance’’ is a major

consideration both in applying the

Federal 60-month time limit on receipt

of TANF benefits and in determining

eligibility for WtW. Therefore, we

received numerous comments seeking

clarification, particularly with regard to

what constituted ‘‘WtW cash

assistance.’’

One commenter stated that the

definition proposed by DHHS showed

intent to include wage subsidies in the

definition of assistance, including

payments to employers to help cover the

costs of employment or on-the-job

training. The commenter disagreed with

this approach and requested that such

subsidies not be treated as assistance.

Rather, the commenter suggested, they

should be viewed as tax incentives

which would not be considered

assistance even if funded with TANF

funds. Since DHHS defines assistance as

benefits or services that would be

considered welfare, the commenter

suggested that activities under TANF

that help pay for jobs that pay wages

and confer employee status should be

considered non-assistance, as should

wage-paying publicly funded jobs

created for recipients.

Another comment stated that

Congress distinguished between cash

and non-cash assistance when it

established the WtW program and that

cash assistance, not non-cash assistance,

should count against the five-year TANF

limit. Further, the comment indicated

that it is unclear whether child care

would be considered cash assistance

and thus count against the time limit. It

suggested that the Final Rule provide

clearly that child care is non-cash

assistance, citing the precedent of the

Food Stamp Program. This would

enable WtW participants to receive

child care through WtW without

exhausting their TANF eligibility.

Response: The DHHS has issued

definitions for ‘‘assistance’’ and ‘‘WtW

cash assistance’’ for use in the TANF

program, at 45 CFR 260.31 and 260.32,

respectively, published in the Federal

Register on April 12, 1999 (64 FR

17720). In 45 CFR 260.31, the DHHS

defines the term ‘‘assistance’’ to

generally mean cash payments,

vouchers, and other forms of benefits to

meet a family’s basic needs for food,

clothing, shelter, etc. Exclusions from

‘‘assistance’’ include non-recurrent

short-term benefits, wage subsidies to

employers, supportive services for

families who are employed, services

such as counseling, case management,

child care, and other job retention and

employment-related services that do not

provide basic income support. However,

supportive services such as

transportation and child care are

included for families who are not

employed. (See TANF Final Rule for full

text).

The term ‘‘WtW cash assistance,’’ as

defined in 45 CFR 260.32, includes the

benefits defined as assistance in 45 CFR

260.31 that are directed at basic needs.

Such benefits are included when they

are provided in the form of cash

payments, checks, reimbursements,

electronic fund transfers, or any other

form that can legally be converted to

currency. The TANF Final Rule became

effective on October 1, 1999. The TANF

definitions are promulgated by DHHS;

we cannot change them for purposes of

TANF.

However, we have determined that a

definition of what it means to receive

‘‘TANF assistance’’ for the purposes of

determining eligibility for the WtW

program, as distinct from the definition

as it relates to TANF time limits, work

participation and other requirements, is

necessary in order to respond to the

comments and concerns about the

potential negative impact the final

DHHS definition could pose for certain

individuals in the WtW target groups.

The DHHS definition of ‘‘assistance’’

and ‘‘Welfare-to-Work cash assistance’’

in the TANF Final Rule would preclude

from participation in WtW persons who

are receiving services such as

counseling and case management and/or

employment-related services such as job

retention, that do not provide basic

income support. Although the definition

of ‘‘WtW cash assistance’’ in the TANF

final regulations still stands for the

purpose if the TANF time clock, for the

purposes of determining if a person is

receiving TANF assistance as a

condition of WtW eligibility, we

consider the phrase ‘‘TANF assistance’’

to mean ‘‘any TANF benefits and

services for the financially needy

according to the appropriate income and

resource criteria (if applicable) specified

in the State TANF plan.’’

The funding sources for the TANF

benefits and services an individual

receives may be either Federal TANF

funds or State Maintenance of Effort

(MOE) funds expended in the TANF

program.

As this phrase is applicable to WtW

for narrow eligibility purposes only, we

have not added it to the definition

section of this rule at § 645.120. Rather,

it is incorporated into the Rule at

§ 645.212(d) and applies only to

eligibility determinations under

§§ 645.212(a)(1) and 645.213(a).

This provision should allow these

otherwise eligible individuals to

participate in WtW and alleviate some

of the main concerns commenters had

about how ‘‘assistance’’ is defined.

Those who are served under WtW

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2693

because of the new provision at

§ 645.212(d) must be among the

financially needy as determined by the

State TANF plan. If there is no means

test for the benefits and services a

particular individual receives under

TANF, the individual will be

considered to be financially needy for

purposes of eligibility under this

provision at § 645.212(d). If there is a

means test, the individual must meet

the income and resource criteria

established by the State for the

particular benefits or services.

Subpart B—General Program and

Administrative Requirements

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

Provision? (§ 645.212)

The 70 percent eligibility criteria for

a ‘‘hard-to-employ’’ individual under

§ 645.212 of IFR1 tracked the underlying

statutory language then in place.

Paragraph 645.212(a) required that the

individual must be receiving TANF;

must face at least two of three specified

barriers to employment (has not

completed secondary school or obtained

a certificate of general equivalency;

requires substance abuse treatment for

employment; and/or has a poor work

history); and must be a long-term TANF

recipient (at least 30 months receipt of

TANF or must be within 12 months of

a Federal or State time limit on TANF

eligibility). Paragraphs 645.212(b) and

(c) set the criteria for serving noncustodial parents and individuals who

no longer receive TANF due to a Federal

or State time limit on eligibility. Also,

we have added a new paragraph (d) to

reflect that for purposes of WtW

eligibility, TANF assistance will mean,

‘‘any TANF benefits and services for the

financially needy according to the

appropriate income and resource

criteria (if applicable) specified in the

State TANF plan.’’ For a full discussion

of this meaning of assistance that is

applicable to WtW for eligibility

determination purposes, see ‘‘Definition

of Assistance’’ above in the discussion

of § 645.120.

The 1999 Amendments significantly

changed the eligibility criteria for

participants served under § 645.212 by

removing the barrier requirements, but,

as described in the discussion of

§ 645.211 in Section III of this preamble,

retained the requirement that at least 70

percent of a project’s funds be used to

serve participants meeting the criteria of

§ 645.212. Generally, at least 70 percent

of a project’s WtW funds must be spent

on long-term welfare recipients (without

a requirement that they face barriers to

employment) and noncustodial parents

meeting certain criteria. Our discussion

of these changes in Section III of the

preamble presents a complete analysis

of these changes and the resulting

changes to the regulatory eligibility

criteria in § 645.212. Many of the

comments on the hard-to-employ

criteria of IFR1, summarized below, are

no longer relevant because the 1999

Amendments eliminated the criteria

addressed by the comments, but we

have presented them to reflect the

concerns expressed by the interested

parties. Some of the comments on IFR1,

however, raise issues regarding the

length of receipt of TANF assistance,

which are still relevant to the revised

§ 645.212. In response to these, we have

made two other changes to § 645.212.

Under IFR1, among the eligibility

criteria under the 70 percent provision,

§ 645.212(a)(3)(ii) provided that an

individual must be within 12 months of

a Federal or State-imposed durational

time limit on eligibility. An individual

could meet this requirement if (s)he

would have been within 12 months of

such a durational time limit but was

exempted from the limit due to a

hardship exemption under section

408(a)(7)(C) of the Act. Section

645.212(c) provides that an individual

who otherwise meets the criteria of

§ 645.212 may be served if (s)he is no

longer receiving assistance due to a

Federal or State-imposed lifetime limit

on assistance.

We received several comments

regarding the use of the terms ‘‘Stateimposed durational time limit’’ and

‘‘State-imposed lifetime limit’’ in

§ 645.212. Commenters suggested that

we replace them with a phrase such as

‘‘State-imposed time limit’’ because not

all States impose durational time limits

or lifetime limits and many States have

instituted intermittent time limits

within the lifetime limit of five years. A

commenter noted that in one State an

individual’s lifetime of TANF assistance

could span a seven-year time frame, as

assistance could be provided for 36

months, break for two years and then

resume for an additional 24 months and

that, under these circumstances, an

individual would not be eligible for

WtW under § 645.212.

Response: We agree that our use of

these terms may have had unintended

consequences due to variation in the

way limits are applied throughout the

States. As the lifetime limit criterion is

still relevant under the 1999

Amendments, we have replaced

references to ‘‘State lifetime limits’’ with

the phrase ‘‘State-imposed time limits’’

in §§ 645.212 and 645.213.

A commenter suggested that we revise

§ 645.212 to provide that victims of

domestic violence, addressed by section

402(a)(7) of the Act, would be eligible

for WtW services even if exempt from

the durational limits on receipt of TANF

services.

Response: Section 402(a)(7) of the Act

provides that State TANF plans may

provide for waiver of certain

requirements, including time limits,

when compliance with the time limits

would make it more difficult for the

TANF recipient to escape from domestic

violence. We agree that where an

individual is within 12 months of the

State limit, but has received such a

waiver, it would make no sense to

deprive the person of WtW assistance

simply because the individual is exempt

from the State limit due to a domestic

violence waiver instead of a hardship

exemption. Accordingly, we have

revised § 645.212(a) to refer to section

402(a)(7) of the Act, to make it clear that

victims of domestic violence who have

received a waiver of the State-imposed

time limit, like individuals who are

exempted from the limit because they

have been battered or subjected to

extreme abuse, may be served under

WtW (other changes to § 645.212(a)

made by IFR2 are discussed in Section

III of this preamble).

Many of the other comments we

received on § 645.212 made valid

points, but the issues raised are no

longer relevant because of the

simplification of the eligibility criteria

under the 1999 Amendments. In

particular, the barriers to employment

provisions of sect; 645.212(a)(2)

generated significant comment. Under

the new eligibility criteria, long-term

welfare recipients who are served under

the 70 percent provisions are not

required to demonstrate that they face

these barriers. Below, we have briefly

summarized and discussed comments

on the 70 percent criteria in general and

the barriers to employment in

particular, but, because they are no

longer required as eligibility criteria, we

have not responded in great detail.

While most comments addressed the

specific barriers to employment, several

comments were more general in nature.

Comments suggested that we revise the

regulations to provide that an individual

would be eligible if the individual

satisfied any one of the three barriers

instead of at least two of the three

barriers. A commenter stated that

persons with disabilities should be

included among the hard-to-employ,

because many people with disabilities

are long-term welfare recipients. The

commenter suggested that we amend

645.212(a)(2) by adding a fourth barrier

to specifically cover persons with

disabilities that affect their ability to

2694 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

obtain/retain employment or by

expanding the definition of poor work

history to include poor work history due

to a disability.

Response: Prior to the 1999

Amendments we could not have made

these changes, although an individual

meeting the poor work history criterion

could be served regardless of the reason

for the poor work history. Thus, an

individual with a poor work history

caused by a disability could be eligible

if the other criteria were met. Under the

1999 Amendments, the barriers criterion

is eliminated. We expect that long term

welfare recipients with disabilities will

be served under the new eligibility

criteria. Moreover, our competitive grant

SGA’s and formula grant planning

instructions have encouraged State and

local operating entities to give priority

consideration to individuals with

disabilities

Education Level (§ 645.212(a)(2)(i)).

IFR1 provided that individuals who had

neither completed secondary school nor

obtained a certificate of general

equivalency and who had low skills in

reading or mathematics satisfied the

education level eligibility criterion of

§ 645.212(a)(2)(i). Several commenters

viewed this provision as overly

restrictive, and suggested we revise the

criterion so that it can be met by a

showing that a participant meets either

of the criteria. Commenters supported

this suggestion with the observation that

a high school diploma or equivalency

did not guarantee that an individual had

the requisite skills.

Other comments recommended that

the reading and mathematics skill level

not be defined at the 8.9 grade level or

below, but that operating entities be able

to set grade skill levels based upon local

labor market requirements, or that the

threshold be raised to a higher grade

level. Commenters recognized that the

8.9 grade level was consistent with

similar criteria in JTPA, but suggested

that WtW’s relationship with TANF

argued for flexibility to diverge from

JTPA.

Response: Based upon these

comments, we tend to agree that the

regulatory definition standards for the

educational ability criterion may have

been overly restrictive. In any event,

under the new criteria set forth in IFR2,

educational ability is no longer a

criterion for eligibility of long-term

welfare recipients.

Poor Work History

(§ 645.212(a)(2)(iii)). The IFR1, at

§ 645.212(a)(2)(iii), defined ‘‘poor work

history’’ generally as no more than 3

consecutive months worked in the past

12 calendar months. Commenters

opined that this definition was overly

restrictive and/or not an appropriate

indicator of a poor work history. Some

commenters provided anecdotes

regarding individuals who, having

worked part-time or through a program,

would be ineligible for WtW under this

definition, and proposed that States

should be permitted to adopt their own

definitions of poor work history.

Commenters identified other

perceived problems with the regulatory

definition of poor work history:

• Individuals who have had a series

of short spells of work covering three

consecutive months would be ineligible

despite demonstrating an inability to

keep a job;

• The definition did not establish a

required number of work hours in the

three-month period;

• The definition would exclude hardto-employ individuals who had only a

part-time summer job within the last 12

months as well as the working poor and

seasonal workers.

Other commenters recommended

revisions, some to conform with the

JTPA and some to follow the pre-TANF

Unemployed Parents regulations. Most

requested that the Department obtain a

more complete picture of an

individual’s work history by going back

further in time.

Several commenters asserted that the

three consecutive months criterion is

inconsistent with the requirement that

at least half of the payment to service

providers for job placement services

occur after a participant placed in a job

has worked for six months. To these

commenters, those provisions indicated

a Congressional determination that

holding a job for less than six months

was evidence of a poor work history.

Response: Like the educational ability

criterion, we tend to agree with

commenters that the regulatory

definition of ‘‘poor work history’’ may

have been overly restrictive. In any

event, under the new criteria set forth in

IFR2, poor work history is no longer a

criterion for eligibility of long-term

welfare recipients.

Length of Receipt of TANF Assistance

(§ 645.212(a)(3)). A commenter asked if

individuals who have been diverted

from receiving TANF as part of a State’s

diversion strategy are eligible for WtW.

Response: Individuals who might

otherwise be eligible for WtW services,

but who have been diverted (may have

received one-time only financial

assistance, for example) are not eligible

for WtW under the old or new

provisions of § 645.212 because they are

not eligible for TANF. Even as amended,

receipt of TANF assistance is the basic

criterion for WtW eligibility. Operating

entities should assess whether diverted

individuals may qualify under other

criteria, such as the criteria for

noncustodial parents at § 645.212(c) or

under § 645.213 as an individual

formerly in foster care or a low income

custodial parent. These new eligibility

criteria are more fully discussed in

Section III of this preamble.

Noncustodial Parents (§ 645.212(b)).

The IFR1 stated that a noncustodial

parent would be eligible if the custodial

parent met the eligibility requirements

of paragraph (a) of § 645.212.

Commenters asserted that this approach

posed insurmountable difficulties for

those entities who were in contact only

with the noncustodial parent.

Response: The 1999 Amendments

address this issue. The statutory and

regulatory changes that address these

concerns are described below.

A technical amendment, enacted on

July 16, 1998, as part of the Child

Support Performance and Incentive Act

of 1998 (Pub. L. 105–200), changed the

eligibility criteria for noncustodial

parents under § 645.212. This

amendment revised the language of SSA

section 403(a)(5)(C)(ii) to apply the

barriers to employment criteria to all

participants, including noncustodial

parents. In addition, the amendment

clarified that the required length of

receipt of cash assistance under TANF

applies to either the custodial parent or

the minor children of the noncustodial

parent. The addition of the reference to

the minor child of the noncustodial

parent addresses those ‘‘child only’’

cases where there is no custodial parent

and also allows WtW to provide services

to a noncustodial parent whose children

are less than 30 months old, if the

custodial parent has been on TANF for

a longer period.

We issued Training and Employment

Guidance Letter (TEGL) No. 6–98 on

September 21, 1998, to convey this

change and have posted this

information on the WtW website.

Subsequently, we issued TEGL 6–98

Change 1 on December 17, 1998, to

address those cases where there are

custodial caretaker relatives who receive

TANF benefits for themselves and on

behalf of the children in their custody.

While the number of these cases

nationwide is small, these custodial

caretaker relatives are subject to the

same TANF participation requirements

and time limitations as other TANF

recipients and therefore may be eligible

for the WtW program.

The 1999 Amendments contain

eligibility criteria pertaining to

noncustodial parents that supersede the

earlier statutory and subsequent

technical changes. Section III of this

preamble fully discusses the new

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2695

eligibility criteria for noncustodial

parents.

Who May Be Served as an Individual

With Long-Term Welfare Dependence

Characteristics Under the 30 Percent

Provision? (§ 645.213)

This section of IFR1 stated the

requirements for enrolling participants,

under the 30 percent provision, as

‘‘individuals with long-term welfare

dependence characteristics.’’ As with

§ 645.212, commenters raised issues

regarding time limits and State-to-State

eligibility variations.

A commenter recommended that we

revise this section to provide that

individuals would be eligible if they

either are receiving TANF assistance or

have one or more characteristic of longterm welfare dependence. Another

commenter suggested that we include a

history of domestic violence as an

example of a characteristic associated

with long-term welfare dependence,

citing studies in support of that

viewpoint. Another suggested that we

add having a disability affecting the

ability to obtain and retain employment

to the list of characteristics associated

with or predictive of long-term welfare

dependency.

Response: These changes have not

been made, because they are not

needed. Under IFR1, States, in

consultation with the operating entities,

already have the flexibility to identify

characteristics associated with or

predictive of long-term welfare

dependence such as those suggested, in

addition to those provided in the

regulation. Under the 1999

Amendments, discussed in Section III of

this preamble, this flexibility is

maintained.

How Will Welfare-to-Work Eligibility Be

Determined? (§ 645.214)

A commenter recommended that we

change the language in § 645.214 (b)(2),

to permit a determination of eligibility

to be ‘‘based on information collected by

the operating entity and/or the TANF

agency’’, in order to address those

situations where State TANF agencies

and operating entities share

responsibility.

Response: This editorial change has

been made for the sake of clarity.

What Activities Are Allowable Under

This Part? (§ 645.220)

A significant number of commenters

asserted that the ‘‘work first’’

philosophy undermines the successful

transition of WtW participants to

unsubsidized employment, by placing

participants into jobs before they have

received the training in basic and

occupational skills needed to prepare

them to succeed at those jobs.

Response: We have not made any

changes to the regulations based on

these comments, because the ‘‘work

first’’ requirements implement our

understanding of the intent of the WtW

legislation and the purpose of the

program. While we acknowledge that

the design and implementation of workfirst programs can pose challenges, the

purpose of the WtW program is to place

participants in employment activities

which will then lead to unsubsidized

employment and long-term selfsufficiency. We also believe that the

statute and the rule provide significant

flexibility to combine work with

training and other post-employment

services that will help participants to

build skills needed to succeed and

advance in the workforce.

Some commenters supported the

IFR1’s flexibility in the definitions of

allowable activities, while others

favored a more prescriptive approach.

The terms that elicited particular

interest were ‘‘job readiness’’, ‘‘job

placement’’, ‘‘on-the-job training’’,

‘‘community service’’, ‘‘work

experience’’, ‘‘job creation’’, ‘‘postemployment activities’’, ‘‘job retention’’,

‘‘supportive services’’, ‘‘assessment’’,

and ‘‘Individual Development

Accounts’’ (IDAs).

Response: We continue to believe that

the States and localities should have the

flexibility to develop definitions that fit

their circumstances, therefore, we have

not further defined these terms. We

have formalized this flexibility in IFR2

by adding a new § 645.125 to describe

the roles of Federal, State and local

governmental partners in the

governance of the WtW program. This

section is discussed in section III of this

preamble.

Several commenters recommended

we modify § 645.220(e) so that

supportive services could be provided

to participants who are receiving job

placement services.

Response: We agree that it is

appropriate for operating entities to be

able to provide supportive services for

individuals participating in job

placement activities. Section § 645.220

has been modified accordingly.

A commenter noted that language

used throughout WtW and JTPA

recommends and mandates

coordination of program activities and

non-duplication of services. This

principle is also true of the Workforce

Investment Act, under which workforce

investment systems have replaced the

job training systems created under

JTPA. Under JTPA, the goal of

coordination was achieved by utilizing

resources outside of the funding source

to supplement and extend services to

the greatest number of participants

possible, the commenter points out. The

commenter recommends that funds

from programs under WIA or JTPA or

others available through the One Stop

system should be available for WtW

activities, and that WtW funds be used

to provide supportive services for

individuals engaged in activities under

WIA, JTPA or other funding streams.

Response: We concur that better

coordination between the WtW system

and the One-Stop system developed

under JTPA/WIA is beneficial to all

programs, and have added language to

§ 645.220(f) that explains that job

retention and support services may be

provided to eligible WtW participants

who are enrolled in WIA or JTPA

activities (including occupational skills

training). We seek to foster such

coordination, especially as the WtW

program is a required partner in the

One-Stop system created under WIA.

These services can be provided with

WtW funds when they are not otherwise

available to the participant.

Furthermore, we have added a new

section 645.430 (which is discussed

below in this section II of the preamble)

to more fully describe the role of WtW

in the One-Stop system.

Several commenters indicated

support for the expanded use of WtW

funds to provide medical services.

Response: Section 408(a)(6)(A) of the

SSA specifically prohibits the use of any

TANF funds, including WtW funds, for

medical services, so we have not made

the suggested change. An explanation of

this prohibition is available in the Q &

A’s on the WtW website, at number

AA8, under ‘‘Allowable Activities.’’

Based upon inquiries received from

other sources, the Department has

posted a Q&A to set forth our

interpretation that § 645.220(h) permits

outreach and recruitment activities as

part of the allowable program activities

listed in paragraphs (a) through (f) of

§ 645.220. Costs associated with these

activities must be reported in the same

category as intake, assessment,

eligibility determination, development

of an individualized service strategy and

case management identified at

§ 645.220(h). We have changed

§ 645.220(h) to clarify that these

outreach and recruitment activities are

allowable uses of WtW funds.

Under IFR1, occupational skills

training activities could only be

provided as a post-employment activity

for individuals placed in a job or a WtW

employment activity. Under the 1999

Amendments, short-term vocational

educational training or job training are

2696 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

permissible activities. This is discussed

in more detail in section III of this

preamble.

Finally, as a technical correction, we

have removed the phrase ‘‘but not

limited to’’ from this the list of

suggested post-employment services

and job retention and support services

in this section. This does not change the

meaning of this provision. Here, as

throughout the regulations, the term

‘‘include’’ is used to indicate an

illustrative, but not exhaustive list of

examples. We also removed the

reference to SSA section 404(h) in

§ 645.220(f) to emphasize that IDAs

established in accordance with statutory

purposes or uses of TANF and WtW are

allowable WtW activities.

