number of unemployed individuals in all 
local areas in the State; 
‘‘(ii) 25 percent on the basis of the 
relative excess number of unemployed indi-
viduals in each local area, compared to the 
total excess number of unemployed individ-
uals in all local areas in the State; and 
‘‘(iii) 15 percent shall be allotted on 
the basis of the relative number of dis-
advantaged adults in each local area, com-
pared to the total number of disadvantaged 
adults in all local areas in the State. 
‘‘(B) MINIMUM AND MAXIMUM PERCENT-
AGES.—The Governor shall ensure that no local 
area shall receive an allocation for a fiscal year 
under this paragraph that is less than 90 per-
cent or greater than 130 percent of the alloca-
tion percentage of the local area for the pre-
ceding fiscal year. 
‘‘(C) DEFINITIONS.— 
‘‘(i) ALLOCATION PERCENTAGE.—The 
term ‘allocation percentage’, used with re-
spect to fiscal year 2006 or a subsequent 
fiscal year, means a percentage of amount 
described in paragraph (1)(A) that is re-
ceived through an allocation made under 
this paragraph for the fiscal year. The 
term, with respect to fiscal year 2005, 
means the percentage of the amounts allo-
cated to local areas under this chapter (as 
in effect on the day before the date of en-
actment of the Job Training Improvement 
Act of 2005) that is received by the local 
area involved for fiscal year 2005. 
‘‘(ii) DISADVANTAGED
ADULT.—The 
term ‘disadvantaged adult’ means an indi-
vidual who is age 22 through 72 who re-
ceived an income, or is a member of a fam-
ily that received a total family income, 
that, in relation to family size, does not ex-
ceed the poverty line. 
‘‘(iii) EXCESS
NUMBER.—The term 
‘excess number’ means, used with respect 
to the excess number of unemployed indi-
viduals within a local area, the number 
that represents the number of unemployed 
individuals in excess of 4.5 percent of the 
civilian labor force in the local area. 
‘‘(3) DISCRETIONARY ALLOCATION.—The Gov-
ernor shall allocate to local areas the amounts de-
scribed in paragraph (1)(B) based on a formula de-
veloped in consultation with the State board and 
local boards. Such formula shall be objective and 
geographically equitable and may include such demo-
graphic and economic factors as the Governor, after 
consultation with the State board and local boards, 
determines are appropriate. 
‘‘(4) LOCAL ADMINISTRATIVE COST LIMIT.— 
‘‘(A) IN GENERAL.—Of the amounts allo-
cated to a local area under this subsection and 
section 128(b) for a fiscal year, not more than 
10 percent of the amount may be used by the 
local boards for the administrative costs of car-
rying out local workforce investment activities 
under this chapter or chapter 4. 
‘‘(B) USE OF FUNDS.—Funds made avail-
able for administrative costs under subpara-
graph (A) may be used for the administrative 
costs of any of the local workforce investment 
activities described in this chapter or chapter 4, 
regardless of whether the funds were allocated 
under this subsection or section 128(b).’’. 
(3) REALLOCATION
AMONG
LOCAL
AREAS.— 
Section 133(c) (29 U.S.C. 2863(c)) is amended—
(A) in paragraph (1), by striking ‘‘para-
graph (2)(A) or (3) of’’; 
(B) by amending paragraph (2) to read as 
follows: 
‘‘(2) AMOUNT.—The amount available for re-
allocation for a program year is equal to the amount 
by which the unexpended balance at the end of the 
program year prior to the program year for which 
the determination is made exceeds 30 percent of the 
total amount of funds available to the local area 
under this section during such prior program year 
(including amounts allotted to the local area in prior 
program years that remain available). For purposes 
of this paragraph, the unexpended balance is the 
amount that is the difference between— 
‘‘(A) the total amount of funds available to 
the local area under this section during the pro-
gram year prior to the program year for which 
the determination is made (including amounts 
allocated to the local area in all prior program 
years that remained available); and 
‘‘(B) the accrued expenditures during such 
prior program year.’’; 
(C) by amending paragraph (3)—
(i) by striking ‘‘subsection (b)(3)’’ 
each place it appears and inserting ‘‘sub-
section (b)’’; 
(ii) by striking ‘‘the prior program 
year’’ and inserting ‘‘the program year in 
which the determination is made’’; 
(iii) by striking ‘‘such prior program 
year’’ and inserting ‘‘such program year’’; 
and 
(iv) by striking the last sentence; and 
(D) by amending paragraph (4) to read as 
follows: 
‘‘(4) ELIGIBILITY.—For purposes of this sub-
section, an eligible local area means a local area 
which does not have an amount available for re-
allocation under paragraph (2) for the program year 
for which the determination under paragraph (2) is 
made.’’. 