What General Fiscal and Administrative

Rules Apply to the Use of Federal

Funds? (§ 645.230)

The information technology provision

of § 645.235(c)(3) has been moved to

§ 645.230(d) to relate it to the discussion

of allowable costs. As a result,

paragraph 645.230(d) is redesignated as

paragraph (g) in the Final Rule and the

remaining paragraphs have been

redesignated accordingly. This is

discussed further in the discussion of

§ 645.235, below.

Commercial Organizations. A

commenter noted that the IFR1 did not

specify fiscal and administrative

requirements for commercial

organizations.

Response: The final rule clarifies, in

§ 645.230 (a)(2), that commercial

organizations, along with non-profit

organizations, must follow OMB

Circular A–110, codified at 20 CFR, Part

95. A similar provision, clarifying the

audit requirements for commercial

organizations, has been added at

§ 645.230(b).

Six-Month, 50 Percent Hold-back on

Contracts and Vouchers. Several

commenters asked for clarification and

guidance on § 645.230(a)(3), requiring

that contracts and vouchers include a

provision that at least one-half of the

payment for job placement services

occur after an eligible individual has

been placed into the workforce for six

(6) months. For example, some

comments raised questions about the

meaning of the phrase ‘‘placement in

the workforce’’ during the six-month

hold-back period. Others wondered

whether the six months must be either

continuous or cumulative, whether

participants had to remain with a single

employer during the entire period,

whether part-time or subsidized

employment could count towards the

six months and whether reasonable

transition time between jobs could be

considered part of the six-month holdback period.

Response: We have provided

guidance that retention for six months

in the workforce is achieved when a

participant is placed in unsubsidized

employment and receives earnings in

the two consecutive quarters following

the quarter in which placement

occurred in the instructions for the WtW

Formula Grant Cumulative Quarterly

Financial Status Report (ETA 9068).

Under these instructions, participants

do not have to remain with a single

employer during the entire period, and

no minimum number of hours or level

of earnings is specified.

A commenter asked for guidance as to

which contracts and vouchers are

subject to the six-month hold-back

provision. Other commenters suggested

that we waive the six-month hold-back

requirement under certain

circumstances.

Response: The mandatory six-month

hold-back provision applies to all

contracts and vouchers for placement

services into unsubsidized jobs, except

for those placement services that are

provided to individual participants as a

reasonable and necessary part of the

operating entity’s work experience,

community service and/or on-the-job

training program. This provision is

mandated by statute and can not be

waived for PICs and local boards. Under

the 1999 Amendments, competitive

grantees who are not PICs or local

boards may provide services directly.

See further discussion in section III of

the preamble.

A number of commenters inquired

whether fixed unit price performancebased contracting can be used under

WtW. One commenter questioned

whether the regulations reflect DOL

policy with regard to fixed-unit-price

contracts. Another commenter

recommended that the regulations not

impose additional restrictions upon

fixed-unit-price contracts over and

above the hold-back requirement.

Response: We see this contracting

method as appropriate, especially in

conjunction with the six-month holdback requirement for performance. We

have provided guidance on fixed unit

price performance-based contracts and

the requisite reporting requirements in

the Q & A’s on the WtW website (http:/

wtw.doleta.gov/q&a/administrative.htm)

at numbers AF17 and AF18, under

‘‘Administrative/Fiscal.’’

Program Income. Commenters

expressed concern that the regulations

prohibit profits as an allowable use of

funds, and asked whether a non-profit

may earn a profit or whether all

earnings must be reported as program

income.

Response: For the sake of clarity, a

new paragraph has been added to

§ 645.230(a)(6) which requires

governmental or non-profit

organizations that earn excess revenue

over costs incurred to treat the excess

revenue as program income earned, and

report it as such. The regulation

imposes no additional restrictions on

fixed-unit-priced contracts or on

program income derived from such

contracts. It only clarifies the treatment

of income earned by governments or

non-profit organizations from fixedunit-price contracts or other sources.

One commenter requested further

clarification of the addition method,

which is addressed in § 645.230(a)(5).

Response: The Final Rule adds a

reference, in this section, to 29 CFR

97.25(g)(2), which describes the

addition method. 29 CFR 97.25(g)(2)

clarifies that under the addition method,

program income is added to the

available WtW grant funds and must be

used for the purposes and under the

conditions set forth by the grant

agreement. Section 97.25(g)(2) also

explains both the net and gross income

methodologies for determining the

amount of program income to be

credited to the grant program.

Audit Requirements. As some

comments noted, the IFR1 did not

address the responsibility for audits of

commercial organizations. Section

645.230(b) has been revised accordingly.

A new paragraph (b)(3) is added to

§ 645.230 to establish that the

Department is responsible for audits of

commercial organizations that are direct

recipients of WtW grants. In addition,

commercial subrecipient organizations

that spend more than the threshold level

specified in 29 CFR part 99, which

implements OMB Circular A–133

($300,000 as of publication of this rule),

must conduct either an organizationwide audit or a program-specific

financial and compliance audit, as

required by 29 CFR part 99.

Drug-Free Workplace Requirements.

Paragraph (d) in § 645.230 of the IFR1

establishes that all WtW recipients and

subrecipients must comply with

government-wide requirements for a

drug-free workplace. One comment,

citing the provisions at 29 CFR 98.600,

questioned whether the drug-free

requirements should apply to both the

recipient and subrecipient level, or

should apply only to the recipient level.

Response: We have divided

§ 645.230(g) into two paragraphs, (g)(1)

and (g)(2), to clarify how drug-free

workplace requirements are to be

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2697

applied, at the recipient and

subrecipient levels, respectively.

Prohibition on the Construction or

Purchase of Facilities and Business

Start-up Costs. The WtW statute

specifies the allowable activities for the

formula and competitive grant programs

at section 403(a)(5)(C)(i). The statute

does not include the construction or

purchase of facilities or buildings as

allowable activities. Section

645.300(b)(1)(i) elaborates on this

general prohibition on facilities

expenses by specifying that the cost of

constructing or purchasing facilities or

buildings is not acceptable as match for

a WtW formula grant. This is because

match expenditures are only acceptable

when spent on those costs which would

be allowable if paid for with WtW grant

funds, and because Federal funds may

be used for such facilities expenses only

where there is specific legislative

authorization. Since WtW does not

specifically authorize these expenses,

they are not allowable WtW

expenditures nor acceptable match.

However, the IFR1 inadvertently failed

to include comparable language

explicitly barring the use of formula

grant funds or competitive grant funds

to construct or purchase facilities or

buildings.

We are concerned that the apparent

discrepancy could be misunderstood.

Therefore, we added a provision at

§ 645.230(e) to fix this oversight and

indicate clearly that the same

limitations on the use of WtW funds for

the construction or purchase of facilities

or buildings apply to competitive grant

funds and to formula grant funds.

Similarly, we wish to clarify that

WtW funds generally may not be used

to cover the costs of starting a business

or for capital ventures. In response to a

recommendation by a commenter that

business start-up funds be provided by

the WtW program, we have added a new

provision in the Final Rule at

§ 645.230(f) that states that WtW funds

may not be used to cover these types of

costs. We note, however, that there is a

limited exception to this prohibition

when WtW funds are used for

Individual Development Accounts.

These accounts, which are established

by or for participants under § 645.220(f),

are permitted for the purpose of

business capitalization, as well as other

specified purposes.

What Types of Activities Are Subject to

the Administrative Cost Limit on

Welfare-to-Work Grants? (§ 645.235)

WtW Definition of Administrative

Costs. The IFR1 adopted the definition

of ‘‘Costs of Administration’’ from the

JTPA regulations at 20 CFR 627.440, and

noted that the Secretary might issue

further rules to conform to similar

provisions in the final regulations

governing the TANF program. Two

commenters recommended adopting the

TANF description of administrative

costs to reduce administrative confusion

and costs and to encourage cooperation

between TANF-funded and WtWfunded programs. Other commenters

recommended not adopting the TANF

definition of administrative costs,

because of the number of activities that

are considered administrative costs

under TANF. One commenter

considered the adoption of JTPA

administrative cost definition as too

permissive given the WtW 15 percent

limit on administrative costs. Another

commenter recommended adopting the

Child Care Development Block Grant

definition for administrative costs.

Another commenter suggested using a

single administrative cost definition for

all three welfare-related programs, WtW,

TANF and Child Care Development

Block Grant.

Response: Since the issuance of the

IFR1, WIA was signed into law,

reforming the employment and training

service delivery system and replacing

PIC’s with local workforce investment

boards. Because the WtW program will

be operated through the workforce

investment system under WIA, as areas

make the transition from JTPA to WIA,

we have decided that it makes more

sense to coordinate the administrative

cost definition with the WIA definition

rather than the TANF definition. The

WIA regulations provide a definition of

administrative costs that is less

restrictive than the JTPA definition. To

minimize burden on the local boards, by

providing consistency between WtW

and WIA, § 645.235 has been revised to

set forth a new WtW definition of

administrative costs that is to a great

extent based on the WIA definition at 20

CFR 667.220. The WIA definition of

administrative costs relies on the

concept of function as the method to

determine how a particular cost would

be charged. Under this principle,

administrative costs are defined as costs

incurred for enumerated administrative

functions by identified administrative

entities for overall program management

purposes. The administrative functions

include but are not limited to the

following activities undertaken for

overall program management purposes:

accounting and budgeting, financial and

cash management, procurement and

property management, and developing

and operating systems and procedures

required for administrative functions.

The administrative entities include

State and local workforce boards, direct

WIA grant recipients, and local grant

subrecipients. For additional

information on covered activities and

entities, see the Workforce Investment

Act Final Rule.

As part of the new definition, we no

longer require first-line supervisory

costs to be treated as administrative

costs because this function is more

closely related to the provision of direct

services to participants than to overall

management. Similarly, we no longer

require data processing costs to be

charged as administrative costs; rather,

these costs must be allocated based on

whether the functions they support are

administrative or programmatic.

Allowable Information Technology

Costs. We received several comments on

the composition and classification of

information technology costs, but none

on the allowability of such costs. As

discussed above, in the discussion of

§ 645.230, upon reviewing these

comments we decided to clarify the

Year 2000 limitations applicable to the

allowability of information technology

costs and to move this paragraph from

§ 645.235(c)(3) to § 645.230(d) to follow

the paragraphs on allowable costs.

The administrative cost definition at

§ 645.235(d) of the Final Rule details the

certain information technology costs

that can be excepted from the

administrative cost category. A

commenter asked under which cost

category are information technology

systems development (above and

beyond costs excluded from

administrative cost limit) charged.

Response: Costs that can be excepted

from the administrative cost limit are

any costs incurred for the lease or

purchase of hardware, including

installation costs, and software needed

for tracking and monitoring participant

activities under a WtW grant. The cost

of software development related to the

tracking and monitoring functions,

including personnel costs associated

with such software development, can

also be charged to the program cost

category. Those costs of systems

development that do not fall under the

information technology cost exemption

(i.e., information technology systems

that are not used for tracking and

monitoring) may be charged to

administrative costs until the

administrative cap is reached. Once the

administrative cap is reached, such

costs must be charged to a non-Federal

source.

2698 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

What are the Reporting Requirements

for Welfare-to-Work Programs?

(§ 645.240)

The IFR1 stated that grantees would

be required to provide the Department

with financial data and to provide

DHHS with participant data. As

discussed in Section III of this

preamble, the 1999 Amendments

transferred the responsibility for

collecting participant data to the

Department and simplified these

requirements. The IFR1 indicated that

the Department would issue

instructions for financial reporting. We

received many comments with

suggestions for the financial reporting

instructions.

Several comments suggested that

reporting requirements conform to

TANF requirements as closely as

possible, while others recommended

that WtW establish a reporting

mechanism different from TANF, in

order to avoid having WtW activities

count towards the 60-month TANF

clock. Some comments recommended

that reporting requirements should

differ from those required under the

One-Stop system, while others

recommended using the JTPA format for

reporting requirements.

Other comments recommended

against requiring reporting by Fiscal

Year, recommended that we minimize

our reporting requirements, and

suggested that the reporting instructions

require the reporting of postemployment services, unsubsidized

employment, and wage data.

Response: We have issued

instructions and formats for on-line

financial reporting that have been

approved by the Office of Management

and Budget (OMB). These financial

reporting instructions and formats are

available at the WtW website (http://

www.etareports.doleta.gov). Reference

to this website has been added to the

Final Rule. Overall, grantee response

has been favorable to on-line financial

reporting, as it reduces the burden on

recipients and subrecipients. While the

Department considered other program

reporting formats, such as TANF and

JTPA, as we developed the WtW

reporting instructions, our intention was

to remain consistent with statutory

requirements. Establishing a reporting

system either similar to or different from

TANF’s would have no impact upon the

applicability of the 60-month limit on

TANF for WtW participants.

In addition, electronic reporting has

simplified cumulative reporting by

fiscal year of appropriation. Grantees are

required to report expenditure data for

post-employment services. Grantees are

also required to report cumulative

number of placements in unsubsidized

employment, broken out by greater than

or less than 30 hours a week. For

purposes of calculating an ‘‘earnings

gain’’ percentage, wage data is reported,

both at the time of placement and when

the participant is retained six months in

unsubsidized employment.

Several comments suggested easing

reporting requirements on tracking

expenditures according to the 70

percent and the 30 percent eligibility

categories. Two comments noted that

the WtW statute imposes significant

administrative and reporting burdens.

They recommended that we consider

the 70 percent criteria to be satisfied

when 70 percent of the participants are

hard-to-employ individuals, citing a

precedent in JTPA Title II where at least

65 percent of participants must be

‘‘hard-to-serve individuals.’’

Response: The 1999 Amendments

have resulted in a change in the original

70/30 requirements which is discussed

in section III under § 645.211.

Some comments stated that the

accounting requirements were overly

burdensome. One comment suggested

allowing States the option to choose the

accounting method, employing either a

cash method or an accrual method. One

comment supported the use of the

accrual method.

Response: States already have the

option to choose which accounting

method they use. However, if they use

a cash method of accounting, they need

to develop accrual information for

reporting purposes.

The 1999 Amendments called for the

simplification and coordination of

reporting requirements. The Department

was given the responsibility of

establishing requirements for both

financial and participant information.

To fulfill this mandate, the Department

has prepared revised reporting formats

for formula and competitive grantees to

include both participant and financial

information.

The existing format was redesigned to

reflect a streamlined approach in the

reporting of both financial and

participant data on one form. This data

collection package will be submitted to

OMB for approval separately from this

rule. The status of the submission is

discussed in section IV. A. Paperwork

Reduction Act. Section 645.240 in IFR2

also discusses the changes in reporting

due to the 1999 Amendments.

The proposed WtW reporting

requirements reflect the Department’s

efforts to strike a balance between

minimizing the burden on recipients

and subrecipients while obtaining

necessary information on the status of

funds and program outcomes required

by various Federal laws concerned with

integrity, accountability, and the

measurement of program results.

What Procedures Apply to the

Resolution of Findings Arising From

Audits, Investigations, Monitoring and

Oversight Reviews? (§ 645.250)

We received comments about the

liability of the States and local entities.

One commenter recommended that the

regulations specify local liability for all

categories of disallowed costs associated

with the funds allocated to the substate

areas.

Response: Because the IFR1 did not

explicitly address the relationship

between grantees and their subgrantees,

we have revised § 645.250(a) to indicate

clearly that the State or competitive

grantee must establish the necessary

rules and procedures.

Other comments asked that we clarify

that the State is not liable for disallowed

costs resulting from local entities’ use of

competitive grant funds, and suggested

that we revise the regulations to require

that the State share equitably with the

substate entity in any disallowed costs.

Response: Under the regulations as

written, a State is not responsible for

disallowed costs under WtW

competitive grants awarded to local

governments, as it is not a party to the

grant agreement. Our position on the

suggestion that we specify the

distribution of liability for disallowed

costs as between recipients and

subrecipients, and particularly as

between States and local governments,

is that we do not have the authority to

do so without explicit direction in the

statute. Accordingly, the suggested

changes have not been made.

What Nondiscrimination Protections

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

Section 645.255 provides that

participants in WtW programs have

such rights as are available under all

applicable Federal, State and local laws

prohibiting discrimination, and lists

four such laws specifically identified in

the WtW statute. We received comments

from several human rights organizations

strongly suggesting that ETA add the

Civil Rights Act of 1964 (Title VII) and

the Education Amendment of 1972 Title

(IX) to the list of statutes in § 645.255(a).

Response: The list in § 645.255(a)

contains those laws identified in section

408(d) of the WtW statute, so the

suggested statutes could not be added to

that section. However, we have

reordered the paragraphs in § 645.255

and have explained in a new paragraph

(c) that complaints alleging

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2699

discrimination in violation of any

applicable Federal, State or local laws,

such as Titles VII and IX, as well as the

Pregnancy Discrimination Act (42

U.S.C. 2000e (paragraph k)), are to be

processed in accordance with those

laws and their implementing

regulations.

A few commenters expressed concern

that IFR1 limits WtW participants’

protection under gender discrimination

laws to ‘‘job readiness and employment

activities’’.

Response: The WtW statute, at section

403(a)(5)(J)(iii), specifies that

participants in ‘‘work activities’’ are

protected under gender discrimination

laws. To be consistent with the language

in the law, the Final Rule replaces the

phrase ‘‘job readiness and employment

activities’’ in § 645.255(d) with the

phrase ‘‘work activities, as defined in

section 407(d) of the Social Security

Act.’’

In addition, Section 188 of the

Workforce Investment Act and its

implementing regulations prohibit

discrimination on a number of bases,

including sex, in all programs and

activities, including WtW programs, that

are part of the One-Stop delivery system

and that are operated by One-Stop

partners to the extent that the program

activities are being conducted as part of

the One-Stop delivery system. The

programs and activities covered under

these WIA nondiscrimination

provisions include those that qualify as

‘‘work activities’’ under the WtW

statute, as well as the broader range of

programs and activities that are offered

within the One-Stop system.

We have added new language to the

Final Rule in §§ 645.230(i), 645.255, and

645.430, to acknowledge that the DOL

regulations implementing WIA section

188, at 29 CFR part 37, are applicable

to WtW actvities conducted as part of

the One-Stop delivery system. 29 CFR

37.2(a)(2) provides that the WIA

nondiscrimination regulations apply to

‘‘[p]rograms and activities that are part

of the One-Stop delivery system and

that are operated by One-Stop partners

listed in section 121(b) of WIA, to the

extent that the programs and activities

are being conducted as part of the OneStop delivery system.’’ Since the WtW

program is one of the required One-Stop

partners identified in WIA sec. 121(b),

part 37 is applicable to WtW activities

carried out as part of the One-Stop

delivery system. Similarly, under 29

CFR 37.2(a)(3), the employment

practices of such WtW One-Stop partner

programs are covered by part 37. WtW

One-Stop partner programs should be

mindful of their responsibilities under

29 CFR part 37. For example, specific

requirements relating to outreach and

recruitment, sectarian activities,

participant data collections and recordkeeping, monitoring, and discrimination

complaints processing apply to WtW

One-Stop partner programs carrying out

WtW activities as part of the One-Stop

delivery system. We intend to work

closely with the Department’s Civil

Rights Center, to provide guidance so

that WtW programs can meet their

responsibilities under part 37.

What Safeguards are There to Ensure

that Participants in Welfare to Work

Employment Activities do not Displace

Other Employees? (§ 645.265)

A comment expressed concern about

the interpretation of ‘‘employment

activity,’’ in the first sentence of

§ 645.265(b), as it pertains to the

prohibition on the use of WtW funds in

violation of existing contracts for

services or collective bargaining

agreements, and recommended that we

indicate which elements of § 645.220

would constitute employment activities

for purposes of the non-displacement

requirement.

Response: We recognize that IFR1

may be unclear about which

employment activities are covered

under § 645.220. Therefore, we have

added a cross reference to § 645.220(b)

and (c) in the first sentence of § 645.265

to more clearly indicate what is meant

by ‘‘employment activities.’’ These

activities are as follows: vocational

educational and job training,

community service programs, work

experience programs, job creation

through public or private sector

employment wage subsidies, and onthe-job training.

One commenter urged that we specify

the amount of time that an employer

must wait before filling a position that

became available due to a lay-off.

Response: Upon review, we believe

that it is not appropriate for us to set a

minimum waiting period. In our view,

individual States and localities should

be accorded the discretion to take their

particular circumstances into account.

What Procedures are There to Ensure

that Currently Employed Workers May

File Grievances Regarding Displacement

and that Welfare-to-Work Participants in

Employment Activities May File

Grievances Regarding Displacement,

Health and Safety Standards and Gender

Discrimination? (§ 645.270)

A number of comments from union

and labor management organizations

stated that the regulatory procedures for

establishing and maintaining grievance

procedures are either overly prescriptive

or too broadly defined.

Response: We have written the

regulations governing grievance

procedures to precisely reflect the

language of the Act at section

403(a)(5)(J)(iv), while seeking to make

the complaint filing system sufficiently

clear and to provide State and local

governments with the maximum

flexibility to establish grievance

procedures that adequately address

State and local needs. Therefore, no

changes have been made in the Final

Rule. However, we have added a new

section (i) to provide that participants

alleging discrimination by WtW

programs that are part of the One-Stop

system may file a complaint using the

procedures developed by the State

under the WIA nondiscrimination

regulations at 29CFR 37.70–37.80.

Subpart C—Additional Formula Grant

Administrative Standards and

Procedures

What Constitutes an Allowable Match?

(§ 645.300)

Several commenters opined that the

match provisions were overly

burdensome and impeded program

implementation, and requested more

flexibility to meet the match

requirement with non-cash funds.

Response: While the amount of the

required match is statutory, we have

provided flexibility by changing the 50

percent limit in § 645.300(b)(3), to allow

up to 75 percent of matching funds to

be third party in-kind match. At least 25

percent of matching funds must be cash

match.

Several commenters recommended

expanding the universe of resources that

can qualify as match. Some commenters

suggested that capital costs, donated

property, and funds spent on renovation

of existing facilities be considered

allowable match.

Response: The Balanced Budget Act

of 1997 established WtW as a short-term

program. Resources which would be

expected to outlast the WtW program,

such as those mentioned above,

therefore, are not allowable WtW

program costs and are not acceptable as

match. We have not made the suggested

change. However, under the regulations

as written, depreciation or use

allowances which reflect the use or

consumption of capital assets during a

reporting period are allowable WtW

costs and allowable as match.

Matching funds must be spent on

WtW allowable activities for WtW

eligible individuals, whether or not the

individuals are actually enrolled in a

WtW program. Some commenters

opined that in their view this definition

was overly restrictive and suggested that

2700 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

any funds spent on training, support or

assistance for any individuals should be

permitted as allowable match. Other

commenters suggested that we permit

in-kind contributions, employer-paid

wages or employer-paid benefits as

allowable match.

Response: Because the purpose of the

WtW program is targeted to a specific

population and has the specific goal of

moving welfare recipients and certain

noncustodial parents into unsubsidized

employment, matching funds must

support the overall design of the

program. The purpose of the matching

requirement is to leverage these targeted

Federal funds and expand services to

this population. Thus, while the

individuals served with matching funds

need not be enrolled in the WtW

program, we believe it is important that

only funds spent on individuals within

the WtW target populations are counted

toward the matching requirement.

Likewise, we do not believe it is

appropriate to eliminate the prohibition

in § 645.300(c)(1) on using the employer

share of participant wage payments,

because it also is intended to ensure that

matching funds are spent on expanded

services that might not otherwise be

provided. On the other hand, as

discussed above, we have increased the

limit on third-party in-kind

contributions to 75 percent. As

discussed in Section III of the preamble,

the eligibility criteria for the program

have been simplified. Any non-Federal

dollars spent on the activities identified

in § 645.220 for individuals in the new

eligible population would count as

match. In addition, any excess of funds

spent to meet TANF maintenance-ofeffort would count as match. We believe

that States will now have sufficient

flexibility to meet their matching

requirement in a manner that will

effectively serve the needs of the target

population.

A number of commenters have

inquired whether Community

Development Block Grant funds may be

used as match.

Response: As the underlying statute at

sections 403(a)(5)(A)(i)(I) and

409(a)(7)(B)(iv)(I) and (IV) does not

allow other Federal funds to be used as

match, these funds are not an allowable

source of match funds. No change to

this provision is warranted.

Paragraph 645.300(e)(2) mandates that

third-party donations of equipment or

space be valued at the fair rental rate.

One commenter noted that in certain

cases this rule may conflict with OMB

Circular A–87, which allows space

donated by governmental third parties

to be charged based on a use allowance.

Response: The provision has been

modified to clarify the distinction

between valuation of equipment and

space donated by a governmental third

party from that donated by a nongovernmental third party.

What Actions are to be Taken if a State

Fails to Make the Required Matching

Expenditures? (§ 645.315)

Section 645.315 provided that we

would implement an annual

reconciliation of match expenditures

and, if necessary, adjust those grants for

which the match requirement has not

been met. On November 13, 1997, a

technical amendment affecting the

expenditure of matching funds became

law as part of the Labor, Health and

Human Services and Education

Appropriations Act (Pub. L. 105–78). As

requested by comments, the technical

amendment changed the period of

expenditure for matching funds from

one year to three years. States may now

spend matching funds over the course of

the same three-year period during

which they spend the Federal WtW

funds. The technical amendment

became law immediately after the

publication of the November 18, 1997

IFR1 and we received many comments

asking that we change the expenditure

period from one to three years and

pointing out that the regulation had

been superseded by the technical

amendment.

Response: As a result of this technical

amendment, § 645.315, which provided

for annual reconciliation and grant

adjustment, is superfluous. We have

deleted the provision at § 645.315(a).

Section 645.315(b) has been revised and

redesignated as § 645.315(a) to describe

the process that will be followed if a

State fails to meet its match

requirements at the end of the three-year

expenditure period. We have added a

new § 645.315(b) to clarify the impact

on the administrative cost limit of any

failure to satisfy the match

requirements.

When Will Formula Funds be Reallotted

and What Reallotment Procedures will

the Secretary Use? (§ 645.320)

Section 645.320 described the

circumstances under which we would

reallocate formula funds. Funds that

were subject to reallocation included

those formula funds returned to the

Department after a State had underexpended matching funds within a

fiscal year, or had failed to fully obligate

formula funds. Some commenters noted

that under the technical amendment

(Pub. L. 105–78) described above in the

discussion of § 645.315, States may now

expend required matching funds over a

three-year period. In addition, another

technical amendment was enacted on

October 28, 1998, (Pub. L. 105–306)

which altered the obligation

requirement for States. Under this

amendment, States are not required to

obligate certain funds within the fiscal

year of appropriation. Under SSA

section 403(a)(5)(A)(iv)(II), these funds

are the 15 percent funds reserved for the

Governor’s special projects and the

funds allocated within single SDA

States.

Response: As a result of the technical

amendments identified by the

commenters, we will not reallocate any

formula funds during the course of the

program. Therefore, § 645.320 is no

longer relevant and has been deleted.

Subpart D—State Formula Grants

Administration

Under What Conditions May the

Governor Request a Waiver to Designate

an Alternate Local Administering

Agency? (§ 645.400)

Waiver Authority. Some commenters

stated that the case-by-case review

process established by the IFR1 was

inflexible, cumbersome, and fraught

with delay. The commenters proposed

that we modify the system to allow

approval of waivers on a statewide

basis.

Response: The case-by-case approach

is prescribed by the statute at section

403(a)(5)(A)(vii)(III), so the suggested

change has not been made. Furthermore,

we have determined that, while perhaps

somewhat burdensome, the mandated

process has functioned adequately.

What Elements Will the State Use in

Distributing Funds Within the State?

(§ 645.410)

Many comments opposed the

§ 645.410(a)(7) requirement that a State

distribute its SDAs’ allocations within

thirty days after the State’s allotment

was received. These comments

suggested that the thirty-day deadline

for distribution curtailed the States’

ability to achieve coordination with

local level plans and reduced the States’

ability to ensure optimal utilization of

funds.

Response: We agree that the 30-day

deadline may be overly restrictive and

could compromise the States’ ability to

distribute the funds in an efficient and

equitable manner. However, since all of

the FY 1998 and FY 1999 formula funds

authorized have now been distributed to

the local level, such a change would be

moot. Therefore, we have made no

change in this provision. Further,

because all funds have been distributed

in a timely manner, we will not be

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retroactively looking into whether the

30 day requirement had been met.

What Factors will be Used in Measuring

State Performance? (§ 645.420)

Section 645.220(a) provides that we

will issue a performance measurement

formula following consultation with

DHHS, the National Governors

Association and the American Public

Welfare Association. We have

completed the necessary consultation

process and received approval of the

performance measures from OMB. The

Performance Bonus Criteria were

published in the Federal Register at 63

FR 64832 (Nov. 23, 1998). The formula

and data elements used for measuring

State performance are included on the

OMB-approved WtW Formula

Cumulative Quarterly Financial Status

Report (ETA 9068). Section 645.420(a) is

revised to specify that job placement

(job entry rate), retention in

employment and earnings gain are the

elements that will be used to measure

performance.

Section 645.420(b) is revised to

identify the weights to be accorded the

factors included in the performance

bonus formula. The formula is based on

four factors: (1) Job entry rate as

measured by the proportion of WtW

participants who enter either subsidized

employment or unsubsidized

employment; (2) Substantive job entry

rate as measured by the proportion of

WtW participants who are placed in or

who have moved into subsidized or

unsubsidized employment of 30 hours

or more per week; (3) Retention as

measured by the proportion of WtW

participants who remain in

unsubsidized employment six months

after initial placement; and (4)

Measured earnings gains of WtW

participants who remain in

unsubsidized employment six months

after initial placement.

How Does the Welfare-to-Work Program

Relate to the One-Stop Delivery System

and Workforce Investment Act (WIA)

Programs? (§ 645.430)

We received several comments about

One-Stop systems. Generally, they

pointed out the need to address the role

of the WtW program in the new OneStop delivery system initiated under

JTPA, and now being implemented

under WIA. Specifically, one

commenter suggested that intake,

assessment, eligibility determination

and development of an Individual

Service Strategy should be part of the

One-Stop system.

Response: The advent of WIA resulted

in the inclusion of the WtW program in

the One-Stop delivery system as a

required partner, and the transition from

PIC’s to local workforce boards. As

discussed above, in relation to

§ 645.220, we agree with the comments

that close coordination between the

WtW program and the One-Stop system

will be beneficial to all programs that

are partners in the system. While the

IFR1 delineated the roles and

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

at § 645.425, and that the WtW roles of

State and local entities will be the same

under WIA as they have been under

JTPA, we agree that it is advisable to

also provide acknowledgment and

guidance about the interaction of the

WtW program with WIA programs and

other programs delivered through the

One-Stop delivery system. We added a

new § 645.430 to foster this

coordination. As a required partner in

the One-Stop delivery system, the WtW

program and the local board will enter

into a Memorandum of Understanding

that includes provisions relating to the

services to be provided through the One

Stop system and the methods for

referring individuals between the OneStop and the partner WtW program. We

expect that WtW participants will have

access to the broad range of services

available in the One-Stop system.

Individuals eligible for WtW who need

skill training may receive that service

through the One-Stop system and will

also be eligible to receive services under

WtW such as child care assistance and

transportation assistance while

participating in the WIA activity. WIA

participants who are also eligible for

WtW may be referred to WtW for

assistance such as job placement and

other services.

Also, paragraph (d) of this section

explains that 29 CFR part 37 applies to

recipients of WtW financial assistance

who operate programs that are part of

the One-Stop system established under

WIA to the extent that the WtW

programs and activities are being

conducted as part of the One-Stop

delivery system.

Subpart E—Welfare-to-Work

Competitive Grants

Who Are Eligible Applicants for

Competitive Grants? (§ 645.500)

Several comments suggested changes

to the categories of entities eligible to

apply for competitive grants. Comments

proposed the addition of specific types

of entities (e.g.) labor unions, women’s

organizations, area vocational schools

and public transit agencies) to the list of

entities which can apply as a ‘‘private

entity’’ in conjunction with a local PIC

or political subdivision.

Response: As noted above in the

discussion of the definitions at

§ 645.120, we have added the definition

of ‘‘private entity’’ contained in the

WtW competitive grant SGA. Under this

definition, a ‘‘private entity’’ is any

organization, public or private, which is

not a Local Board, PIC or alternate

administering agency or a political

subdivision of a State. The types of

organizations that commenters

suggested adding meet this definition

and are eligible to apply as private

entities. Moreover, § 645.500(a)(3)

provides an illustrative list of types of

private entities that would include the

suggested entities as ‘‘nonprofit

organizations’’ or as ‘‘other qualified

private organizations.’’ Therefore,

because the suggested entities are

eligible to apply for WtW competitive

grants under the existing IFR1, we do

not believe it is necessary to make any

other changes to this section.

What Is the Required Consultation With

the Governor? (§ 645.510)

Three comments expressed concern

about the State-level consultation

process. One commenter stated that

States should have the same amount of

time for comment on competitive grant

proposals as the PIC or political

subdivision. One commenter argued

that the State and local reviews should

be concurrent rather than consecutive.

One commenter asserted that the

Governor’s review was counterproductive.

Response: While the reviews of

competitive grant applications at the

local level and at the State level serve

different purposes, they operate

sequentially to further the goals of the

competitive grant program. We consider

it important that the Governor be aware

of any concerns about an application

that the local board or PIC may have so

that the Governor is able to foster

cooperation and coordination of

resources at the local level.

Furthermore, while we acknowledge

that the volume of competitive grant

proposals has placed a considerable

burden on some States, we do not

believe that the burden imposed has

compromised the competitive grant

program.

III. Summary and Explanation—

Interim Final Rule (IFR2)

Substantive Changes Under the Welfareto-Work and Child Support

Amendments of 1999

As a result of the Welfare-to-Work and

Child Support Amendments of 1999

(1999 Amendments) (introduced as Title

VIII of H.R. 3424, and enacted as part of

2702 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

the Consolidated Appropriations Act for

FY 2000, (Pub. L. 106–113)), we have

made significant changes to the

regulations implementing the WtW

grant program. These changes are

implemented as an Interim Final Rule

(IFR2), published with the Final Rule

discussed in Section II of this preamble.

These revisions provide WtW grantees

with greater flexibility to serve both

long-term welfare recipients and

noncustodial parents of low-income

children. The effective dates of the

changes made by the 1999 Amendments

are discussed in new §§ 645.130 and

645.135, which are discussed later in

this section of the preamble.

The most significant of these changes

removes the requirement that long-term

TANF recipients must meet additional

barriers to employment in order to be

eligible for program services, as

described in § 645.212. Also, under the

30 percent provision at § 645.213, as

provided by the 1999 Amendments, we

have added two new categories of

eligible participants: former foster care

recipients, and custodial parents with

income below the poverty line. Among

the regulatory definitions in § 645.120,

we have defined ‘‘local workforce

investment board’’ to include former

‘‘PICs’’ and ‘‘alternative administrative

agencies’’ to cover all possible entities

operating the WtW program.

We wish to emphasize that we are

implementing the changes resulting

from the 1999 Amendments as an

Interim Final Rule to afford the

opportunity for public comment. The

preamble also contains guidance to the

WtW system in areas where regulations

are not promulgated but clarification

may be needed.

We invite public comments on the

provisions discussed below:

What Definitions Apply to This Part?

(§ 645.120)

As a result of the 1999 Amendments,

this section has been amended to

include additional definitions of terms,

acronyms and phrases where needed.

To maintain the program’s underlying

principle of providing State/local

governments with maximum flexibility

in designing and implementing program

objectives, we generally allow State/

local discretion in defining most terms.

However, we believe it is necessary to

define the term ‘‘unemployed’’ for

purposes of determining the eligibility

of a noncustodial parent at

§ 645.212(c)(1). For consistency, we are

defining this term as it is defined under

Title I of the Workforce Investment Act.

Under this definition, the term

‘‘unemployed individual’’ means an

‘‘individual who is without a job and

who wants and is available for work.’’

The determination of whether an

individual is without a job must be

made in accordance with criteria

established by the Bureau of Labor

Statistics. Information can be found in

the BLS publication, How the

Government Measures Unemployment,

at http://stats.bls.gov/cps_htgm.htm.

We have not defined the term

‘‘underemployed,’’ which permits the

State to define it, in consultation with

local entities, including competitive

grantees within their jurisdiction.

Similarly, States, in consultation with

local entities, including competitive

grantees within their jurisdiction, may

define the term ‘‘having difficulty

paying child support obligations.’’ In

developing this definition, State

agencies should also consult with the

State or local child support enforcement

entity. We discuss the terms

‘‘underemployed’’ and ‘‘having

difficulty paying child support’’ in more

detail in the discussion of § 645.212 in

this section of the preamble.

Additionally, the phrase ‘‘PIC or

alternate administering agency’’ has

been added after each reference to a

local workforce investment board

throughout 20 CFR part 645. While local

workforce investment boards (local

boards) are the presumed administering

entities under transition from JTPA to

WIA, we believe it is important to

recognize the administering role of PIC’s

in the WtW system. We have included

these additional terms to emphasize that

entities other than local workforce

investment boards may serve as WtW

administering agencies and that PIC’s

may still retain their role as the

operating entity until such time as WIA

is fully implemented, and in some

cases, afterward. In accordance with

§ 661.300 of WIA, we anticipate that

most PIC’s will be replaced by local

workforce investment boards, for

purposes of WtW and WIA.

We have also added a definition of

‘‘IV–D Agency’’ to clarify that this

means the organizational unit in a State

that has responsibility for the plan

under title IV–D of the SSA which is

child support enforcement. The 1999

Amendments have given such entities a

definite role in the development of

personal responsibility contracts and

other matters relating to noncustodial

parents.

What Are the Roles of the State and

Local Governmental Partners in the

Governance of the WtW Program?

(§ 645.125)

As we discussed in the preamble to

IFR1 (62 FR 61588, 61589), we have

tried to limit WtW regulations to only

those instances where they are

necessary to clarify or explain how we

interpret the statute. IFR1 provided

States and local governments with the

primary responsibility for developing

program and policy guidance for this

program. We have tried to maintain this

flexibility in the changes we have made

under the 1999 Amendments. The WIA

regulations were drafted under the same

principle and, at 20 CFR 661.120, codify

this flexibility by providing authority to

States and local governments to

establish such policy guidance and

interpretations, as long as they are not

inconsistent with the statutory and

regulatory requirements. For

consistency, we added a similar

regulation to part 645 to reiterate our

intention that States and local

governments have this policy-making

flexibility in administering the WtW

program.

What Are the Effective Dates for

Implementation of the Welfare-to-Work

Amendments? (§ 645.130)

The 1999 Amendments to the WtW

eligibility criteria and allowable

activities have staggered effective dates

depending on the type of funds

(competitive, formula, or Indian and

Native American) used to pay for the

activities. Section 645.130 explains

when the various changes made by the

1999 Amendments and this IFR2 took

effect:

• For Indian and Native American

(INA) grantees, all of the 1999

Amendments took effect upon

enactment of the legislation on

November 29, 1999.

• For WtW competitive grants,

provisions relating to the new eligibility

and allowable activities took effect on

January 1, 2000, while the other

provisions of the 1999 Amendments

were effective upon enactment of the

legislation on November 29, 1999.

• For WtW formula grantees,

provisions relating to the new eligibility

and allowable activities took effect on

July 1, 2000, except that expenditures

could not be made from State allotments

until October 1, 2000, as provided in

§ 645.135.

What is the Effective Date for Spending

Federal Welfare-to-Work Formula Funds

on Newly Eligible Participants and

Newly Authorized Services? (§ 645.135)

As stated above in the discussion of

§ 645.130, the changes made under the

1999 Amendments became effective for

formula grants on July 1, 2000, except

that expenditures could not be made

from Federal WtW formula allotments

until October 1, 2000. The intent of this

provision is to prevent the outlay of

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2703

Federal WtW formula funds until the

first day of fiscal year 2001. It is not

intended to prevent the normal

incurrence of unpaid obligations until

that date, provided that Federal WtW

formula funds were not drawn down to

liquidate the obligations until October 1,

2000. Therefore States could not draw

down WtW formula funds from the

Federal Treasury until that date. During

the period of July 1, 2000 to September

30, 2000, States could expend matching

funds and incur unpaid obligations

within the normal course of business,

provided that the timing of those

transactions ensure that the draw down

of Federal WtW formula funds to

liquidate the obligations did not occur

until October 1, 2000.

How Must Welfare-to-Work Funds be

Spent by the Operating Entity?

(§ 645.211)

Before the 1999 Amendments, the

WtW statute and IFR1 provided for two

categories of eligible individuals, those

served under the 70 percent provisions

and those served under the 30 percent

provisions. Noncustodial parents could

qualify under either provision, if they

met the appropriate criteria. IFR1

required operating entities to expend at

least 70 percent of the grant funds

awarded on hard-to-employ individuals

enrolled under the ‘‘70 percent

provision,’’ according to the eligibility

criteria at § 645.212 of IFR1, and no

more than 30 percent on individuals

with characteristics associated with

long-term welfare dependence under the

criteria at § 645.213 of IFR1.

A practical effect of this requirement

was that if an operating entity spent up

to 30 percent of its funds on individuals

with characteristics associated with

long-term welfare dependence, but was

only able to spend 69 percent of the

total funds (or less) on hard-to-employ

individuals under the 70 percent

provision, it could be penalized with

disallowed costs for failure to expend at

least 70 percent of its funds on these

hard-to-employ individuals. The costs

to be disallowed could be otherwise

allowable expenditures for the 30

percent ‘‘other eligibles’’ individuals.

While it was certainly the intent of

Congress to insure that the bulk of WtW

grant funds be spent on the hardest-toserve, we do not believe it intended to

unnecessarily penalize grantees by

disallowing what otherwise would be

legitimate expenditures to help other

eligible individuals solely on the basis

of the fact that the 70/30 ratio was not

met. But because of the language of the

original statute, this was a possible

result.

The 1999 Amendments divide the

WtW eligible population into three

groups:

1. Hard-to-employ individuals served

under ‘‘general eligibility’’ provisions at

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

2. A separate category for

noncustodial parents at section

403(a)(5)(C)(iii); and

3. Others, including individuals with

characteristics of long-term welfare

dependence, served under the 30

percent provisions at section

403(a)(5)(C)(iv).

The 1999 Amendments alter the

eligibility requirements for hard-toemploy individuals and for

noncustodial parents and eliminate

language referring to any mandatory

expenditure level of 70 percent for these

groups. The 1999 Amendments do,

however, retain the 30 percent

maximum expenditure provision for

individuals with the characteristics of

long-term welfare dependence at section

403(a)(5)(C)(iv).

Note: For ease of identification, IFR2 refers

to the group of individuals served under the

30 percent provision as ‘‘other eligibles,’’ at

§ 645.212, and IFR2 refers to the ‘‘general

eligibility and noncustodial parent’’ category

at § 645.212 as the ‘‘primary’’ eligibility

category (formerly the 70 percent category).

Since the statute no longer specifies a

70 percent expenditure requirement and

says only that no more than 30 percent

of grant funds may be spent on

individuals served under the ‘‘other

eligibles’’ category, we interpret it to

mean that all other expended funds

must be spent on individuals enrolled

under the primary ‘‘general eligibility

and noncustodial parents’’ category.

Thus, an operating entity which does

not quite spend all of its grant funds,

resulting in an expenditure ratio slightly

below 70 percent for the general and

noncustodial (primary) population, will

still be in compliance with the

expenditure requirements as long as its

expenditures on the other eligibles does

not exceed 30 percent of the total grant

funds allotted. An operating entity may

in fact spend up to 100 percent of its

grant funds to benefit individuals in the

general eligibility and noncustodial

parents (primary) category, as described

in § 645.212, as the provision of ‘‘no

more than’’ 30 percent of the funds

spent on ‘‘other eligibles’’ would have

been met.

This change in the 1999 Amendments

allows operating entities more of an

opportunity to achieve the intended

goal of targeting the hardest-to-employ

individuals in the program by the end

of the grant period without unintended

punitive consequences. To be in

compliance, an operating entity must

have spent no more than 30 percent of

the funds allotted or awarded on the

‘‘other eligibles’’ in § 645.213, even if

the operating entity has not expended

all of its funds.

We see this change as a move away

from an arbitrarily punitive way of

assessing compliance towards a more

realistic approach that recognizes that

overall expenditure rates may have been

suppressed by the original WtW

eligibility criteria. Operating entities are

not absolved of the underlying

requirement that spending is to be

targeted to the hardest-to-serve primary

eligibility category and that poor

performance in this area will be cited

through routine monitoring and

oversight. Such poor performance may

lead to sanctions such as termination,

reduction in grant amount or other

actions warranted by the circumstances

as determined by the Grant Officer.

Falling short of expenditure goals due to

lack of effort in serving the primary

eligibles will be viewed far differently

from a good faith effort to achieve those

goals. This change, coupled with the

more flexible eligibility criteria in the

1999 Amendments, should encourage

grantees to move ahead on enrollments

and expenditures in the remaining years

of the program without the previous

overcaution and concern about how the

original 70 percent expenditure

requirement would be applied at the

closeout of the grant.

The 30 percent maximum expenditure

requirement applies to all WtW funds,

i.e., to substate formula funds,

Governors’ funds for long-term

recipients of assistance, and competitive

funds. The requirement does not apply

to the proportion of WtW participants

served; rather, it applies to the

percentage of WtW funds expended on

the participants in each category of

eligibility.