(e) USE OF FUNDS FOR EMPLOYMENT AND TRAIN-
ING ACTIVITIES.— 
(1) STATEWIDE EMPLOYMENT AND TRAINING 
ACTIVITIES.— 
(A) IN GENERAL.—Section 134(a)(1) (29 
U.S.C. 2864(a)(1) is amended to read as fol-
lows:
‘‘(1) IN GENERAL.— 
‘‘(A) REQUIRED USE OF FUNDS.—Not less 
than 50 percent of the funds reserved by a Gov-
ernor under section 133(a) shall be used to sup-
port the provision of core services in local areas, 
consistent with the local plan, through one-stop 
delivery systems by distributing funds to local 
areas in accordance with subparagraph (B). 
Such funds may be used by States to employ 
State personnel to provide such services in des-
ignated local areas in consultation with local 
boards. 
‘‘(B) 
METHOD
OF
DISTRIBUTING 
FUNDS.—The method of distributing funds 
under this paragraph shall be developed in con-
sultation with the State board and local boards. 
Such method of distribution, which may include 
the 
formula 
established 
under 
section 
121(h)(3), shall be objective and geographically 
equitable, and may include factors such as the 
number of centers in the local area that have 
been certified, the population served by such 
centers, and the performance of such centers. 
‘‘(C) OTHER USE OF FUNDS.—Funds re-
served by a Governor for a State—
‘‘(i) under section 133(a) and not 
used under subparagraph (A), may be used 
for statewide activities described in para-
graph (2); and 
‘‘(ii) under section 133(a) and not 
used under subparagraph (A), and under 
section 128(a) may be used to carry out 
any of the statewide employment and 
training activities described in paragraph 
(3).’’. 
(B) STATEWIDE RAPID RESPONSE ACTIVI-
TIES.—Section 
134(a)(2) 
(29 
U.S.C. 
2864(a)(2)) is amended to read as follows: 
‘‘(2) STATEWIDE
RAPID
RESPONSE
ACTIVI-
TIES.—A State shall carry out statewide rapid re-
sponse activities using funds reserved as described in 
section 133(a). Such activities shall include— 
‘‘(A) provision of rapid response activities, 
carried out in local areas by the State or by an 
entity designated by the State, working in con-
junction with the local boards and the chief 
elected officials in the local areas; and 
‘‘(B) provision of additional assistance to 
local areas that experience disasters, mass lay-
offs or plant closings, or other events that pre-
cipitate substantial increases in the number of 
unemployed individuals, carried out in local 
areas by the State, working in conjunction with 
the local boards and the chief elected officials in 
the local areas.’’. 
(C) STATEWIDE EMPLOYMENT AND TRAIN-
ING ACTIVITIES.—Section 134(a)(3) (29 U.S.C. 
2864(a)(3)) is amended to read as follows: 
‘‘(3) STATEWIDE ACTIVITIES.—Funds reserved 
by a Governor for a State as described in sections 
133(a) and 128(a) may be used for statewide activi-
ties including— 
‘‘(A) supporting the provision of core serv-
ices described in section 134(c)(2) in the one- 
stop delivery system; 
‘‘(B) conducting evaluations under section 
136(e) of activities authorized under this chap-
ter and chapter 4 in coordination with evalua-
tions carried out by the Secretary under section 
172, research, and demonstration projects; 
‘‘(C) providing incentive grants to local 
areas for regional cooperation among local 
boards (including local boards in a designated 
region as described in section 116(c)), for local 
coordination of activities carried out under this
Act, and for exemplary performance by local 
areas on the local performance measures; 
‘‘(D) providing technical assistance and ca-
pacity building to local areas, one-stop opera-
tors, one-stop partners, and eligible providers, 
including the development and training of staff, 
the development of exemplary program activi-
ties, and the provision of technical assistance to 
local areas that fail to meet local performance 
measures; 
‘‘(E) operating a fiscal and management 
accountability system under section 136(f); 
‘‘(F) carrying out monitoring and oversight 
of activities carried out under this chapter and 
chapter 4; 
‘‘(G) implementing innovative programs, 
such as incumbent worker training programs, 
programs and strategies designed to meet the 
needs of businesses in the State, including small 
businesses, and engage employers in workforce 
activities, and programs serving individuals 
with disabilities consistent with section 188; 
‘‘(H) developing strategies for effectively 
serving hard-to-serve populations and for inte-
grating programs and services among one-stop 
partners; 
‘‘(I) implementing innovative programs for 
displaced homemakers, which for purposes of 
this subparagraph may include an individual 
who is receiving public assistance and is within 
2 years of exhausting lifetime eligibility under 
Part A of title IV of the Social Security Act (42 
U.S.C. 601 et seq.); 
‘‘(J) implementing programs to increase 
the number of individuals training for and 
placed in nontraditional employment; and 
‘‘(K) carrying out activities to facilitate re-
mote access to services provided through a one- 
stop delivery system, including facilitating ac-
cess through the use of technology.’’. 