The ‘‘general eligibility and

noncustodial parents’’ (primary)

category may include participants who

were originally enrolled as individuals

with characteristics of long-term welfare

dependence under the 30 percent

category and transferred to the ‘‘general

eligibility and noncustodial parents’’

(primary) category after the effective

date of the 1999 Amendments.

Operating entities should note that

expenditures on these individuals prior

to their transfer to the ‘‘general

eligibility/noncustodial parents’’

(primary) category may not be reported

as and will not count as expenditures

under the new primary category. We

intend to provide more guidance on

tracking and reporting expenditures

under § 645.212 (primary eligibility) and

§ 645.213 (‘‘other eligibles’’ eligibility)

2704 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

in revised WtW participant and

financial reporting instructions to be

issued separately.

Who May Be Served Under the General

Eligibility and Noncustodial Parent

Eligibility (Primary Eligibility)

Provision? (§ 645.212)

As discussed above, under the 1999

Amendments, 30 percent of WtW funds

may be spent on individuals served

under the ‘‘other eligibles’’ category,

and the remaining funds must be spent

on the ‘‘general eligibility and

noncustodial parents’’ (primary)

category of eligibility. The main purpose

of the 1999 Amendments was to

simplify the WtW eligibility

requirements by eliminating the

requirement that long-term TANF

recipients or exhaustees demonstrate

two of three specified barriers to

employment (education level and low

skills in reading or math; requires

substance abuse treatment for

employment; and poor work history).

The comments from a variety of public

and private entities about these barriers

are discussed in detail in Section II of

this preamble in the discussion of

§ 645.212.

General Eligibility. The general

eligibility portion of the primary

eligibility provision focuses on the

target groups expected to constitute the

majority of those served in WtW due to

their status as TANF recipients. The

regulations reflect the statute in

describing these target groups as

follows:

1. Current TANF recipients who have

received TANF assistance for at least 30

months;

2. Current TANF recipients who will

become ineligible for TANF assistance

within 12 months; or

3. Former TANF recipients who are

no longer receiving TANF assistance

because they reached the Federal or

State-imposed time limit.

As these groups were already

included in the groups possibly eligible

for the the primary eligibility portion of

WtW, the 1999 Amendment’s

elimination of the barriers to

employment requirements should

significantly increase the number of

participants eligible for the program,

without requiring the addition of any

verification procedures not already in

place.

Noncustodial Parent Eligibility. Under

the 1999 Amendments, operating

entities now serve noncustodial parents

in the WtW program under separate

noncustodial parent eligibility criteria,

set forth in the primary eligibility

provision for general eligibility and

noncustodial parents at § 645.212. Most

often, noncustodial parents are fathers

with minor children who do not live in

the same household as the child. To be

eligible under this provision,

noncustodial parents must meet three

criteria (generally, the noncustodial

parent must be unemployed,

underemployed or having difficulty

making child support payments; the

minor child must be receiving or be

eligible for TANF or other specified

assistance; and the noncustodial parent

must enter into a personal responsibility

contract).

The first requirement is that the

noncustodial parent be ‘‘unemployed,

underemployed, or having difficulty

making child support payments.’’ Since

the WtW program is a required partner

in the workforce investment system

established under WIA, we believe it is

important to coordinate WtW program

definitions or requirements with those

set forth under WIA wherever possible

or appropriate. Therefore, the definition

for ‘‘unemployed’’ set forth in the WtW

regulations at § 645.120 corresponds to

the definition of ‘‘unemployed

individual’’ in section 101(47) of WIA.

This is discussed in more detail above

under the discussion of § 645.120 in this

section of the preamble. We have not

defined the other two terms in this

criterion.

We allow the States to determine how

to define the term ‘‘underemployed,’’ in

consultation with local operating

entities, including local competitive

grantees. We suggest that States

consider the definition used in the

Indian and Native American WIA

program at 20 CFR 668.150, where

underemployed means an individual

who is working part time but desires

full time employment, or who is

working in employment not

commensurate with the individuals’s

demonstrated level of educational and/

or skill achievement.

States, in consultation with local

entities, including competitive grantees

within their jurisdiction, and the State

Child Support Enforcement (IV-D)

Agency, may define what constitutes

‘‘having difficulty paying child support

obligations,’’ and should coordinate

with the State or local child support

enforcement entity. For example, a State

may decide that if a noncustodial parent

is behind in his/her payments as

specified in a child support order for

one or more months, this constitutes

‘‘having difficulty paying child support

obligations,’’ as the noncustodial parent

is now in arrears. In such cases, the

child support enforcement entity would

be able to assist in identifying such

arrearages. Another example of a

definition of ‘‘having difficulty paying

child support’’ would be any

noncustodial parent that has not yet

established paternity or who does not

have a child support order but is not

working and hence, has no ability to pay

child support, if ordered.

Effective dates for the implementation

of the 1999 Amendments are discussed

in this section of the preamble at

§ 645.130 and § 645.135. However,

entities operating competitive grants

have expressed concern that there may

be a delay before States articulate

definitions for these and other terms

under the 1999 Amendments, given the

later effective date for formula grantees.

States and local workforce investment

boards may establish definitions for the

WtW program. Competitive grantees are

encouraged to provide input in the

development of these definitions, as

they will be required to follow these

definitions once established by the State

and local area, as was the case in the

establishment of definitions for

‘‘characteristics of long-term welfare

dependence’’ under IFR1. When terms

are not defined by the State or local

board in the area in which a competitive

grantee operates, competitive grantees

may establish their own definitions for

‘‘underemployed’’ and ‘‘having

difficulty making child support

payments.’’ However, once State or local

board definitions become effective,

competitive grantees are required to

follow them.

The second requirement for the

enrollment of a noncustodial parent in

the WtW program relates to the financial

status of the minor child (or, in certain

cases, the custodial parent). The

noncustodial parent may be eligible if

the minor child or custodial parent is a

long-term TANF recipient. The

noncustodial parent may also establish

eligibility if the minor child is a current

or recent TANF recipient, or is receiving

or is eligible for Food Stamps,

Supplemental Security Income,

Medicaid, or State Children’s Health

Insurance Program (SCHIP).

Operating entities must first attempt

to determine whether a noncustodial

parent’s child(ren) is actually receiving

any of the above benefits by obtaining

documentation of such benefits from the

custodial parent or by confirmation

from the agency that the minor child or

custodial parent, for purposes of

determining long-term TANF receipt, is

receiving services under the program.

It is important to note, however, that

the 1999 Amendments explicitly state

that in order to protect custodial parents

and children at risk of domestic

violence, the custodial parent may not

be required to cooperate in the

establishment of the noncustodial

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2705

parent’s eligibility based upon the

custodial parent’s or minor child’s

receipt of certain benefits and services.

The cooperation of the custodial parent

is not to be construed as a condition for

participation in the program of either

parent, as the safety of the custodial

parent and/or child takes precedence

over the direct gathering of information

from a custodial parent when domestic

violence or risk of domestic violence is

a factor. If a grantee wishing to enroll a

noncustodial parent under the above

eligibility criterion is not able to verify

receipt of benefits and services from the

custodial parent due to the risk of

domestic violence, the grantee should

attempt to get this information from the

responsible agency, or should employ

the presumptive eligibility

determination methods outlined below.

Presumptive Eligibility Determination.

We are especially seeking comments on

the IFR2’s method of determining if a

minor child is eligible for assistance

under the Food Stamps Act of 1977,

benefits under the supplemental

security income program under Title

XVI (SSI), medical assistance under

Title XIX (Medicaid), or child health

assistance under title XXI of the Social

Security Act (SCHIP). For purposes of

this new IFR2, we offer the following

method.

In cases where the child or custodial

parent is not receiving benefits, or when

there is not a timely response from the

responsible agency, the State or the

operating entity must develop its own

reasonable method for determining

whether a child is eligible for benefits

under any of the above-specified

programs. The method devised by the

operating entity may include an

objective standard to be used as a proxy

determination for eligibility for the

specified programs. For example, the

State may adopt an income test under

which an individual or family would be

eligible for one or more of these

programs for purposes of determining

WtW noncustodial parent eligibility.

In general, SCHIP has the simplest

eligibility of the four programs,

requiring only an income determination.

In most States, the SCHIP program is

also the most generous program (i.e., it

has the highest minimum income level

for eligibility purposes), with 30 States

providing benefits for children with

family incomes up to 200 percent of the

poverty guidelines. To determine

eligibility for SCHIP, and hence

qualification of the noncustodial parent

as meeting this portion of the criteria in

these States, it makes sense for the State

or an operating entity to establish a

presumptive eligibility guideline for

WtW purposes based on the SCHIP

income level for that State since this

program likely has the largest group of

potentially eligible individuals and

families. For those States where SCHIP

eligibility is set at a level lower than 200

percent of poverty, or where another of

the programs identified may have more

generous eligibility criteria, States and

operating entities should consider

adopting the eligibility criteria which is

most generous of the four specified

programs as a presumptive eligibility

guideline for determining eligibility for

noncustodial parents under WtW. The

website which discusses State income

eligibility limits for SCHIP may be

found at http://www.insurekidsnow.gov/

childhealth/states/states.asp.

Upon determining presumptive

eligibility for the WtW program based

on any of the relevant programs,

operating entities should notify the

noncustodial parent or the custodial

parent, if the address is known, that his/

her children may be eligible for

additional services. Determining

presumptive eligibility for WtW under

this provision does not change the

application or eligibility requirements

for any other programs. In most

programs, only the custodial parent or

child’s caretaker is able to make

application for benefits or services.

Additional Eligibility Requirement for

Noncustodial Parents: Personal

Responsibility Contracts. The third

factor in the eligibility determination

process for noncustodial parents under

the 1999 Amendments is participation

in a personal responsibility contract.

This essential element for the

enrollment of noncustodial parents is

covered in a new section of the

regulations. A description of the

contents, the parties to the contract, and

time frames is contained in a new

§ 645.215, and is discussed in this

section of the preamble under that

designation.

Who May Be Served as an Individual in

the ‘‘Other Eligibles’’ (30 percent)

Provision? (§ 645.213)

This section describes the new

eligibility criteria for individuals under

the 30 percent provision as required by

the 1999 Amendments. The new 30

percent criteria retain eligibility for

individuals who are receiving TANF

assistance and who have characteristics

associated with, or predictive of long

term welfare dependence, as determined

by the State in consultation with the

local operating entities. The examples

given in IFR1 of school dropout, teenage

pregnancy or having a poor work history

remain as guidance. The 1999

Amendments also allow local boards to

establish criteria for determining if an

individual has significant barriers to

self-sufficiency.

New provisions in the amendments

also add two new groups of eligible

individuals to those who may be served

under the ‘‘other eligibles’’ provisions of

§ 645.213. These are certain individuals

who have been in foster care and

custodial parents with incomes below

the poverty line.

The provision at § 645.213(c) of IFR1

provided eligibility under the 30

percent provision for individuals with

characteristics associated with longterm welfare dependence but who were

not TANF recipients because they had

reached federal or State-imposed time

limits. We have deleted this provision

because these individuals can be served

under the 70 percent provisions at

§ 645.212(b) as a result of the 1999

Amendments.

Individuals Who Have Been in Foster

Care. Section 645.213(c) provides that

an individual who is at least 18 but not

yet 25 years of age, who was in foster

care before age 18, is eligible for the

WtW program under the ‘‘’other

eligibles’’ portion. The 1999

Amendments provide that the

individual must have been a recipient of

foster care maintenance payments, as

defined in section 475(4) of the Social

Security Act (42 U.S.C. 675(4)), or was

in foster care under the responsibility of

the State. This foster care could have

occurred in, but is not limited to, family

homes, group homes or child care

institutions.

Section 475(4) of the Social Security

Act contains a definition of ‘‘foster care

maintenance payments.’’ Section 472 of

the Social Security Act describes the

Federal Foster Care Maintenance

Payments Program itself.

It should be noted that the definition

of foster care under the responsibility of

the State includes children on whose

behalf Federal foster care payments

were made. Thus, for WtW eligibility

purposes, all individuals under foster

care in the State, whether or not State

or Federal funds are paid on the

individuals’ behalf, are considered to

have been under the responsibility of

the State. For assistance in determining

eligibility for WtW, operating entities

should contact the appropriate State

Child Welfare or Child Protective

Services Agency to verify whether, in

fact, an individual was in its foster care

system.

Recruiting Youth Who Have Been in

Foster Care. We suggest that operating

entities contact their State’s

Independent Living Coordinator to

ensure that former foster care

individuals who meet the eligibility

requirement are referred to WtW

2706 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

programs. Grantees can find the

Independent Living Coordinator in their

area by calling their State Department of

Health and Human Services.

Custodial Parents With Incomes

Below the Poverty Line. A new category

of eligible WtW participants under the

‘‘other eligibles’’ provision is custodial

parents with incomes below the poverty

line. Receipt of TANF or other public

assistance is not a requirement for

eligibility under this provision. To

ensure consistency with other Federal

programs and among States,

§ 645.213(c)(1) provides that operating

entities must use the most recent DHHS

Poverty Guidelines to determine

whether an individual’s income is

below the poverty line. The Guidelines

are updated annually, as required by

section 673(2) of the Omnibus Budget

Reconciliation Act (OBRA) of 1981

(Pub. L. 97–35). The 1999 DHHS

Poverty Guidelines are available in the

Federal Register, at 64 FR 13428–13430

(Mar. 18, 1999), or on the following

website: http://aspe.hhs.gov/poverty/

00poverty.htm.

Determination of Income. To

determine whether an individual’s

income is below the poverty line,

§ 645.213(c) provides a method that is

based upon the WIA method for

determining income under the

definition of ‘‘low income individual,’’

at WIA section 101(25). This method

entails utilizing total family income for

the last six months with exclusions for

unemployment compensation, child

support payments, cash payments under

a Federal, State or local income-based

public assistance program, and old-age,

survivors benefits received under

section 202 of the Social Security Act

(42 U.S.C. 402), and other amounts

specifically excluded by any other

Federal statute for consideration as

income.

Allowing each State to determine

income could lead to many variations

on what is considered income as there

are a variety of income requirements

among the various entitlement programs

such as Food Stamps and Medicaid.

There are also variations within the

same programs from one State to

another. The WIA-based method

adapted here would provide consistency

among operating entities while fulfilling

the intent of serving low income

custodial parents.

Receipt of cash payments for a

Federal, State, or local income-based

public assistance program might be an

acceptable indication that an

individual’s income is below the

poverty line for purposes of meeting the

eligibility criteria in § 645.213(c)(1).

However, it is acknowledged that some

States benefits and services are provided

to individuals and families whose

income may be above the poverty line.

If the operating entity is able to confirm

that receipt of a particular kind of

assistance is limited to individuals with

incomes below the poverty line, receipt

of assistance from that program would

be an acceptable proxy for income

below the poverty line. If the program

used as a proxy income test also serves

individuals or families with incomes

above the poverty line, then operating

entities must take care to determine that

individuals served with WtW funds

meet the income test of § 645.213(c)(1).

For programs limited to individuals or

families below the poverty line,

documented receipt of assistance will

suffice for purposes of complying with

§ 645.213(c)(1).

Finally, as provided in WIA low

income guidelines, a custodial parent

with a disability whose own income

includes receipt of cash payments under

a Federal, State or local income-based

public assistance program, or whose

own income for the prior six month

period with the exclusions discussed

above, does not exceed the poverty line

would be eligible under this provision.

The disabled individual may be a

member of a family whose income does

not meet these requirements. The

overall consistency with WIA’s

definition of ‘‘low-income individual’’

should enhance the partnership at the

local level required between WtW and

WIA.

How Will Welfare-to-Work Participant

Eligibility Be Determined? (§ 645.214)

Section 645.214 has been revised to

reflect the 1999 Amendments’ addition

of new groups of eligible individuals,

and its removal of the barriers to

employment formerly required under

§ 645.212(a)(2). As amended, the IFR2

requires that operating entities have

mechanisms in place to determine the

eligibility of all participants. It is

especially important that operating

entities have effective mechanisms in

place to determine the eligibility of

noncustodial parents as well as

individuals formerly in foster care,

because these groups have not

traditionally been closely attached to

the TANF system. As described above,

this section provides States and

operating entities with authority to use

a presumptive eligibility determination

procedure for purposes of noncustodial

parent eligibility under

§ 645.212(c)(2)(iii), when WtW

eligibility is based upon the minor

child’s eligibility for other programs.

What Must a WtW Operating Entity

That Serves Noncustodial Parents Do?

(§ 645.215)

Preference. According to the 1999

Amendments, among all eligible

noncustodial parents, preference for

admission must be given to those

noncustodial parents of minor children

who are, or whose custodial parents are,

long-term TANF recipients (i.e.,

received TANF for at least 30 months or

will become ineligible for TANF within

12 months due to time limits). However,

these noncustodial parents eligible

under § 645.212(c)(2)(i) do not have

preference over all other categories of

eligible participants, just over other

noncustodial parents.

In order to satisfy this requirement for

preference to noncustodial parents of

minor children who are, or whose

custodial parents are, long-term

recipients of TANF, § 645.214 requires

that operating entities must create a

mechanism to implement this

preference. However, in creating this

mechanism to establish preference for

these noncustodial parents, we would

like to make clear that this does not

mean that this category of eligible

noncustodial parents must be exhausted

before any other category of eligible

noncustodial parents may be served.

The operating entity may establish a

process that gives preference to

noncustodial parents eligible under

§ 645.212(c)(2)(i) and that also provides

services to noncustodial parents eligible

under the other provisions of

§ 645.212(c)(2).

Personal Responsibility Contracts.

The WtW operating entity must ensure

the fulfillment of the personal

responsibility contract provision of

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

Section 645.215(c) requires that

noncustodial parents participating in a

Welfare-to-Work program must comply

with the terms of a personal

responsibility contract as a condition of

their eligibility and continued

participation in the WtW program. The

parties to the contract are (1) the

noncustodial parent, (2) the entity

operating the WtW program and (3) the

agency responsible for administering the

State child support enforcement plan

under title IV, part D of the Social

Security Act (IV–D agency, or Child

Support Enforcement agency). In

drawing up the personal responsibility

contract, the parties must take into

consideration the employment and

child support status of the noncustodial

parent.

The State IV–D agency has an

important role in establishing personal

responsibility contracts, because these

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2707

contracts involve matters relating to

paternity (if the participant is male),

establishing and monitoring child

support orders, and modification of

such orders as program participation

warrants. Section 645.215(c)(2) requires

that the State IV–D agency be a party to

the personal responsibility contract. We

expect that the WtW operating entity

and the IV–D agency will develop a

working relationship at the local level

so that personal responsibility contracts

are executed in a timely fashion.

However, the Secretary may permit the

WtW operating entity to enter into a

personal responsibility contract with a

noncustodial parent, without the State

IV–D agency as a party to that contract,

if the operating entity demonstrates,

through written documentation, that it

is not able to coordinate with the IV–D

agency. We expect that this will be a

rare occurrence, and will issue guidance

on how to demonstrate this in the

future.

Content of the Personal Responsibility

Contract. Section 645.215(c)(3) requires

that the personal responsibility contract

contain certain specified elements. The

first required element is a commitment

by the noncustodial parent to cooperate,

at the earliest opportunity, in the

establishment of the paternity of the

minor child (if the participant is male).

Paternity may be established through

voluntary acknowledgment or through

other procedures that may be pursued

by the WtW operating entity and/or the

State IV–D agency. The noncustodial

parent must commit to cooperate with

the State IV–D agency in establishing a

child support order, if one is not already

in place.

It is very important to remember that

the cooperation of the custodial parent

must not be required as a condition of

the noncustodial parent’s eligibility.

The 1999 Amendments expressly state

that in order to protect custodial parents

and children at risk of domestic

violence, the custodial parent may not

be required to cooperate in the

establishment of paternity or

establishing and enforcing a support

order with regard to a child. The

cooperation of the custodial parent is

not a condition for participation in the

program of either parent, as the safety of

the custodial parent and/or child takes

precedence over the establishment of

paternity when domestic violence or the

risk of domestic violence is a factor.

However, because voluntary paternity

establishment can only be accomplished

with the consent and signatures of both

parents, issues of how to approach

custodial parents should be part of the

consultation that WtW programs have

with domestic violence organizations

(see discussion below in this section).

The second required element in the

personal responsibility contract is the

noncustodial parent’s commitment to

cooperate in the payment of child

support for the minor child. The parties

should take into consideration the

ability of the parent to pay the child

support during participation in the WtW

program. The IV–D agency might be able

to provide flexibility within their State

guidelines on the payment of child

support such as the establishment or

modification of a child support order

while noncustodial parents are

participating in the program, suspension

or reduction in the order, suspension of

interest accruing on arrears, suspension

of enforcement actions, such as driver’s

license suspension; and compromise of

child support debt owed to the State.

The third required element in the

personal responsibility contract is a

commitment from the noncustodial

parent to participate in the WtW

program in order to meet these child

support obligations. We expect that the

noncustodial parents will generally be

engaged in employment or work-related

activities that provide income at a level

that will allow these obligations to be

met in a timely fashion to benefit the

minor child. If a noncustodial parent is

less than 20 years of age, the individual

may engage in activities that relate to

obtaining a high school diploma or a

general equivalency degree, or other

education directly related to

employment. Because of the overall

intent to engage noncustodial parents in

the provision of monetary support to a

child, this other pre-employment

education must be directly related to

employment and should not exceed six

months in duration. This time limit is

consistent with the time limit on

vocational educational training and job

training which occur prior to

employment as provided in § 645.220 of

the IFR2, which is described below in

this section of the preamble. Education

directly related to obtaining a high

school diploma or a general equivalency

degree has no specific time limit but the

duration of participation should be

estimated and monitored by the

operating entity.

The fourth required element in the

personal responsibility contract is a

description of the services to be

provided by the WtW program to the

noncustodial parent which are designed

to assist the noncustodial parent to

obtain and retain employment and

increase his or her earnings to enhance

his or her financial and emotional

contributions to the well-being of the

child.

Documentation of the Personal

Responsibility contract. Section

645.212(c)(3) provides that the personal

responsibility contract may be either an

oral or written agreement. We believe it

is in the best interest of all parties that

the agreed-upon terms of the personal

responsibility contract be clearly

described in a written document.

However, if all the required parties

choose to enter into an oral personal

responsibility contact, meeting all the

required conditions, we strongly

encourage WtW operating entities to

document the oral personal

responsibility contract so that there is a

record of what agreements the parties

reached. An example of such

documentation would be a notation in

the participant’s file noting the date the

oral contract was made, the parties to

the contract, and the terms of the

contract. We also strongly recommend

that the noncustodial parent be given a

copy of the documentation or a letter

summarizing the terms agreed upon for

the sake of consistency in following up

on the oral contract during the period of

enrollment in the program.

Timeframe for the Establishment of

Personal Responsibility Contracts.

Under § 645.215(c)(4), the parties must

enter into a personal responsibility

contract no later than 30 days after the

noncustodial parent enrolls in a WtW

program and is receiving services

through a Federally funded WtW

project. When there is good cause, the

operating entity has the option of

extending this time period to no later

than 90 days for itself or its

subrecipients. The entity has the

discretion to grant such an extension on

an individual or a broader basis. It is up

to the operating entity to decide what is

good cause for the extension. For

example, the entity may require a

showing of a particular reason why

more than 30 days is needed in

individual cases, or may determine that

more than 30 days is generally needed

and grant an across-the-board extension.

Pre-existing Personal Responsibility

Contracts. For participants for whom

similar personal responsibility

agreements already exist, these preexisting agreements may be used for

WtW purposes, as long as they contain

the elements described in § 645.215(c).

Therefore, any pre-existing agreements

may be adapted to incorporate a

commitment on the part of the

noncustodial parent to cooperate in

establishing paternity (if male), paying

child support, and participating in WtW

services designed increase his/her

employment and earnings if it does not

already contain these elements.

2708 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

Domestic Violence Consultation. WtW

entities that operate a program serving

noncustodial parents under the new

noncustodial parent eligibility criteria

in § 645.212(c) must take certain

precautions when determining

eligibility for the program and

establishing personal responsibility

contracts with noncustodial parents. As

described above, the statute explicitly

states that, to protect custodial parents

and children at risk of domestic

violence, the custodial parent cannot be

required to cooperate in the

establishment of paternity or

establishing and enforcing a support

order with regard to a child. To assist

the WtW operating entity with

developing such precautions,

§ 645.215(b) requires that it must

consult with domestic violence

prevention and intervention

organizations before operating a project

to serve noncustodial parents under

§ 645.212(c). This consultation is

intended to raise the awareness of

operating entities about the issues

associated with domestic violence, and

to provide operating entities with the

practical knowledge and resources

needed to safely and effectively address

domestic violence issues as they arise in

programs where noncustodial parents

are served.

Operating entities who have been

serving noncustodial parents in their

WtW programs prior to the passage of

the 1999 Amendments are strongly

encouraged to amend their operating

procedures to include regular and

continuing consultation with domestic

violence organizations regarding their

services to these individuals. This

consultation is mandatory if the

operating entity wishes to continue to

enroll noncustodial parents under the

criteria set forth in this IFR2.

Domestic violence information,

including assessment and intervention

resources, hotline and referral telephone

numbers, confidentiality protections

information, legal, supportive services,

and safety planning resources; and

contact information for domestic

violence organizations, will be posted

on the WtW web site shortly (http://

wtw.doleta.gov). Operating entities may

use this information to locate domestic

violence organizations in their areas and

fulfill the consultation requirement. We

urge WtW operating entities to use these

resources to help meet the consultation

requirement and to ensure that their

programs fully address domestic

violence issues and concerns in the

context of the provision of services to

noncustodial parents, and the provision

of services to custodial parents and

children at risk for domestic violence.

What Activities are Allowable Under

this Part? (§ 645.220)

As provided in the 1999

Amendments, new § 645.220(b) adds

short-term vocational educational

training and job training to the list of

allowable WtW activities. Under this

provision, operating entities may

provide these activities before the

participant enters into employment or a

WtW employment activity (as specified

in § 645.220(c), formerly § 645.220(b)).

These training activities have been

allowed as post-employment services

since the inception of the WtW program.

We have not defined the terms

‘‘vocational educational training’’ and

‘‘job training,’’ to permit the States and

competitive grantees to define them.

However, under any such definition,

these activities must be related to

preparing a participant for employment.

Therefore, for example, English-as-aSecond Language training must be

directly tied to the needs of the

workplace, such as by teaching the

terms a participant will need for a

particular job, in order to be allowable

vocational educational training.

A participant may only receive up to

six calendar months of vocational

educational training or job training prior

to entering employment or beginning a

WtW employment activity. The six

month period begins on the date the

participant enters a training activity and

must end no later than six calendar

months from the beginning date, unless

the participant enters into employment

or a WtW employment activity before

the conclusion of the six month period.

In that case, the six month ‘‘clock’’

stops. If a participant leaves the

employment activity or ceases to be

employed, the participant could again

enroll in vocational educational training

or job training. Re-enrollment restarts

the ‘‘clock’’ and is available for the time

remaining in the six month period. In

no case may a participant receive, in

aggregate, greater than six months of

pre-employment vocational educational

training or job training.

Although vocational education and

job training are new additions to the list

of allowable activities, these activities

may, in some cases, be the same as those

provided by an operating entity as postemployment services to participants

who are employed or participating in a

WtW employment activity. The

important distinction is that no time

limit applies to any type of vocational

educational training or job training

when the participant is employed or

engaged in an employment activity, as

described in § 645.220(c).

For What Activities Must Local

Workforce Investment Boards and PICs

Use Contracts or Vouchers? (§ 645.221)

When enacted in 1997, the WtW

statute required that all WtW operating

entities, both competitive and formula,

provide job readiness, job placement

and post-employment activities through

job vouchers or through contracts with

public or private providers. This

requirement anticipated the subsequent

passage of the WIA by generally putting

PIC’s into the role of oversight, planning

and policy direction as opposed to

program operations. Under WIA, PIC’s

will be replaced by local workforce

investment boards. Unlike PIC’s under

JTPA, local workforce investment

boards generally may not directly

provide WIA services. The Balanced

Budget Act’s attempt to anticipate WIA

had several unintended consequences.

Although PIC’s were the presumed

local operating entities under the WtW

formula grant program, they have not

been in all cases. In addition, most WtW

competitive grantees are not PIC’s. WtW

competitive grantees are mostly local

community-based public or private

organizations with special capabilities,

innovations or partnerships that allow

them to operate an effective program at

the community level. By prohibiting all

WtW grantees from directly providing

job readiness, job placement, and postemployment services in order to

anticipate a changing local board role

under WIA, the WtW statute

unintentionally restricts communitybased organization grantees from

providing direct services which they are

uniquely qualified to deliver.

The 1999 Amendments correct this

unintended consequence by allowing

WtW operating entities that are not

PIC’s or local workforce investment

boards to provide services directly,

including the previously limited job

readiness, job placement, and postemployment services.

Prior to the passage of the 1999

Amendments, we issued a Q and A in

Training and Employment Guidance

Letter (TEGL) No. 5–98 in an attempt to

clarify this issue. In TEGL 5–98, we said

that a WtW operating entity may not

directly operate a program to provide

job readiness, job placement or postemployment services. However, a WtW

operating entity may directly operate a

work experience program, a community

service program or an on-the-job

training program. TEGL 5–98 states that

where job readiness, job placement or

post-employment services are a

reasonable and necessary component of

the operating entity’s work experience

program, a community service program

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2709

or an on-the-job training program, then

the operating entity could provide those

services as part of the overall program.

We have found that this guidance was

widely misinterpreted in the field, and

that many operating entities may have

provided direct services where the

circumstances would not have allowed

this under the narrow circumstances

permitted under TEGL 5–98. We now

recognize that our guidance was not

clear enough to ensure all grantees were

in conformity with the contract/voucher

requirement.

The 1999 Amendments have now

corrected the unintended consequence

of applying the contract/voucher

requirement to all operating entities, by

specifically permitting all WtW

operating entities that are not PICs or

local boards to directly provide job

readiness, job placement and postemployment services. We do not intend

to penalize operating entities which

may have previously violated the

contract/voucher requirement while

relying in good faith on guidance

promulgated by the Department that

was open to misinterpretation.

However, we do intend to ensure that

operating entities that are PIC’s or local

boards conform with the contract/

voucher requirement. Towards that end,

we have added a new § 645.221 to

clarify how the contract/voucher

requirement applies to PIC’s and local

boards and other operating entities, and

to provide a grace period for entities

that may have violated this requirement

in reliance on our guidance. Section

645.221(b) provides that all PIC’s and

local boards operating WtW programs

must come into compliance with the

contracts and vouchers requirements in

this section by February 12, 2001.

What are the Reporting Requirements

for Welfare-to-Work Programs?

(§ 645.240)

The WtW Amendments of 1999

eliminated the reporting requirements

for WtW formula grants found at section

411(a)(1)(A) and amended section

403(a)(5)(C) of the Act to grant

responsibility for simplified WtW State

formula and competitive grant financial

and participant data collection and

reporting to the Secretary of Labor, in

consultation with the Secretary of

Health and Human Services, States, and

organizations that represent State or

local governments.

The previous participant data

collection and reporting requirements

mandated that States collect on a

monthly basis, and report to the

Department of Health and Human

Services on a quarterly basis, numerous

disaggregated case record data on

individuals who were receiving

assistance under a State TANF program,

and who were also participating in a

WtW program. The Secretary of Labor

was responsible for establishing

participant data collection and reporting

requirements for WtW competitive grant

recipients and for establishing financial

reporting requirements.

Under the 1999 Amendments, the

Secretary of Labor will establish

requirements for the collection and

maintenance of financial and

participant information and the

reporting of that information by WtW

State formula grants and WtW

competitive grantees. Section 645.240

has been revised to reflect the

Secretary’s authority to establish these

reporting requirements.

What Factors Will Be Used in

Measuring State Performance?

(§ 645.420)

As originally enacted in section

403(a)(5)(E) of the Act, $100 million was

set aside from FY 1999 funds to provide

a performance bonus to successful

States. This bonus award was to be

made in FY 2000. The 1999

Amendments reduced the amount

available for performance bonuses to

$50 million, and require that no outlays

of these funds occur before October 1,

2000 (FY 2001). As discussed in Section

I of this preamble, we have revised

§ 645.420 to reflect the criteria that will

used to award performance bonuses to

successfully performing States.

Additionally, we have amended

paragraph (c) of this section to indicate

that bonus awards will not be made

until FY 2001.

Under What Circumstances May

States Disclose Information to Aid

Administration of Welfare-to-Work

Grant Funds? The 1999 Amendments

made several changes to existing

information disclosure requirements, in

order to assist the WtW system in

serving noncustodial parents. The 1999

Amendments amended sections

403(a)(5) and 454A(f) of the Act to

authorize State IV–D agencies and State

TANF agencies to share certain

information on noncustodial parents

with local workforce investment boards

or PIC’s for the purpose of identifying

and contacting the individuals about

participation in the WtW program. The

State agencies may share the names,

addresses, telephone numbers and

identifying case number information of

noncustodial parents residing in the

local area/service delivery area of the

local board or PIC. The information can

only be shared with local boards or PICs

operating WtW programs. The State IV–

D agencies and State TANF agencies

disclosing this information must ensure

that the recipients of this information

have procedures in place for

safeguarding the privacy of the

information and for ensuring that the

information will be used solely for WtW

recruiting purposes.

We recognize the need for guidance

about information sharing under the

1999 Amendments, and about the

safeguards needed for protecting that

information. We do not, however,

intend to issue regulations on this

subject, since the ultimate responsibility

for ensuring that States safeguard this

information lies with DHHS. Instead, we

consulted with DHHS, and intend to

issue information and guidance on the

applicable requirements in the future,

and expect that the specific safeguards

to be established will be left up to each

State.

In May, 2000 we distributed TEGL

No. 11–99 which provides ‘‘Joint

Guidance on Strategies to Enhance the

Recruitment, Referral, Eligibility

Determination, and Service Provision

Processes Between Welfare-to-Work,

Temporary Assistance for Needy

Families, and Child Support

Enforcement Entities.’’ This was a

product of earlier collaboration between

the Department and DHHS to improve

WtW program operations by presenting

strategies and suggestions on crosscutting issues including the sharing of

information on noncustodial parents.

This document can be found at

http:wtw.doleta.gov/11–99at.htm.

IV. Administrative Information

A. Paperwork Reduction Act

Information collection requirements

are contained in this rule at § 645.240.

As required by the Paperwork

Reduction Act of 1995 (44 U.S.C.

3507(d)), the Department submitted

pertinent reporting documents and

justification separately to OMB at the

time IFR1 was published. OMB has

assigned Control Number 1205–0385 to

the Welfare-to-Work Formula (ETA

9068) and Competitive (ETA 9068–1)

Cumulative Quarterly Financial Status

Reports.

Because the 1999 Amendments called

for the Department to simplify reporting

requirements and to collect participant

data, we have revised the existing

reporting formats and instructions for

competitive and formula grantees, in

consultation with DHHS and State and

local government representatives. On

August 22, 2000, we published a Notice

in the Federal Register inviting public

comment on the proposed information

collection package. After the comment

period, we will submit this revised

2710 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

information collection to OMB for

approval. Therefore, the information

collection requirements associated with

this rulemaking will not become

effective until approved by OMB.

B. Executive Order 13132 (Federalism)

ETA has reviewed this rule in

accordance with Executive Order 13132

regarding Federalism, and has

determined that it does not have

‘‘federalism implications.’’ While this

rulemaking was begun prior to the

issuance of Executive Order 13132, we

have attempted to provide States with

the maximum administrative discretion

possible. As described in the preamble

to IFR1, we have conducted extensive

consultations with State and local

governmental officials in the

development of IFR1, and this Final

Rule.

Shortly after enactment of the 1999

Amendments, the Department consulted

with public interest groups and

intergovernmental groups on the

development of regulations necessary to

implement the 1999 Amendments.

Included in the consultation process

were representatives of the National

Association of Counties, the Conference

of Mayors, the National Governors’

Association, and the Interstate

Conference of Employment Security

Agencies.

C. Regulatory Flexibility and Regulatory

Impact Analysis, SBREFA; Family Wellbeing

The Regulatory Flexibility Act (5

U.S.C. Chapter 6) requires the Federal

government to anticipate and reduce the

impact of rules and paperwork

requirements on small businesses and

other small entities. ‘‘Small entities’’ are

defined as small businesses (those with

fewer than 500 employees, except where

otherwise provided), small non-profit

organizations (those with fewer than

500 employees, except where otherwise

provided) and small governmental

entities (those in areas with fewer than

50,000 residents). This rule will affect

primarily the 50 States, the District of

Columbia, and certain Territories. As

described in the preamble to IFR1, ETA

has taken a variety of measures to

minimize any potential burdens for

grant applicants and recipients in order

to maximize the resources available to

achieve the purposes of the WtW

program. The Department has assessed

the potential impact of the Final Rule

and IFR2, consulting with a wide range

of small entities, in order to identify any

areas of concern. Therefore, based on

that assessment, the Department

certifies that these Rules, as

promulgated, will not have a significant

impact on a substantial number of small

entities.

In addition, under the Small Business

Regulatory Fairness Act (SBREFA) (5

U.S.C. Chapter 8), the Department has

determined that these are not ‘‘major

rules’’, as defined in 5 U.S.C. 804(2).

The Department certifies that the Final

Rule and IFR2 have been assessed in

accordance with Pub. L. 105–277, 112

Stat. 2681, for their effect on family

well-being. The purpose of the WtW

program is to provide job opportunities

and support and job retention services

to current or former TANF recipients,

low income custodial parents,

noncustodial parents and other eligible

individuals so that they may attain

economic self-sufficiency. Programs are

designed at the State and local level to

fulfill this purpose with the effect of

enhancing family well-being through

increased earnings and increased ability

for noncustodial parents to pay child

support.

D. Executive Order 12866

Executive Order 12866 requires that

regulations be drafted to ensure that

they are consistent with the priorities

and principles set forth in the Executive

Order. We have determined that these

rules are consistent with these priorities

and principles. This rulemaking

implements statutory authority based on

broad consultation and coordination. It

reflects our response to comments

received on IFR1 that we issued on

November 18, 1997.

The Executive Order encourages

agencies, as appropriate, to provide the

public with meaningful participation in

the regulatory process. We consulted

with the Departments of Health and

Human Services, Housing and Urban

Development, and Transportation, and

with other responsible agencies as well

as with State and local officials and

their representative organizations, in

addition to a broad range of advocacy

groups and others to obtain their views

prior to the publication of IFR2. We also

considered comments received in

response to IFR1. We have responded to

the comments received in the

‘‘Background’’ and the ‘‘Summary and

Explanation’’ sections of the preamble.

To a considerable degree, these rules

reflect the comments that we received in

response to IFR1. They also reflect the

intent of the Act to move hard-toemploy welfare recipients and certain

noncustodial parents into unsubsidized

employment and economic selfsufficiency. We have determined that

the revisions made by the Final Rule

and IFR2 will not have an adverse effect

in a material way on the nation’s

economy.

This is a significant regulatory action

under section (3)(f)(1) of Executive

Order 12866 and, therefore, the Final

Rule and IFR2 have been reviewed by

the Office of Management and Budget in

accordance with that Order.

E. Unfunded Mandates Reform Act of

1995

Section 202 of the Unfunded

Mandates Reform Act of 1995 (2 U.S.C.

1501 et seq.) requires that a covered

agency prepare a budgetary impact

statement before promulgating a rule

that includes any Federal mandate that

may result in the expenditure by State,

local, and Tribal governments, in the

aggregate, or by the private sector, of

$100 million or more in any one year.

If a covered agency must prepare a

budgetary impact statement, section 205

further requires that it select the most

cost-effective and least burdensome

alternative that achieves the objectives

of the rule and is consistent with the

statutory requirements. In addition,

section 203 requires a plan for

informing and advising any small

government that may be significantly or

uniquely impacted by the rule.

We have determined that the

revisions made by the Final Rule and

IFR2 will not require the expenditure by

State, local, or Tribal governments, in

the aggregate, or by the private sector, of

more than $100 million in any one year.

Accordingly, we have not prepared a

budgetary impact statement, specifically

addressed the regulatory alternatives

considered, or prepared a plan for

informing and advising any significantly

or uniquely impacted small government.

F. Effective Date and Absence of Notice

and Comment

In 1997, we provided a period of 60

days for public comment on IFR1. We

fully reviewed all comments, and

considered input from our State, local

and Federal partners through our

consultation process. The Final Rule

will become effective on February 12,

2001.

For IFR2, we have determined,

pursuant to 5 U.S.C. 553(b)(3)(B), that

the statutory mandate to issue interim

final regulations constitutes good cause

for waiving notice and comment

proceedings for IFR2. Moreover, because

certain changes made by the 1999

Amendments are already in effect, it is

important to have regulations

implementing these provisions as soon

as possible. Accordingly, we find that

the issuance of a proposed rule rather

than an interim final rule would be

contrary to the public interest. IFR will

become effective on February 12, 2001.

IFR2 provides a 60-day comment

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2711

period, so that the public may submit

comments on regulatory provisions

implementing the 1999 Amendments.

The information collection requirements

associated with the rule will not be

effective until approved by OMB.

G. Catalog of Federal Domestic

Assistance Number

The program is listed in the Catalog

of Federal Domestic Assistance at No.

17.253, ‘‘Employment and Training

Assistance-Welfare-to-Work Grants to

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

List of Subjects in 20 CFR Part 645

Employment programs, Grant

programs-labor, Welfare-to-Work

programs.

Signed at Washington, D.C. this 4th day of

January, 2001.

Alexis M. Herman,

Secretary of Labor.

Raymond L. Bramucci,

Assistant Secretary of Labor, Employment

and Training Administration.

For the reasons set out in the

preamble, 20 CFR part 645 is revised to

read as follows:

PART 645—PROVISIONS GOVERNING

WELFARE-TO-WORK GRANTS

Subpart A—Scope and Purpose

Sec.

645.100 What does this part cover?

645.110 What are the purposes of the

Welfare-to-Work program?

645.120 What definitions apply to this part?

645.125 What are the roles of the local and

State governmental partners in the

governance of the WtW program?

645.130 What are the effective dates for the

Welfare-to-Work 1999 Amendments?

645.135 What is the effective date for

spending Federal Welfare-to-Work

formula funds on newly eligible

participants and newly authorized

services?

Subpart B—General Program and

Administrative Requirements

645.200 What does this subpart cover?

645.210 What is meant by the terms

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

phrase ‘‘an entity that operates a project’’

with Welfare-to-Work funds?

645.211 How must Welfare-to-Work funds

be spent by the operating entity?

645.212 Who may be served under the

general eligibility and noncustodial

parent eligibility (primary eligibility)

provision?

645.213 Who may be served as an

individual in the ‘‘other eligibles’’ (30

percent) provision?

645.214 How will Welfare-to-Work

participant eligibility be determined?

645.215 What must a WtW operating entity

that serves noncustodial parent

participants do?

645.220 What activities are allowable under

this part?

645.221 For what activities and services

must local boards use contracts and

vouchers?

645.225 How do Welfare-to-Work activities

relate to activities provided under TANF

and other related programs?

645.230 What general fiscal and

administrative rules apply to the use of

Federal funds?

645.233 What are the time limitations on

the expenditure of Welfare-to-Work grant

funds?

645.235 What types of activities are subject

to the administrative cost limit on

Welfare-to-Work grants?

645.240 What are the reporting

requirements for Welfare-to-Work

programs?

645.245 Who is responsible for oversight

and monitoring of Welfare-to-Work

grants?

645.250 What procedures apply to the

resolution of findings arising from

audits, investigations, monitoring, and

oversight reviews?

645.255 What nondiscrimination

protections apply to participants in

Welfare-to-Work programs?

645.260 What health and safety provisions

apply to participants in Welfare-to-Work

programs?

645.265 What safeguards are there to ensure

that participants in Welfare-to-Work

employment activities do not displace

other employees?

645.270 What procedures are there to

ensure that currently employed workers

may file grievances regarding

displacement and that Welfare-to-Work

participants in employment activities

may file grievances regarding

displacement, health and safety

standards and gender discrimination?

Subpart C—Additional Formula Grant

Administrative Requirements and

Procedures

645.300 What constitutes an allowable

match?

645.310 What assurances must a State

provide that it will make the required

matching expenditures?

645.315 What actions are to be taken if a

State fails to make the required matching

expenditures?

645.320 When will formula funds be

reallotted, and what reallotment

procedures will the Secretary use?

Subpart D—State Formula Grant

Administration

645.400 Under what conditions may the

Governor request a waiver to designate

an alternate local administering agency?

645.410 What elements will the State use in

distributing funds within the State?

645.415 What planning information must a

State submit in order to receive a

formula grant?

645.420 What factors will be used in

measuring State performance?

645.425 What are the roles and

responsibilities of the State(s) and local

boards or alternate administering

agencies?

645.430 How does the Welfare-to-Work

program relate to the One-Stop system

and Workforce Investment Act (WIA)

programs?

Subpart E—Welfare-to-Work Competitive

Grants

645.500 Who are eligible applicants for

competitive grant funds?

645.510 What is the required consultation

with the Governor?