(D) LIMITATION ON STATE ADMINISTRA-
TIVE EXPENDITURES.—Section 134(a) is fur-
ther amended by adding the following new 
paragraph: 
‘‘(4) LIMITATION.—Not more than 5 percent of 
the funds allotted under section 132(b) shall be used 
by the State for administrative activities carried out 
under this subsection and section 128(a).’’.
(2) LOCAL
EMPLOYMENT
AND
TRAINING
AC-
TIVITIES.—Section 134(b) (29 U.S.C. 2864(b)) is 
amended— 
(A) by striking ‘‘under paragraph (2)(A)’’ 
and 
all 
that 
follows 
through 
‘‘section 
133(b)(2)(B)’’ and inserting ‘‘under section 
133(b)’’; 
(B) in paragraphs (1) and (2), by striking 
‘‘or dislocated workers, respectively’’ both 
places it appears; and 
(C) by redesignating subsections (d) and 
(e) as subsections (c) and (d), respectively. 
(3) 
REQUIRED
LOCAL
EMPLOYMENT
AND 
TRAINING ACTIVITIES.— 
(A) 
ALLOCATED
FUNDS.—Section 
134(c)(1) (29 U.S.C. 2864(c)(1)) (as redesig-
nated by paragraph (2)) is amended to read as 
follows: 
‘‘(1) IN GENERAL.—Funds allocated to a local 
area for adults under section 133(b) shall be used— 
‘‘(A) to establish a one-stop delivery sys-
tem as described in section 121(e); 
‘‘(B) to provide the core services described 
in paragraph (2) through the one-stop delivery 
system in accordance with such paragraph;
‘‘(C) to provide the intensive services de-
scribed in paragraph (3) to adults described in 
such paragraph; and 
‘‘(D) to provide training services described 
in paragraph (4) to adults described in such 
paragraph.’’. 
(B) CORE
SERVICES.—Section 134(c)(2) 
(29 U.S.C. 2864(c)(2)) (as redesignated by 
paragraph (2)) is amended— 
(i) by striking ‘‘who are adults or dis-
located workers’’; 
(ii) in subparagraph (A), by striking 
‘‘under this subtitle’’ and inserting ‘‘under 
the one-stop partner programs described in 
section 121(b)’’; 
(iii) by amending subparagraph (D) to 
read as follows: 
‘‘(D) labor exchange services, including— 
‘‘(i) job search and placement assist-
ance, and where appropriate career coun-
seling; 
‘‘(ii) appropriate recruitment services 
for employers; and 
‘‘(iii) reemployment services provided 
to unemployment claimants.’’;
(iv) in subparagraph (I), by inserting 
‘‘and the administration of the work test 
for the unemployment compensation sys-
tem’’ after ‘‘compensation’’; and 
(v) by amending subparagraph (J) to 
read as follows: 
‘‘(J) assistance in establishing eligibility 
for programs of financial aid assistance for 
training and education programs that are not 
funded under this Act and are available in the 
local area; and’’. 
(C) 
INTENSIVE
SERVICES.—Section 
134(c)(3) (29 U.S.C. 2864(c)(3) (as redesig-
nated by paragraph (2) of this subsection) is 
amended— 
(i) by amending subparagraph (A) to 
read as follows: 
‘‘(A) IN GENERAL.— 
‘‘(i) ELIGIBILITY.—Funds allocated to 
a local area under section 133(b) shall be 
used to provide intensive services for 
adults who— 
‘‘(I) 
ARE
UNEMPLOYED
AND 
WHO
HAVE
BEEN
DETERMINED
BY 
THE ONE-STOP OPERATOR TO BE.—
‘‘(aa) unlikely or unable to 
obtain 
suitable 
employment 
through core services; and 
‘‘(bb) in need of intensive 
services in order to obtain suit-
able employment; or 
‘‘(II) are employed, but who are 
determined by a one-stop operator to 
be in need of intensive services to ob-
tain or retain suitable employment. 