645.515 What are the program and

administrative requirements that apply

to both the formula grants and

competitive grants?

645.520 What are the application

procedures and timeframes for

competitive grant funds?

645.525 What special consideration will be

given to rural areas and cities with large

concentrations of poverty?

Subpart F—Administrative Appeal Process

645.800 What administrative remedies are

available under this Part?

Authority: 42 U.S.C. 603 (a)(5)(C)(viii).

Subpart A—Scope and Purpose

§ 645.100 What does this part cover?

(a) Subpart A establishes regulatory

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

State and at the local area levels.

(b) Subpart B provides general

program requirements applicable to all

WtW formula and competitive funds.

The provisions of this subpart govern

how WtW funds must be spent, who is

eligible to participate in the program,

allowable activities and their

relationship to TANF, Governor’s

projects for long-term recipients,

administrative and fiscal provisions,

and program oversight requirements.

This subpart also addresses worker

protections and the establishment of a

State grievance system.

(c) Subpart C sets forth additional

administrative standards and

procedures for WtW Formula Grants,

such as matching requirements and

reallotment procedures.

(d) Subpart D sets forth the conditions

under which the Governor may request

a waiver to designate an alternate

administering agency, sets forth the

formula elements that must be included

in the within-State distribution formula,

the submission of a State annual plan,

the factors for measuring State

performance, and the roles and

responsibilities of the States and the

local boards or alternate administering

agencies.

(e) Subpart E outlines general

conditions and requirements for the

WtW Competitive Grants.

(f) Subpart F sets forth the

administrative appeals process.

(g) Regulatory provisions applicable

to the Indian and Native American

2712 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

Welfare-to-Work Program (INA WtW)

are found at 20 CFR part 646.

§ 645.110 What are the purposes of the

Welfare-to-Work Program?

The purposes of the WtW program

are:

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

noncustodial parents into transitional

employment opportunities which will

lead to lasting unsubsidized

employment and self-sufficiency;

(b) To provide a variety of activities,

grounded in TANF’s ‘‘work first’’

philosophy, to prepare individuals for,

and to place them in, lasting

unsubsidized employment;

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

which will assist the hard-to-employ

welfare recipient and certain

noncustodial parents to secure lasting

unsubsidized employment;

(d) To provide targeted WtW funds to

high poverty areas with large numbers

of hard-to-employ welfare recipients.

§ 645.120 What definitions apply to this

part?

The following definitions apply under

this part:

Act means Title IV, Part A of the

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

Adult means an individual who is not

a minor child.

Chief Elected Official(s) (CEOs)

means:

(1) The chief elected official of the

sole unit of general local government in

the service delivery area,

(2) The individual or individuals

selected by the chief elected officials of

all units of general local government in

such area as their authorized

representative, or

(3) In the case of a service delivery

area designated under section

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

representative of the chief elected

official for such area (as defined in

section 4(4)(C) of JTPA) or as defined in

section 101 of the Workforce Investment

Act of 1988.

Competitive grants means those grants

in which WtW funds have been

awarded by the Department under a

competitive application process to local

governments, PICs, and private entities

(such as community development

corporations, community-based and

faith-based organizations, disability

community organizations, and

community action agencies) who apply

in conjunction with a PIC or local

government.

Department or DOL means the U.S.

Department of Labor.

Employment activities means the

activities enumerated at § 645.220(b).

ETA means the Employment and

Training Administration of the U.S.

Department of Labor.

Fiscal year (FY) means any 12-month

period ending on September 30 of a

calendar year.

Formula grants means those grants in

which WtW funds have been allotted to

each Welfare-to-Work State, based on a

formula prescribed by the Act, which

equally considers States’ shares of the

national number of poor individuals

and of adult recipients of assistance

under TANF. The State is required to

distribute not less than 85 percent of the

allotted formula grant funds to service

delivery areas in the State; and the State

may retain not more than 15 percent for

projects to help long-term recipients of

assistance enter unsubsidized

employment. Unless otherwise

specified, the term ‘‘formula grant’’

refers to the 85 percent and 15 percent

funds.

Governor means the Chief Executive

Officer of a State.

IV–D Agency (Child Support

Enforcement) means the organizational

unit in the State that has the

responsibility for administering or

supervising the administration of the

State plan under title IV–D of the Act

(SSA).

Job Training Partnership Act or JTPA

means Public Law (Pub. L.) 97–300, as

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

Local area means a local workforce

investment area designated under

section 116 of the Workforce investment

Act of 1998, or a service delivery area

designated under section 101 of the Job

Training partnership Act, as

appropriate.

Local workforce investment board

(local board) means a local board

established under section 117 of the

Workforce Investment Act, or a Private

Industry Council established under

section 102 of the Job Training

Partnership Act (JTPA), which performs

the functions authorized at section 103

of the JTPA, or an alternate

administering agency designated under

section 405(a)(5)(A)(vii)(II) of the Act

and § 645.400 of this part.

Minor child means an individual who

has not attained 18 years of age, or has

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

in the equivalent level of vocational or

technical training).

MOE means maintenance of effort.

Under TANF, States are required to

maintain a certain level of spending on

welfare based on ‘‘historic’’ FY 1994

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

the Act).

PIC means a Private Industry Council

established under Section 102 of the Job

Training Partnership Act, which

performs the functions authorized at

Section 103 of the JTPA.

Political subdivision of a State means

a unit of general purpose local

government, as provided for in State

laws and/or Constitution, which has the

power to levy taxes and spend funds

and which also has general corporate

and police powers.

Private entity means any organization,

public or private, which is not a local

board, PIC or alternate administering

agency or a political subdivision of a

State.

PRWORA means the Personal

Responsibility and Work Opportunity

Reconciliation Act of 1996, Public Law

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

TANF program.

SDA means a service delivery area

designated under section 101 of the Job

Training Partnership Act or a local area

designated under section 116 of the

Workforce Investment Act of 1998, as

appropriate.

Secretary means the Secretary of

Labor.

Separate State program means a

program operated outside of TANF in

which the expenditures of State funds

may count for TANF MOE purposes.

State means the 50 States of the

United States, the District of Columbia,

the Commonwealth of Puerto Rico, the

US Virgin Islands, Guam, and American

Samoa, unless otherwise specified.

State TANF Program means those

funds expended under the State Family

Assistance Grant (SFAG), the basic

block grant allocated to the States under

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

TANF means Temporary Assistance

for Needy Families Program established

under PRWORA.

TANF MOE means the expenditure of

State funds that must be made in order

to meet the Temporary Assistance for

Needy Families Maintenance of Effort

requirement.

Unemployed means the individual is

without a job and wants and is available

for work.

WIA means the Workforce Investment

Act of 1998 (Pub. L. 105–220)(29 U.S.C.

2801 et seq.).

WtW means Welfare-to-Work.

WtW State means those States that the

Secretary of Labor determines have met

the five conditions established at

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

States that are determined to be WtW

States can receive WtW grant funds.

WtW statute means those provisions

of the Balanced Budget Act of 1997

containing certain amendments to

PRWORA and establishing the new

Welfare-to-Work program, amending

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2713

Title IV of the Social Security Act,

(codified at 42 U.S.C. 601–619).

§ 645.125 What are the roles of the local

and State governmental partners in the

governance of the WtW program?

(a) Local boards or alternate

administering agencies, in coordination

with CEO’s should establish policies,

interpretations, guidelines and

definitions to implement provisions of

the WtW statute to the extent that such

policies, interpretations, guidelines and

definitions are not inconsistent with the

WtW statute or regulations or with State

policies.

(b) States should establish policies,

interpretations, guidelines and

definitions to implement provisions of

the WtW statute to the extent that such

policies, interpretations, guidelines and

definitions are not inconsistent with the

WtW statute or regulations.

(c) The Secretary, in consultation with

other Federal Agencies, as appropriate,

may publish guidance on interpretations

of statutory and regulatory provisions.

State and local policies, interpretations,

guidelines and definitions that are

consistent with interpretations

contained in such guidance will be

considered to be consistent with the

WtW statute for purposes of this section.

§ 645.130 What are the effective dates for

the Welfare-to-Work 1999 Amendments?

The legislative changes made by the

1999 amendments:

(a) Are effective on November 29,

1999, except as provided in paragraphs

(b) and (c) of this section;

(b) Provisions relating to the

eligibility of participants for WtW

competitive grants are effective on

January 1, 2000;

(c)(1) Provisions relating to the

eligibility of participants for WtW

formula grants are effective on July 1,

2000, except that expenditures from

allotments to the States, as discussed in

§ 645.135 of this subpart, must not have

been made before October 1, 2000, for

individuals who would not have been

eligible under the criteria in effect

before the changes made by the 1999

Amendments;

(2) Provisions authorizing preplacement vocational educational

training and job training for WtW

formula grants, at § 645.220(b) of this

part, are effective on July 1, 2000, except

that expenditures from allotments to the

States, as discussed in § 645.135 of this

subpart, must not have been made

before October 1, 2000.

§ 645.135 What is the effective date for

spending Federal Welfare-to-Work formula

funds on newly eligible participants and

newly authorized services?

States and local areas may expend

matching funds beginning July 1, 2000.

States and local areas may incur unpaid

obligations within the normal course of

business, beginning July 1, 2000,

provided that the timing of those

transactions ensures that drawdown of

federal Welfare-to-Work formula funds

to liquidate the obligations did not

occur until October 1, 2000.

Subpart B—General Program and

Administrative Requirements

§ 645.200 What does this subpart cover?

This subpart provides general

program and administrative

requirements for WtW formula funds,

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

competitive grant funding (section

403(a)(5)).

§ 645.210 What is meant by the terms

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

phrase ‘‘an entity that operates a project’’

with Welfare-to-Work funds?

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

the statutory phrase ‘‘an entity that

operates a project’’, means:

(a) For WtW substate formula funds:

(1) ‘‘Entity’’ means the PIC, local

board (or the alternate administering

agency designated by the Governor and

approved by the Secretary pursuant to

§ 645.400 of this part) which

administers the WtW substate formula

funds in a local area(s). This entity is

referred to in §§ 645.211 through

645.225 of this part as the ‘‘operating

entity.’’

(2) ‘‘Project’’ means all activities,

administrative and programmatic,

supported by the total amount of the

WtW substate formula funds allotted to

the entity described in section (a)(1) of

this paragraph.

(b) For WtW Governors’ funds for

long-term recipients of assistance:

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

or organization to which the Governor

has distributed any of the funds for

long-term recipients of assistance, as

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

part. This entity is referred to in

§§ 645.211 through 645.225 of this part

as the ‘‘operating entity.’’

(2) ‘‘Project’’ means all activities,

administrative and programmatic,

supported by the total amount of one

discrete award of WtW Governors’ funds

for long-term recipients of assistance

awarded to the entity described in

section (b)(1) of this paragraph.

(c) For competitive WtW funds:

(1) ‘‘Entity’’ means an eligible

applicant, as described in § 645.500 of

this part, which is awarded a

competitive WtW grant. This entity is

referred to in §§ 645.211 through

645.225 of this part as the ‘‘operating

entity.’’

(2) ‘‘Project’’ means all of the

activities, administrative and

programmatic, supported by the total

amount of one discrete WtW

competitive grant awarded to the entity

described in section (c)(1) of this

paragraph (section 403(a)(5)(C)).

§ 645.211 How must Welfare-to-Work

funds be spent by the operating entity?

An operating entity, as described in

§ 645.210 of this subpart, may spend not

more than 30 percent of the WtW funds

allotted to or awarded to the operating

entity to assist individuals who meet the

‘‘other eligibles’’ eligibility requirements

under § 645.213 of this subpart. The

remaining funds allotted to or awarded

to the operating entity are to be spent to

benefit individuals who meet the

‘‘general eligibility’’ and/or

‘‘noncustodial parents’’ eligibility

requirements, under § 645.212 of this

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

§ 645.212 Who may be served under the

general eligibility and noncustodial parent

eligibility (primary eligibility) provision?

An individual may be served under

this provision if:

(a)(1) (S)he is currently receiving

TANF assistance under a State TANF

program, and/or its predecessor

program, for at least 30 months,

although the months do not have to be

consecutive; or

(2) (S)he will become ineligible for

assistance within 12 months due to

either Federal or State-imposed time

limits on the receipt of TANF

assistance. This criterion includes

individuals (as well as children of

noncustodial parents) exempted from

the time limits due to hardship under

section 408(a)(7)(C) of the Act or due to

a waiver because of domestic violence

under section 402(a)(7) of the Act, who

would become ineligible for assistance

within 12 months without the

exemption or waiver;

(b) (S)he is no longer receiving TANF

assistance because (s)he has reached

either the Federal five-year limit or a

State-imposed time limit on receipt of

TANF assistance (section 403(a)(5)(C) of

the Act); or

(c) (S)he is a noncustodial parent of a

minor child if:

(1) The noncustodial parent is:

(i) ‘‘Unemployed,’’ as defined in

§ 645.120 of this part,

(ii) ‘‘Underemployed,’’ as defined by

the State in consultation with local

2714 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

boards and WtW competitive grantees,

or

(iii) ‘‘Having difficulty paying child

support obligations,’’ as defined by the

State in consultation with local boards

and WtW competitive grantees and the

State Child Support Enforcement (IV-D)

Agency, and

(2) At least one of the following

applies:

(i) The minor child, or the custodial

parent of the minor child, meets the

long-term recipient of TANF

requirements of paragraph (a) of this

section;

(ii) The minor child is receiving or is

eligible for TANF benefits and services;

(iii) The minor child received TANF

benefits and services during the

preceding year; or

(iv) The minor child is receiving or

eligible for assistance under the Food

Stamp program, the Supplemental

Security Income program, Medicaid, or

the Children’s Health Insurance

Program; and

(3) The noncustodial parent is in

compliance with the terms of a written

or oral personal responsibility contract

meeting the requirements of § 645.215 of

this subpart.

(d) For purposes of determining

whether an individual is receiving

TANF assistance in paragraphs (a)(1) of

this section and § 645.213(a), TANF

assistance means any TANF benefits

and services for the financially needy

according to the appropriate income and

resource criteria (if applicable) specified

in the State TANF plan.

§ 645.213 Who may be served as an

individual in the ‘‘other eligibles’’ (30

percent) provision?

Any individual may be served under

this provision if (s)he:

(a) Is currently receiving TANF

assistance (as described in § 645.212(d))

and either:

(1) Has characteristics associated

with, or predictive of, long-term welfare

dependence, such as having dropped

out of school, teenage pregnancy, or

having a poor work history. States, in

consultation with the operating entity,

may designate additional characteristics

associated with, or predictive, of long

term-welfare dependence; or

(2) Has significant barriers to selfsufficiency, under criteria established

by the local board or alternate

administering agency.

(b) Was in foster care under the

responsibility of the State before s(he)

attained 18 years of age and is at least

18 but not 25 years of age or older at the

time of application for WtW. Eligible

individuals include those who were

recipients of foster care maintenance

payments as defined in section 475(4)

under part E of the Social Security Act,

or

(c)(1) Is a custodial parent with

income below 100 percent of the

poverty line, determined in accordance

with the most recent HHS Poverty

Guidelines established under section

673(2) of the Omnibus Budget

Reconciliation Act of 1981 (Pub. L. 97–

35), including any revisions required by

such section, applicable to a family of

the size involved.

(2) For purposes of paragraph (c)(1) of

this section, income is defined as total

family income for the last six months,

exclusive of unemployment

compensation, child support payments,

and old-age and survivors benefits

received under section 202 of the Social

Security Act (42 U.S.C. 402).

(3) A custodial parent with a

disability whose own income meets the

requirements of a program described in

paragraph (c)(1) or (c)(3)(i) but who is a

member of a family whose income does

not meet such requirements is

considered to have met the

requirements of paragraph (c)(1) of this

section.

§ 645.214 How will Welfare-to-Work

participant eligibility be determined?

(a) The operating entity, as described

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

this subpart, is accountable for ensuring

that WtW funds are spent only on

individuals eligible for WtW projects.

(b) The operating entity must ensure

that there are mechanisms in place to

determine WtW eligibility for

individuals who are receiving TANF

assistance. These mechanisms:

(1) Must include arrangements with

the TANF agency to ensure that a WtW

eligibility determination is based on

information, current at the time of the

WtW eligibility determination, about

whether an individual is receiving

TANF assistance, the length of receipt of

TANF assistance, and when an

individual may become ineligible for

assistance, pursuant to §§ 645.212 and

645.213 of this part (section

403(a)(5)(I)(A)(ii)(dd)).

(2) May include a determination of

WtW eligibility for characteristics of

long-term welfare dependence and for

significant barriers to self-sufficiency

under § 645.213(a) of this subpart, based

on information collected by the

operating entity and/or the TANF

agency up to six months prior to the

WtW eligibility determination.

(c) The operating entity must ensure

that there are mechanisms in place to

determine WtW eligibility for

individuals who have reached the time

limit on receipt of TANF, under

§ 645.212(b) of this subpart; individuals

who are not receiving TANF assistance

(i.e., noncustodial parents under

§ 645.212(c) of this subpart; individuals

who are former foster care recipients

under § 645.213(b) of this subpart, and

low-income custodial parents under

§ 645.213(c) of this subpart). The

mechanisms for establishing

noncustodial parent eligibility must

include a process for applying the

preference required under § 645.215(a)

of this subpart, and may include an

objective standard to be used as a

presumptive determination for

establishing the eligibility of the minor

child for the programs specified in

§ 645.212(c)(2)(iv) of this subpart.

§ 645.215 What must a WtW operating

entity that serves noncustodial parent

participants do?

(a) In programs that serve

noncustodial parents, the operating

entity must give preference to those

noncustodial parents who qualify under

§ 645.212(c)(2)(i) of this subpart over

other noncustodial parents. The

preference for admission into the

program applies only to noncustodial

parents and not to any other group

eligible under the ‘‘general eligibility’’

provisions of § 645.212(a) or (b) or the

‘‘other eligibles’’ provisions of

§ 645.213. The preference does not

require that the category of noncustodial

parents eligible under § 645.212(c)(2)(i)

must be exhausted before any other

category of eligible noncustodial parents

may be served. The operating entity may

establish a process that gives preference

to noncustodial parents eligible under

§ 645.212(c)(2)(i) and that also provides

WtW services to noncustodial parents

eligible under the other provisions of

§ 645.212(c)(2).

(b) In order to protect custodial

parents and children who may be at risk

of domestic violence, the operating

entity must consult with domestic

violence prevention and intervention

organizations in the development of its

WtW project serving noncustodial

parents; and must not require the

cooperation of the custodial parent as a

condition of participation in the WtW

program for either parent; and

(c) The operating entity must ensure

that personal responsibility contracts:

(1) Take into account the employment

and child support status of the

noncustodial parent;

(2) Include all of the following parties:

(i) The noncustodial parent,

(ii) The operating entity, and

(iii) The agency responsible for

administering the State Child Support

Enforcement program as described

under Title IV–D of the Act, unless the

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2715

operating entity demonstrates to the

Secretary of Labor with written

documentation that it is not able to

coordinate with the State IV–D agency;

(3) Include the following elements:

(i) A commitment by the noncustodial

parent to cooperate:

(A) In the establishment of paternity

(if the participant is male) of the minor

child at the earliest opportunity,

through voluntary acknowledgment or

other procedures, and

(B) In the establishment of a child

support order;

(ii) A commitment by the

noncustodial parent to cooperate in the

payment of child support for the minor

child. This commitment may include a

modification of an existing support

order to take into account:

(A) The ability of the noncustodial

parent to pay such support; and

(B) The participation of the

noncustodial parent in the WtW

program, and

(iii) A commitment by the

noncustodial parent to participate in

employment or related activities that

will enable the noncustodial parent to

make regular child support payments.

For noncustodial parents who have not

reached 20 years of age, such activities

may include:

(A) Completion of high school,

(B) Earning a general equivalency

degree, or

(C) Participating in other education

directly related to employment;

(iv) A description of the services to be

provided to the noncustodial parent

under the WtW program;

(4) Contain a commitment by the

noncustodial parent to participate in the

services that are described in the

personal responsibility contract under

paragraph (c)(3)(iv) of this section; and

(5) Be entered into no later than thirty

(30) days after the individual is enrolled

in and is receiving services through a

WtW project funded under this part,

unless the operating entity has

determined that good cause exists to

extend this period. This extension may

not extend to a date more than ninety

(90) days after the individual is enrolled

in and receiving services through a WtW

project funded under this part.

§ 645.220 What activities are allowable

under this part?

Entities operating WtW projects may

use WtW funds for the following:

(a) Job readiness activities, subject to

the requirements of § 645.221 of this

subpart.

(b) Vocational educational training or

job training. A participant is limited to

six calendar months of such training if

(s)he is not also employed or

participating in an employment activity,

as described in paragraph (c) of this

section.

(c) Employment activities which

consist of any of the following:

(1) Community service programs;

(2) Work experience programs;

(3) Job creation through public or

private sector employment wage

subsidies; and

(4) On-the-job training.

(d) Job placement services subject to

the requirements of § 645.221 of this

subpart.

(e) Post-employment services which

are provided after an individual is

placed in one of the employment

activities listed in paragraph (c) of this

section, or in any other subsidized or

unsubsidized job, subject to the

requirements of § 645.221 of this

subpart. Post-employment services

include such services as:

(1) Basic educational skills training;

(2) Occupational skills training;

(3) English as a second language

training; and

(4) Mentoring.

(f) Job retention services and support

services that are provided after an

individual is placed in a job readiness

activity, as specified in paragraph (a) of

this section; in vocational education or

job training, as specified in paragraph

(b) of this section; in one of the

employment activities, as specified in

paragraph (c) of this section, or in any

other subsidized or unsubsidized job.

WtW participants who are enrolled in

Workforce Investment Act (WIA) or

JTPA activities, such as occupational

skills training, may also receive job

retention and support services funded

with WtW monies while they are

participating in WIA activities. Job

retention and support services can be

provided with WtW funds only if they

are not otherwise available to the

participant. Job retention and support

services include such services as:

(1) Transportation assistance;

(2) Substance abuse treatment (except

that WtW funds may not be used to

provide medical treatment);

(3) Child care assistance;

(4) Emergency or short term housing

assistance; and

(5) Other supportive services.

(g) Individual development accounts

which are established in accordance

with the Act.

(h) Outreach, recruitment, intake,

assessment, eligibility determination,

development of an individualized

service strategy, and case management

may be incorporated in the design of

any of the allowable activities listed in

paragraphs (a) through (g) of this section

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

§ 645.221 For what activities and services

must local boards use contracts or

vouchers?

(a) Local boards and PIC’s must

provide the following activities and

services through vouchers or contracts

with public or private providers: the job

readiness activities described in

§ 645.220(a) of this subpart, the job

placement services described in

§ 645.220(d) of this subpart, and the

post-employment services described in

§ 645.220(e) of this subpart. Job

placement services provided with

contracts or vouchers are subject to the

payment requirements at § 645.230(a)(3)

of this subpart. If an operating entity is

not a local board or a PIC, it may

provide such services directly.

(b) Local boards and PIC’s which are

directly providing job readiness

activities or job placement and/or postemployment services must conform to

the requirement in paragraph (a) of this

section, to provide such services

through contract or voucher, by

February 12, 2001.

§ 645.225 How do Welfare-to-Work

activities relate to activities provided

through TANF and other related programs?

(a) Activities provided through WtW

must be coordinated effectively at the

State and local levels with activities

being provided through TANF (section

403(a)(5)(A)(vii)(II)).

(b) The operating entity must ensure

that there is an assessment of skills,

prior work experience, employability,

and other relevant information in place

for each WtW participant. Where

appropriate, the assessment performed

by the TANF agency or JTPA should be

used for this purpose.

(c) The operating entity must ensure

that there is an individualized strategy

for transition to unsubsidized

employment in place for each

participant which takes into account

participant assessments, including the

TANF assessment and any JTPA

assessment. Where appropriate, the

TANF individual responsibility plan

(IRP), a WIA individual employment

plan, or a JTPA individual service

strategy should be used for this purpose.

(d) Coordination of resources should

include not only those available through

WtW and TANF grant funds, and the

Child Care and Development Block

Grant, but also those available through

other related activities and programs

such as the WIA or JTPA programs

(One-Stop systems), the State

employment service, private sector

employers, labor organizations, business

and trade associations, education

agencies, housing agencies, community

development corporations,

2716 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

transportation agencies, communitybased and faith-based organizations,

disability community organizations,

community action agencies, and

colleges and universities which provide

some of the assistance needed by the

targeted population (section

402(a)(5)(A)).

§ 645.230 What general fiscal and

administrative rules apply to the use of

Federal funds?

(a) Uniform fiscal and administrative

requirements.

(1) State, local, and Indian tribal

government organizations are required

to follow the common rule ‘‘Uniform

Administrative Requirements for Grants

and Cooperative Agreements to State

and Local Governments’’ which is

codified in the DOL regulations at 29

CFR part 97.

(2) Institutions of higher education,

hospitals, and other non-profit

organizations and other commercial

organizations are required to follow

OMB Circular A–110 which is codified

in the DOL regulations at 29 CFR part

95.

(3) In addition to the requirements at

29 CFR 95.48 and 29 CFR 97.36(i),

contracts or vouchers for job placement

services supported by funds provided

for this program must include a

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

eligible individual placed into the

workforce has been in the workforce for

six (6) months. This provision applies

only to placement in unsubsidized jobs

(section 403(a)(5)(C)(i)).

(4) In addition to the requirements at

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

which address codes of conduct and

conflict of interest issues related to

employees, it is also required that:

(i) A local board or alternate

administering agency member shall

neither cast a vote on, nor participate in,

any decision making capacity on the

provision of services by such member

(or any organization which that member

directly represents), nor on any matter

which would provide any direct

financial benefit to that member or a

member of his immediate family; and

(ii) Neither membership on the local

board or alternate administering agency

nor the receipt of WtW funds to provide

training and related services shall be

construed, by itself, to violate these

conflict of interest provisions.

(5) The addition method, described at

29 CFR 97.25(g)(2), is required for the

use of all program income earned under

WtW grants. When the cost of

generating program income has been

charged to the program, the gross

amount earned must be added to the

WtW program. However, the cost of

generating program income must be

subtracted from the amount earned to

establish the net amount of program

income available for use under the

grants when these costs have not been

charged to the WtW program.

(6) Any excess revenue over costs

incurred for services provided by a

governmental or non-profit entity must

be included in program income earned.

(b) Audit requirements. All recipients

and subrecipients of Department of

Labor WtW awards must comply with

the audit requirements codified at 29

CFR part 96.

(1) All governmental and non-profit

organizations must follow the audit

requirements of OMB Circular A–133

which is codified at 29 CFR part 99.

This requirement is imposed at 29 CFR

97.26 for governmental organizations

and at 29 CFR 95.26 for institutions of

higher education, hospitals, and other

non-profit organizations.

(2) The Department is responsible for

audits of commercial organizations

which are direct recipients of WtW

grants.

(3) Commercial organizations which

are WtW subrecipients and which

expend more than the minimum level

specified in OMB Circular A–133

($300,000 as of April 15, 1999) must

have either an organization-wide audit

conducted in accordance with 29 CFR

part 99 or a program specific financial

and compliance audit.

(c) Allowable costs/cost principles.

The DOL regulations at 29 CFR 95.27

and 29 CFR 97.22 identify the Federal

principles for determining allowable

costs which each kind of recipient and

subrecipient must follow. For those

selected items of cost requiring prior

approval, the authority to grant or deny

approval is delegated to the Governor.

(1) State, local, and Indian tribal

government organizations must

determine allowability of costs in

accordance with the provisions of OMB

Circular A–87, ‘‘Cost Principles for State

and Local Governments.’’

(2) Non-profit organizations must

determine allowability of costs in

accordance with OMB Circular A–122,

‘‘Cost Principles for Non-Profit

Organizations.’’

(3) Institutions of higher education

must determine allowability of costs in

accordance with OMB Circular A–21,

‘‘Cost Principles for Education

Institutions.’’

(4) Hospitals must determine

allowability of costs in accordance with

the provisions of Appendix E of 45 CFR

Part 74, ‘‘Principles for Determining

Costs Applicable to Research and

Development Under Grants and

Contracts with Hospitals.’’

(5) Commercial organizations and

those non-profit organizations listed in

Attachment C to OMB Circular A–122

must determine allowability of costs in

accordance with the provisions of the

Federal Acquisition Regulation (FAR) at

48 CFR Part 31.

(d) Information technology costs. In

addition to the allowable cost

provisions identified in § 645.235 of this

subpart, the costs of information

technology—computer hardware and

software—will only be allowable under

WtW grants when such computer

technology is ‘‘Year 2000 compliant.’’

To meet this requirement, information

technology must be able to accurately

process date/time data (including, but

not limited to, calculating, comparing

and sequencing) from, into and between

the twentieth and twenty-first centuries,

and the years 1999 and 2000. The

information technology must also be

able to make leap year calculations.

Furthermore, ‘‘Year 2000 compliant’’

information technology when used in

combination with other technology shall

accurately process date/time data if the

other information technology properly

exchanges date/time data with it.

(e) Prohibition on Construction or

Purchase of Facilities. WtW federal

funds may not be used to pay for the

construction or purchase of facilities or

buildings.

(f) Prohibition on Business Start-up

Costs. WtW federal funds may not be

used to cover the costs of business startup and/or capital ventures.

(g) Government-wide debarment and

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

grant recipients and subrecipients are

required to comply with:

(1) Government-wide requirements for

debarment and suspension which are

codified at 29 CFR part 98, subparts A

through E; and

(2) The government-wide

requirements for a drug-free workplace.

Recipients and subrecipients are

required to comply with 29 CFR part 98,

subpart F, except that the definition of

‘‘grantee’’ shall be read to include

recipients and subrecipients.

(h) Restrictions on Lobbying. All WtW

grant recipients and subrecipients are

required to comply with the restrictions

on lobbying which are codified in the

DOL regulations at 29 CFR Part 93.

(i) Nondiscrimination. All WtW grant

recipients and subrecipients are

required to comply with the

nondiscrimination provisions codified

in the DOL regulations at 29 CFR parts

31 and 32. In addition, 29 CFR part 37

applies to recipients of WtW financial

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2717

assistance who are also WIA recipients

and applies to recipients of WtW

financial assistance who operate

programs that are part of the One-Stop

system established under the Workforce

Investment Act, to the extent that the

WtW programs and activities are being

conducted as part of the One-Stop

delivery system. Furthermore, WtW

programs that are part of larger State

agencies that are recipients of WIA title

I financial assistance must also comply

with the provisions of 29 CFR part 37.

For purposes of this paragraph, the term

‘‘recipient’’ has the same meaning as the

term is defined in 29 CFR part 37. That

part also contains participant rights

related to nondiscrimination.

(j) Nepotism. (1) No individual may

be placed in a WtW employment

activity if a member of that person’s

immediate family is engaged in an

administrative capacity for the

employing agency.

(2) To the extent that an applicable

State or local legal requirement

regarding nepotism is more restrictive

than this provision, such State or local

requirement shall be followed.

§ 645.233 What are the time limitations on

the expenditure of Welfare-to-Work grant

funds?

(a) Formula grant funds: The

maximum time limit for the expenditure

of a given fiscal year allotment is three

years from the effective date of the

Federal grant award to the State. The

maximum time limit will be allowed

and will be specified in the

Department’s formula grant document

for each fiscal year of funds provided to

the State. Any remaining funds that

have not been expended at the end of

the expenditure period must be returned

to the Department in accordance with

the applicable closeout procedures for

formula grants.

(b) Competitive grant funds: The

maximum time limit for the expenditure

of these funds is three years from the

effective date of award, but will, in all

cases, be determined by the grant period

and the terms and conditions specified

in the Federal grant award agreement

(including any applicable grant

modification documents). Any

remaining funds that have not been

expended at the end of the approved

grant period must be returned to the

Department in accordance with the

applicable closeout procedures for

competitive grants (section

503(a)(5)(C)(vii)).

§ 645.235 What types of activities are

subject to the administrative cost limit on

Welfare-to-Work grants?

(a) Administrative cost limitation

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

to states. Expenditures for

administrative purposes under WtW

formula grants to States are limited to

fifteen percent (15%) of the grant award.

(2) Competitive grants. The limitation

on expenditures for administrative

purposes under WtW competitive grants

will be specified in the grant agreement

but in no case shall the limitation be

more than fifteen percent (15%) of the

grant award.

(3) Although administrative in nature,

costs of information technology—

computer hardware and software—

needed for tracking and monitoring of

WtW program, participant, or

performance requirements, are excluded

from the administrative cost limit

calculation.

(b) The costs of administration are

that allocable portion of necessary and

allowable costs associated with those

specific functions identified in

paragraph (c) of this section for the

administration of the WtW program and

which are not related to the direct

provision of services to participants.

These costs can be both personnel and

non-personnel and both direct and

indirect.

(c) The costs of administration are the

costs associated with performing the

following functions:

(1) Performing overall general

administrative functions and

coordination of those functions under

WtW including:

(i) Accounting, budgeting, financial

and cash management functions;

(ii) Procurement and purchasing

functions;

(iii) Property management functions;

(iv) Personnel management functions;

(v) Payroll functions;

(vi) Coordinating the resolution of

findings arising from audits, reviews,

investigations and incident reports;

(vii) Audit functions;

(viii) General legal services functions;

and

(ix) Developing systems and

procedures, including information

systems, required for these

administrative functions;

(2) Performing oversight and

monitoring responsibilities related to

WtW administrative functions,

(3) Costs of goods and services

required for administrative functions of

the program, including goods and

services such as rental or purchase of

equipment, utilities, office supplies,

postage, and rental and maintenance of

office space;

(4) Travel costs incurred for official

business in carrying out administrative

activities or the overall management of

the WtW system; and

(5) Costs of information systems

related to administrative functions (for

example, personnel, procurement,

purchasing, property management,

accounting and payroll systems)

including the purchase, systems

development and operating costs of

such systems.

(d)(1) Only that portion of the costs of

WtW grantees that are associated with

the performance of the administrative

functions described in paragraph (c) of

this section and awards to subrecipients

or vendors that are solely for the

performance of these administrative

functions are classified as

administrative costs. All other costs are

considered to be for the direct provision

of WtW activities and are classified as

program costs.

(2) Personnel and related nonpersonnel costs of staff who perform

both administrative functions specified

in paragraph (c) of this section and

programmatic services or activities are

to be allocated as administrative or

program costs to the benefitting cost

objectives/categories based on

documented distributions of actual time

worked or other equitable cost

allocation methods.

(3) Specific costs charged to an

overhead or indirect cost pool that can

be identified directly as a program cost

may be charged as a program cost.

Documentation of such charges must be

maintained.

(4) Except as provided at paragraph

(d)(1) of this section, all costs incurred

for functions and activities of

subrecipients and vendors are program

costs.

(5) Costs of the following information

systems including the purchase, systems

development and operating (e.g., data

entry) costs are charged to the program

category.

(i) Tracking or monitoring of

participant and performance

information;

(ii) Employment statistics

information, including job listing

information, job skills information, and

demand occupation information; and

(iii) Local area performance

information.

§ 645.240 What are the reporting

requirements for Welfare-to-Work

programs?

(a) General. State formula and other

direct competitive grant recipients must

report financial and participant data in

accordance with revised instructions

that will be issued by the Department

after consultation with the Secretary of

Health and Human Services, States, and

organizations that represent State or

local governments. Reports must be

submitted to the Department quarterly.

Existing WtW financial reporting

2718 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

instructions and formats are available

on the WtW web site at http://

wtw.doleta.gov/linkpages/tegltein.htm.

The Internet reporting system for WtW

grantees is accessible at http://

www.etareports.doleta.gov.

(b) Subrecipient reporting. A State

formula or other direct competitive

grant recipient may impose different

forms or formats, shorter due dates, and

more frequent reporting requirements

on subrecipients. However, the recipient

is required to meet the reporting

requirements imposed by the

Department.

(c) Financial reports. Each grant

recipient must submit financial reports

to the Department. Reported

expenditures and program income must

be on the accrual basis of accounting

and cumulative by fiscal year of

appropriation. If the recipient’s

accounting records are not normally

kept on the accrual basis of accounting,

the recipient must develop accrual

information through an analysis of the

documentation on hand.

(d) Participant reports. Each grant

recipient must submit participant

reports to the Department. Participant

data must be aggregate data, and, for

most data elements, must be cumulative

by fiscal year of appropriation.

(e) Due dates. Financial and

participant reports are due no later than

45 days after the end of each quarter. A

final financial and participant report is

required 90 days after the expiration of

a funding period or the termination of

grant support.

§ 645.245 Who is responsible for oversight

and monitoring of Welfare-to-Work grants?

(a) The Secretary may monitor all

recipients and subrecipients of all grants

awarded and funds expended under

WtW. Federal oversight will be

conducted primarily at the State level

for formula grants and at the recipient

level for competitive grants.

(b) The Governor must monitor local

boards (or other approved

administrative entities) funded under

the State’s formula allocated grants on a

periodic basis for compliance with

applicable laws and regulations. The

Governor must develop and make

available for review a State monitoring

plan.

§ 645.250 What procedures apply to the

resolution of findings arising from audits,

investigations, monitoring and oversight

reviews?

(a) Resolution of subrecipient level

findings.

(1) The WtW grantee is responsible for

the resolution of findings that arise from

its monitoring reviews, investigations

and audits (including OMB Circular A–

133 audits) of subrecipients.

(2) A State or competitive grantee, as

appropriate, must use the audit

resolution, debt collection and appeal

procedures that it uses for other Federal

grant programs.

(3) If a State or competitive grantee, as

appropriate, does not have such

procedures, it must prescribe standards

and procedures for the WtW grant

program.

(b) Resolution of State level findings.

(1) The Secretary is responsible for

the resolution of findings that arise from

Federal audits, monitoring reviews,

investigations, incident reports, and

recipient level OMB Circular A–133

audits.

(2) The Secretary will use the DOL

audit resolution process, consistent with

the Single Audit Act of 1996 and OMB

Circular A–133.

(3) A final determination issued by a

grant officer pursuant to this process

may be appealed to the DOL Office of

Administrative Law Judges under the

procedures at § 645.800.

(c) Resolution of nondiscrimination

findings. Findings arising from

investigations or reviews conducted

under nondiscrimination laws shall be

resolved in accordance with those laws

and the applicable implementing

regulations.

§ 645.255 What nondiscrimination

protections apply to participants in Welfareto-Work programs?

(a) All participants in WtW programs

under this part shall have such rights as

are available under all applicable

Federal, State and local laws prohibiting

discrimination, and their implementing

regulations, including:

(1) The Age Discrimination Act of

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

(2) Section 504 of the Rehabilitation

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

(3) The Americans with Disabilities

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

and

(4) Title VI of the Civil Rights Act of

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

(b) Participants in work activities, as

defined in section 407(a) of the Social

Security Act, operated with WtW funds,

shall not be discriminated against

because of gender. Participants alleging

gender discrimination may file a

complaint using the State’s grievance

system procedures as described in

§ 645.270 of this subpart (section

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

alleging gender discrimination in WtW

programs conducted by One-Stop

partners as part of the One-Stop delivery

system may file a complaint using the

complaint processing procedures

developed and published by the State in

accordance with the requirements of 29

CFR 37.70–37.80.

(c) Complaints alleging discrimination

in violation of any applicable Federal,

State or local law, such as Title VII of

the Civil Rights Act of 1964 (42 U.S.C.

2000e et seq.), Title IX of the Education

Amendments of 1972 (20 U.S.C. 1681 et

seq.), the Pregnancy Discrimination Act

(42 U.S.C. 2000e (paragraph k)), or

Section 188 of the Workforce

Investment Act of 1998 (29 U.S.C. 2938),

as well as those listed in paragraph (a)

of this section, shall be processed in

accordance with those laws and the

implementing regulations.

(d) Questions about or complaints

alleging a violation of the

nondiscrimination laws in paragraph (a)

of this section may be directed or

mailed to the Director, Civil Rights

Center, U.S. Department of Labor, Room

N–4123, 200 Constitution Avenue, NW,

Washington, D.C. 20210 for processing.

§ 645.260 What health and safety

provisions apply to participants in Welfareto-Work programs?

(a) Participants in an employment

activity operated with WtW funds, as

defined in § 645.220 of this part, are

subject to the same health and safety

standards established under State and

Federal law which are applicable to

similarly employed employees, of the

same employer, who are not

participants in programs under WtW.

(b) Participants alleging a violation of

these health and safety standards may

file a complaint pursuant to the

procedures contained in § 645.270 of

this part (section 403(a)(5)(J)(ii)).

§ 645.265 What safeguards are there to

ensure that participants in Welfare-to-Work

employment activities do not displace other

employees?

(a) An adult participating in an

employment activity operated with

WtW funds, as described in § 645.220

(b) and (c) of this subpart, may fill an

established position vacancy subject to

the limitations in paragraph (c) of this

section.

(b) An employment activity operated

with WtW funds, as described in

§ 645.220(c) of this subpart, must not

violate existing contracts for services or

collective bargaining agreements. Where

such an employment activity would

violate a collective bargaining

agreement, the appropriate labor

organization and employer must

provide written concurrence before the

employment activity is undertaken.

(c) An adult participating in an

employment activity operated with

WtW funds, as described in § 645.220(c)

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2719

of this subpart, must not be employed

or assigned:

(1) When any other individual is on

layoff from the same or any

substantially equivalent job within the

same organizational unit;

(2) If the employer has terminated the

employment of any regular,

unsubsidized employee or otherwise

caused an involuntary reduction in its

workforce with the intention of filling

the vacancy so created with the WtW

participant; and,

(3) If the employer has caused an

involuntary reduction to less than full

time in hours of any employee in the

same or substantially equivalent job

within the same organizational unit.

(d) Regular employees and program

participants alleging displacement may

file a complaint pursuant to § 645.270 of

this part (section 403(a)(5)(J)(i)).

§ 645.270 What procedures are there to

ensure that currently employed workers

may file grievances regarding displacement

and that Welfare-to-Work participants in

employment activities may file grievances

regarding displacement, health and safety

standards and gender discrimination?

(a) The State shall establish and

maintain a grievance procedure for

resolving complaints from:

(1) Regular employees that the

placement of a participant in an

employment activity operated with

WtW funds, as described in § 645.220 of

this part, violates any of the

prohibitions described in § 645.265 of

this part; and

(2) Program participants in an

employment activity operated with

WtW funds, as described in § 645.220 of

this part, that any employment activity

violates any of the prohibitions

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

645.265 of this part.

(b) Such grievance procedure should

include an opportunity for informal

resolution.

(c) If no informal resolution can be

reached within the specified time as

established by the State as part of its

grievance procedure, such procedure

shall provide an opportunity for the

dissatisfied party to receive a hearing

upon request.

(d) The State shall specify the time

period and format for the hearing

portion of the grievance procedure, as

well as the time period by which the

complainant will be provided the

written decision by the State.

(e) A decision by the State under

paragraph (d) of this section may be

appealed by any dissatisfied party

within 30 days of the receipt of the

State’s written decision, according to

the time period and format for the

appeals portion of the grievance

procedure as specified by the State.

(f) The State shall designate the State

agency which will be responsible for

hearing appeals. This agency shall be

independent of the State or local agency

which is administering, or supervising

the administration of the State TANF

and WtW programs.

(g) No later than 120 days of receipt

of an individual’s original grievance, the

State agency, as designated in paragraph

(f) of this section, shall provide a

written final determination of the

individual’s appeal.

(h) The grievance procedure shall

include remedies for violations of

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

this part which may continue during the

grievance process and which may

include:

(1) Suspension or termination of

payments from funds provided under

this part;

(2) Prohibition of placement of a WtW

participant with an employer that has

violated §§ 645.255(b), 645.260, and

645.265 of this part;

(3) Where applicable, reinstatement of

an employee, payment of lost wages and

benefits, and reestablishment of other

relevant terms, conditions, and

privileges of employment; and,

(4) Where appropriate, other equitable

relief (section 403(a)(5)(J)(iv)).

(i) Participants alleging gender

discrimination by WtW programs that

are not part of the One-Stop system may

file a complaint using the grievance

system procedures described above.

Participants alleging gender

discrimination by WtW programs that

are part of the One-Stop system may file

a complaint using the procedures

developed by the State under the WIA

nondiscrimination regulations at 29 CFR

37.70–37.80.

Subpart C—Additional Formula Grant

Administrative Standards and

Procedures

§ 645.300 What constitutes an allowable

match?

(a) A State is entitled to receive two

(2) dollars of Federal funds for every

one (1) dollar of State match

expenditures, up to the amount

available for allotment to the State based

on the State’s percentage for WtW

formula grant for the fiscal year. The

State is not required to provide a level

of match necessary to support the total

amount available to it based on the

State’s percentage for WtW formula

grant. However, if the proposed match

is less than the amount required to

support the full level of Federal funds,

the grant amount will be reduced

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

(b) States shall follow the match or

cost-sharing requirements of the

‘‘Common Rule’’ Uniform

Administrative Requirements for Grants

and Cooperative Agreements to State

and Local Governments (codified for

DOL at 29 CFR 97.24). Paragraphs

(b)(1)(i) and (ii), (b)(3), and (b)(4) and

(c)(1) of this section are in addition to

the common rule requirements. Also,

paragraphs included in the common

rule which relate to the use of donated

buildings and other real property as

match have been excluded from this

provision.

(1) Only costs that would be allowable

if paid for with WtW grant funds will be

accepted as match.

(i) Because the use of Federal funds is

prohibited for construction or purchase

of facilities or buildings except where

there is explicit statutory authority

permitting it, costs incurred for the

construction or purchase of facilities or

buildings shall not be acceptable as

match for a WtW grant.

(ii) Because the costs of construction

or purchase of facilities or buildings are

unallowable as match, the donation of a

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

a match for a WtW grant.

(2) A match or cost-sharing

requirement may be satisfied by either

or both of the following:

(i) Allowable costs incurred by the

grantee, subgrantee or a cost type

contractor under the assistance

agreement. This includes allowable cost

borne by non-Federal grants or by others

and cash donations from non-Federal

third parties.

(ii) The value of third party in-kind

contributions applicable to the FY

period to which the cost-sharing or

matching requirement applies.

(3) No more than seventy-five percent

(75%) of the total match expenditures

may be in the form of third party inkind contributions.

(4) Match expenditures must be

recorded in the books of account of the

entity that incurred the cost or received

the contribution. These amounts may be

rolled up and reported as aggregate State

level match.

(c) Qualifications and exceptions—

(1) The matching requirements may

not be met by the use of an employer’s

share of participant wage payments

(e.g., employer share of OJT wages).

(2) Costs borne by other Federal grant

agreements. A cost-sharing or matching

requirement may not be met by costs

borne by another Federal grant. This

prohibition does not apply to income

earned by a grantee or subgrantee from

a contract awarded under another

Federal grant.

2720 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

(3) General revenue sharing. For the

purpose of this section, general revenue

sharing funds distributed under 31

U.S.C. 6702 are not considered Federal

grant funds.

(4) Cost or contributions counted

towards other Federal cost-sharing

requirements. Neither costs nor the

values of third party in-kind

contributions may count towards

satisfying a cost-sharing or matching

requirement of a grant agreement if they

have been or will be counted towards

satisfying a cost-sharing or matching

requirement of another Federal grant

agreement, a Federal procurement

contract, or any other award of Federal

funds.

(5) Costs financed by program income.

Costs financed by program income, as

defined in 29 CFR 97.25, shall not count

towards satisfying a cost-sharing or

matching requirement unless they are

expressly permitted in the terms of the

assistance agreement. (This use of

general program income is described in

29 CFR 97.25(g)).

(6) Services or property financed by

income earned by contractors.

Contractors under a grant may earn

income from the activities carried out

under the contract in addition to the

amounts earned from the party

awarding the contract. No costs of

services or property supported by this

income may count toward satisfying a

cost-sharing or matching requirement

unless other provisions of the grant

agreement expressly permit this kind of

income to be used to meet the

requirement.

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

satisfying a cost-sharing or matching

requirement must be verifiable from the

records of grantees and subgrantee or

cost-type contractors. These records

must show how the value placed on

third party in-kind contributions was

derived. To the extent feasible,

volunteer services will be supported by

the same methods that the organization

uses to support the allocability of

regular personnel costs.

(8) Special standards for third party

in-kind contributions.

(i) Third party in-kind contributions

count towards satisfying a cost-sharing

or matching requirement only where, if

the party receiving the contributions

were to pay for them, the payments

would be allowable costs.

(ii) Some third party in-kind

contributions are goods and services

that, if the grantee, subgrantee, or

contractor receiving the contribution

had to pay for them, the payments

would have been an indirect costs. Cost

sharing or matching credit for such

contributions shall be given only if the

grantee, subgrantee, or contractor has

established, along with its regular

indirect cost rate, a special rate for

allocating to individual projects or

programs the value of the contributions.

(iii) A third party in-kind contribution

to a fixed-price contract may count

towards satisfying a cost-sharing or

matching requirement only if it results

in:

(A) An increase in the services or

property provided under the contract

(without additional cost to the grantee

or subgrantee) or

(B) A cost savings to the grantee or

subgrantee.

(iv) The values placed on third party

in-kind contributions for cost-sharing or

matching purposes must conform to the

rules in the succeeding sections of this

part. If a third party in-kind

contribution is a type not treated in

those sections, the value placed upon it

must be fair and reasonable.

(d) Valuation of donated services.

(1) Volunteer services. Unpaid

services provided to a grantee or

subgrantee by individuals must be

valued at rates consistent with those

ordinarily paid for similar work in the

grantee’s or subgrantee’s organization. If

the grantee or subgrantee does not have

employees performing similar work, the

rates must be consistent with those

ordinarily paid by other employers for

similar work in the same labor market.

In either case, a reasonable amount for

fringe benefits may be included in the

valuation.

(2) Employees of other organizations.

When an employer other than a grantee,

subgrantee, or cost-type contractor

furnishes free of charge the services of

an employee in the employee’s normal

line of work, the services must be

valued at the employee’s regular rate of

pay exclusive of the employee’s fringe

benefits and overhead costs. If the

services are in a different line of work,

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

(e) Valuation of third party donated

supplies and loaned equipment or

space.

(1) If a third party donates supplies,

the contribution must be valued at the

market value of the supplies at the time

of donation.

(2) If a third party donates the use of

equipment or space in a building but

retains title, the contribution must be

valued at:

(i) the fair rental rate of the equipment

or space for property donated by nongovernmental entities, or

(ii) a depreciation or use-allowance

based on the property’s market value at

the time it was donated for property

donated by governmental entities.

§ 645.310 What assurance must a State

provide that it will make the required

matching expenditures?

In its State plan, a State must provide

a written estimate of planned matching

expenditures and describe the process

by which the funds will be tracked and

reported to ensure that the State meets

its projected match (section

403(a)(5)(A)(i)(I)).

§ 645.315 What actions are to be taken if

a State fails to make the required matching

expenditures?

(a) If State match expenditures do not

satisfy the requirements of the FY grant

award by the end of the three year fund

availability period, the grant award

amount will be reduced by the

appropriate corresponding amount (i.e.,

the grant will be reduced by two (2)

dollars for each one (1) dollar shortfall

in State matching funds) when the grant

is closed out.

(b) Compliance with the fifteen

percent (15%) administrative cost limit

will be recalculated based on the FY

formula grant award amount, as reduced

under paragraph (a) of this section.

Subpart D—State Formula Grants

Administration

§ 645.400 Under what conditions may the

Governor request a waiver to designate an

alternate local administering agency?

(a)(1) The Governor may include in

the State’s WtW Plan a waiver request

to select an agency other than the local

board or PIC to administer the program

for one or more local areas or SDA’s in

a State; or

(2) When the Governor determines the

local board or alternate administering

agency has not coordinated its

expenditures with the expenditure of

funds provided to the State under

TANF, pursuant to section

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

Governor must request a waiver.

(b) The Governor shall bear the

burden of proving that the designated

alternate administering agency, rather

than the local board or other alternate

administering agency, would improve

the effectiveness or efficiency of the

administration of WtW funds in the

SDA. The Governor’s waiver request

shall include information to meet that

burden. The Governor shall provide a

copy of the waiver request and any

supporting information submitted to the

Secretary to the local board and CEO of

the local area for which an alternative

administering agency is requested.

(c) The local board and CEO shall

have fifteen (15) days in which to

submit his or her written response to the

Department. The local board and CEO

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2721

shall provide a copy of such response to

the Governor.

(d) The Secretary will assess the

waiver information submitted by the

Governor, including input from the

local board and CEO in reaching the

decision whether to permit the use of an

alternate administering agency.

(e) The Secretary shall approve a

waiver request if she determines that the

Governor has established that the

designated alternate administering

agency, rather than the local board or

other administering agency, will

improve the effectiveness or efficiency

of the administration of WtW funds

provided for the benefit of the local

area.

(f) Where an alternate administering

agency is approved by the Secretary,

such administrative entity shall

coordinate with the CEO for the

applicable local area(s) regarding the

expenditure of WtW grant funds in the

local area(s).

(g) The decision of the Secretary to

approve or deny a waiver request will

be issued promptly and shall constitute

final agency action.

§ 645.410 What elements will the State use

in distributing funds within the State?

(a) Of the WtW funds allotted to the

State, not less than 85 percent of the

State allotment must be distributed to

the local areas or SDA’s in the State.

(1) The State shall prescribe a formula

for determining the amount of funds to

be distributed to each local area or SDA

in the State using no factors other than

the three factors described in paragraphs

(2) and (3) of this paragraph;

(2) The formula prescribed by the

Governor must include as one of the

formula factors for distributing funds

the provision at section

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

Governor is to distribute funds to a local

area or SDA based on the number by

which the population of the area with

an income that is less than the poverty

line exceeds 7.5 percent of the total

population of the area, compared to all

such numbers in all such areas in the

State. The Governor must assign a

weight of not less than 50 percent to this

factor;

(3) The Governor shall distribute the

remaining funds, if any, to the local area

or SDA’s utilizing only one or both of

the following factors:

(i) the local area or SDA’s share of the

number of adults receiving assistance

under TANF or the predecessor program

in the local area or SDA for 30 months

or more (whether consecutive or not),

relative to the number of such adults

residing in the State;

(ii) the local area or SDA’s share of the

number of unemployed individuals

residing in the local area or SDA,

relative to the number of such

individuals residing in the State.

(4) If the amount to be distributed to

a local area or SDA by the Governor’s

formula is less than $100,000, the funds

shall be available to be used by the

Governor to fund projects described at

paragraph (b) of this section.

(5) States shall use the guidance

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

Act in determining the number of

individuals with an income that is less

than the poverty line.

(6) Local Boards (or alternate

administering agency) shall determine,

pursuant to section 403(a)(5)(A)(vii)(I) of

the Act, on which individual(s) and on

which allowable activities to expend its

WtW fund allocation.

(7) The State must distribute the local

boards’ or SDAs’ allocations in a timely

manner, but not longer than 30 days

from receipt of the State’s fund

allotment.

(b) Of the funds allocated to the State,

up to 15 percent of the funds may be

retained at the State level to fund

projects that appear likely to help longterm recipients of assistance enter

unsubsidized employment. Any

additional funds available as a result of

the process described at paragraph (a)(4)

of this section, shall also be available to

be used to fund projects to help longterm recipients of assistance enter

unsubsidized jobs.

(c) The Governors may distribute the

funds retained pursuant to paragraph (b)

of this section to a variety of workforce

organizations, in addition to local

boards or alternate administering

agencies, and other entities such as OneStop systems, private sector employers,

labor organizations, business and trade

associations, education agencies,

housing agencies, community

development corporations,

transportation agencies, communitybased and faith-based organizations,

disability community organizations,

community action agencies, and

colleges and universities which provide

some of the assistance needed by the

targeted population.

§ 645.415 What planning information must

a State submit in order to receive a formula

grant?

(a) Each State seeking financial

assistance under the formula grant

portion of the WtW legislation must

submit an annual plan meeting the

requirements prescribed by the

Secretary. This plan shall be in the form

of an addendum to the TANF State plan

and shall be submitted to the Secretaries

of Labor and Health and Human

Services.

(b) The Secretary shall review the

State plan for compliance with the

statutory and regulatory provisions of

the WtW program. The Secretary’s

decision whether to accept a State plan

as in compliance with the Act shall

constitute final agency action.

(c) If the Governor has requested a

waiver to permit the selection of an

alternate administering agency in the

State plan, the provisions of § 645.400 of

this part shall apply (section

403(a)(5)(A)(ii)).

§ 645.420 What factors will be used in

measuring State performance?

(a) The Department will use the

following factors to measure State

performance:

(1) Job entry rate as measured by the

proportion of WtW participants who

enter either subsidized employment or

unsubsidized employment,

(2) Substantive job entry rate as

measured by the proportion of WtW

participants who are placed in or who

have moved into subsidized or

unsubsidized employment of 30 hours

or more per week,

(3) Retention as measured by the

proportion of WtW participants who

remain in unsubsidized employment six

months in the second subsequent

quarter after the quarter in which

placement occurred after initial

placement, and

(4) Measured earnings gains of WtW

participants who remain in

unsubsidized employment six months

after initial placement.

(b) The formula for calculating the

performance bonus is weighted as

follows:

(1) 30 percent on job entry rate,

(2) 30 percent on substantive job entry

rate,

(3) 20 percent on retention in

unsubsidized employment,

(4) 20 percent on earnings gains in

unsubsidized employment.

The formula will reflect general

economic conditions on a State-by-State

basis.

(c) The formula shall serve as the

basis for the award of FY 2000 bonus

grants based on successful performance

to be made in FY 2001 (section

403(a)(5)(E)).

§ 645.425 What are the roles and

responsibilities of the State(s) and local

boards or alternate administering

agencies?

(a) State roles and responsibilities. A

State:

(1) Designates State WtW

administering agency;

2722 Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations

(2) Provides overall administration of

WtW funds, consistent with the WtW

statute, WtW regulations and the State’s

WtW Plan;

(3) Develops the State WtW Plan in

consultation and coordination with

appropriate entities in substate areas,

such as One-Stop systems, private sector

employers, labor organizations, business

and trade associations, education

agencies, housing agencies, community

development corporations,

transportation agencies, communitybased and faith-based organizations,

disability community organizations,

community action agencies, and

colleges and universities which provide

some of the assistance needed by the

targeted population (section

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

(4) Distributes funds to SDAs,

consistent with the provisions described

at § 645.410(a) (section

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

(5) Conducts oversight and

monitoring of WtW activities and fund

expenditures at the State and local

levels for compliance with applicable

laws and regulations, consistent with

the provisions at § 645.245 and provides

technical assistance as appropriate;

(6) Ensures coordination of local

board or alternate administering agency

fund expenditures with the State TANF

expenditures and other programs

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

(7) Determines whether to request

waivers to select an alternate

administering agency consistent with

the provisions described at § 645.400 of

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

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

(8) Manages and distributes State

level WtW funds (15 percent),

consistent with the provisions at

§ 645.410(b) and (c) (section

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

(9) Ensures that the 15 percent

administration limitation and the match

requirement are met;

(10) Ensures that worker protections

provisions are observed and establishes

an appropriate grievance process,

consistent with §§ 645.255 through

645.270 of this part (section

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

(11) Provides comments on

Competitive Grant Application(s) from

eligible entities within the State,

consistent with § 645.510 of this part

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

(12) Cooperates with the Department

of Health and Human Services on the

evaluation of WtW programs (section

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

(13) Provides technical assistance to

PIC’s, local boards or alternate

administering agencies; and

(14) Establishes internal reporting

requirements to ensure Federal reports

are accurate, complete and are

submitted on a timely basis, consistent

with § 645.240 of this part.

(b) Local Boards (or alternate

administering agency) roles and

responsibilities. A local board:

(1) Has sole authority, in coordination

with CEOs, to expend formula funds

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

(2) Has authority to determine the

individuals to be served in the local area

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

(3) Has authority to determine the

services to be provided in the local area

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

(4) Ensures funds are expended on

eligible recipients and on allowable

activities, consistent with

§ 645.410(a)(5) of this part;

(5) Coordinates WtW fund

expenditures with State TANF

expenditures and other programs

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

(6) Ensures that there is an assessment

and an individual service strategy in

place for each WtW participant,

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

this part;

(7) Conducts oversight and

monitoring of subrecipients, consistent

with the provisions at § 645.245 of this

part;

(8) Ensures worker protection

provisions and grievance process are

observed, consistent with State

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

(9) Consults with and provides

comments on private entity Competitive

Grant Application(s), consistent with

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

this part.

§ 645.430 How does the Welfare-to-Work

program relate to the One-Stop system and

Workforce Investment Act (WIA) programs?

(a) As provided in the Workforce

Investment Act regulations at 20 CFR

663.620, the local WtW formula grant

program operator is a required partner

in the One-Stop system. 20 CFR part 662

describes the roles of such partners in

the One-Stop system and applies to the

WtW formula grant program operators.

A Memorandum of Understanding must

be developed between the Local

Workforce Investment Board and the

WtW program that meets the

requirements of 20 CFR 662.300, such as

containing provisions relating to the

services to be provided through the

One-Stop system and methods for

referring individuals between the OneStop operator and the partner WtW

program.

(b) WtW participants may also be

served by the WIA programs and,

through appropriate linkages and

referrals, these individuals will have

access to a broader range of activities

and services through the cooperation of

the WtW and WIA programs in the OneStop system. For example, WtW

participants, who are also determined

eligible for WIA, and who need

occupational skills training, may be

referred through the One-Stop system to

receive WIA training. These participants

are also eligible to receive services

available under WtW, such as

transportation and child care while

participating in the WIA activity.

(c) WIA participants, who are

determined to be eligible for WtW, may

also be served by the WtW programs

through cooperation with the WIA

programs in the One-Stop system. For

example, WIA participants, who are also

determined eligible for WtW, may be

referred to the WtW program for job

placement and other WtW assistance.

(d) 29 CFR part 37 applies to

recipients of WtW financial assistance

who operate programs that are part of

the One-Stop system established under

WIA to the extent that the WtW

programs and activities are being

conducted as part of the One-Stop

delivery system.

Subpart E—Welfare-To-Work

Competitive Grants

§ 645.500 Who are eligible applicants for

competitive grants?

(a) Eligible applicants for competitive

grants are:

(1) Local boards or alternate

administering agencies

(2) Political subdivisions of a State;

and

(3) Private entities, as defined in

§ 645.120 of this part, including

nonprofit organizations such as

community development corporations,

community-based and faith-based

organizations, disability community

organizations, community action

agencies, and public and private

colleges and universities, and other

qualified private organizations.

(b) Entities other than a local board or

alternate administering agency or a

political subdivision of the State must

submit an application for competitive

grant funds in conjunction with the

applicable local board or alternate

administering agency or political

subdivision.

(1) The term ‘‘in conjunction with’’

shall mean that the application

submitted by such an entity must

include a signed certification by both

the applicant and either the applicable

local board or alternate administering

agency or political subdivision that:

(i) The applicant has consulted with

the applicable local board or alternate

Federal Register / Vol. 66, No. 8 / Thursday, January 11, 2001 / Rules and Regulations 2723

administering agency or political

subdivision during the development of

the application; and

(ii) The activities proposed in the

application are consistent with, and will

be coordinated with, WtW efforts of the

local board or alternate administering

agency or political subdivision.

(2) If the applicant is unable to

include such a certification in its

application, the applicant will be

required to certify, and provide

information indicating that efforts were

undertaken to consult with the local

board or alternate administering agency

or political subdivision and that the

local board or alternate administering

agency or political subdivision was

provided a sufficient opportunity to

cooperate in the development of the

project plan and to review and comment

on the application prior to its

submission to the Secretary. ‘‘Sufficient

opportunity for local Board or alternate

administering agency or political

subdivision review and comment’’ shall

mean at least 30 calendar days.

(3) The certification described in

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

evidence of efforts to consult described

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

local board or alternate administering

agency or political subdivision included

in the geographic area in which the

project proposed in the application is to

operate (section 403(a)(5)(B)(ii)).

§ 645.510 What is the required

consultation with the Governor?

(a) All applicants for competitive

grants, including local boards or

alternate administering agencies and

political subdivisions, must consult

with the Governor by submitting their

application to the Governor or the

designated State administrative entity

for the WtW program for review and

comment prior to submission of the

application to the Secretary. The

application submitted to the Secretary

must include:

(1) Comments on the application from

the State; or

(2) Information indicating that the

State was provided a sufficient

opportunity for review and comment

prior to submission to the Secretary.

‘‘Sufficient opportunity for State review

and comment’’ shall mean at least 15

calendar days.

(b) For private entity applicants, the

submission of the application for State

review and comment must follow the 30

day period provided for local board or

alternate administering agency/political

subdivision review. Evidence of local

board or alternate administering agency

or political subdivision review should

be included in the submission to the

State (section 403(a)(5)(B)(ii)).

§ 645.515 What are the program and

administrative requirements that apply to

both the formula grants and competitive

grants?

(a) All of the general program

requirements and administrative

standards set by 29 CFR Part 645

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

and section 404(b)).

(b) In addition, competitive grants

will be subject to:

(1) Supplemental reporting

requirements; and

(2) Additional monitoring and

oversight requirements based on the

negotiated scope-of-work of individual

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

and (v)).

§ 645.520 What are the application

procedures and timeframes for competitive

grant funds?

(a) The Secretary shall establish

appropriate application procedures,

selection criteria and an approval

process to ensure that grant awards

accomplish the purpose of the

competitive grant funds and that

available funds are used in an effective

manner.

(b) The Secretary shall publish such

procedures in the Federal Register and

establish submission timeframes in a

manner that allows eligible applicants

sufficient time to develop and submit

quality project plans (section

403(a)(5)(B)(i) and (iii)).

§ 645.525 What special consideration will

be given to rural areas and cities with large

concentrations of poverty?

(a) Competitive grant awards will be

targeted to geographic areas of

significant need. In developing

application procedures, special

consideration will be given to rural

areas and cities with large

concentrations of residents living in

poverty.

(b) Grant application guidelines will

clarify specific requirements for

documenting need in the local area

(section 403(a)(5)(B)(iv)).

Subpart F—Administrative Appeal

Process

§ 645.800 What administrative remedies

are available under this Part?

(a) Within 21 days of receipt of a final

determination that has directly imposed

a sanction or corrective action pursuant

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

subrecipient, or a vendor directly

against which the Grant Officer has

imposed a sanction or corrective action,

may request a hearing before the

Department of Labor Office of

Administrative Law Judges, pursuant to

the provisions of 29 CFR part 96 subpart

96.6.

(b) In accordance with 29 CFR

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

procedure published at 29 CFR part 18

shall govern the conduct of hearings

under this section, except that a request

for hearing under this section shall not

be considered a complaint to which the

filing of an answer by DOL or a DOL

agency is required. Technical rules of

evidence shall not apply to a hearing

conducted pursuant to this part;

however, rules or principles designed to

assure production of the most credible

evidence available and to subject

testimony to cross-examination shall

apply.

(c) The decision of the Administrative

Law Judge (ALJ) shall constitute final

agency action unless, within 20 days of

the decision, a party dissatisfied with

the decision of the ALJ has filed a

petition for review with the

Administrative Review Board (ARB)

(established pursuant to the provisions

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

at 61 FR 19977 (May 3, 1996)),

specifically identifying the procedure,

fact, law or policy to which exception

is taken. Any exception not specifically

urged shall be deemed to have been

waived. A copy of the petition for

review must be sent to the opposing

party at that time. Thereafter, the

decision of the ALJ shall constitute final

agency action unless the ARB, within 30

days of the filing of the petition for

review, has notified the parties that the

case has been accepted for review. Any

case accepted by the ARB shall be

decided within 120 days of such

acceptance. If not so decided, the

decision of the ALJ shall constitute final

agency action.

[FR Doc. 01–514 Filed 1–10–01; 8:45 am]

BILLING CODE 4510–30–P