‘‘(ii) 
DEFINITION.—The 
Governor 
shall define the term ‘suitable employment’ 
for purposes of this subparagraph.’’. 
(ii) in subparagraph (C)— 
(I) in clause (v), by striking ‘‘for 
participants seeking training services 
under paragraph (4)’’; and 
(II) by adding the following 
clauses after clause (vi): 
‘‘(vii) Internships and work experi-
ence. 
‘‘(viii) Literacy activities relating to 
basic work readiness, and financial literacy 
activities.
‘‘(ix) Out-of-area job search assistance 
and relocation assistance.’’. 
(D) 
TRAINING
SERVICES.—Section 
134(c)(4) (as redesignated by paragraph (2) of 
this subsection) is amended— 
(i) by amending subparagraph (A) to 
read as follows: 
‘‘(A) IN GENERAL.— 
‘‘(i) ELIGIBILITY.—Funds allocated to 
a local area under section 133(b) shall be 
used to provide training services to adults 
who— 
‘‘(I) after an interview, evalua-
tion, or assessment, and case manage-
ment, have been determined by a one- 
stop operator or one-stop partner, as 
appropriate, to— 
‘‘(aa) be unlikely or unable 
to obtain or retain suitable em-
ployment through intensive serv-
ices under paragraph (3)(A); 
‘‘(bb) be in need of training 
services to obtain or retain suit-
able employment; and
‘‘(cc) have the skills and 
qualifications to successfully par-
ticipate in the selected program 
of training services; 
‘‘(II) select programs of training 
services that are directly linked to the 
employment opportunities in the local 
area involved or in another area in 
which the adults receiving such serv-
ices are willing to commute or relo-
cate; 
‘‘(III) who meet the requirements 
of subparagraph (B); and 
‘‘(IV) who are determined eligible 
in accordance with the priority system 
in effect under subparagraph (E). 
‘‘(ii) The Governor shall define the 
term ‘suitable employment’ for purposes of 
this subparagraph.’’; 
(ii) in subparagraph (B)(i), by strik-
ing ‘‘Except’’ and inserting ‘‘Notwith-
standing section 479B of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1087uu) 
and except’’;
(iii) by amending subparagraph (E) to 
read as follows: 
‘‘(E) PRIORITY.— 
‘‘(i) IN GENERAL.—A priority shall be 
given to unemployed individuals for the 
provision of intensive and training services 
under this subsection. 
‘‘(ii) ADDITIONAL
PRIORITY.—If the 
funds in the local area, including the funds 
allocated under section 133(b), for serving 
recipients of public assistance and other 
low-income individuals, including single 
parents, displaced homemakers, and preg-
nant single women, is limited, the priority 
for the provision of intensive and training 
services under this subsection shall include 
such recipients and individuals. 
‘‘(iii) DETERMINATIONS.—The Gov-
ernor and the appropriate local board shall 
direct the one-stop operators in the local 
area with regard to making determinations 
with respect to the priority of service under 
this subparagraph.’’; 
(iv) in subparagraph (F), by adding 
the following clause after clause (iii):
‘‘(iv) ENHANCED INDIVIDUAL TRAIN-
ING
ACCOUNTS.—Each local board may, 
through one-stop centers, assist individuals 
receiving 
individual 
training 
accounts 
through the establishment of such accounts 
that include, in addition to the funds pro-
vided under this paragraph, funds from 
other programs and sources that will assist 
the individual in obtaining training serv-
ices.’’; and 
(v) in subparagraph (G)(iv), by redes-
ignating subclause (IV) as subclause (V) 
and inserting after subclause (III) the fol-
lowing: 
‘‘(IV) Individuals with disabil-
ities.’’. 
(4) PERMISSIBLE ACTIVITIES.—Section 134(d) 
(as redesignated by paragraph (2)) is amended— 
(A) by amending paragraph (1) to read as 
follows: 
‘‘(1) DISCRETIONARY ONE-STOP DELIVERY AC-
TIVITIES.— 
‘‘(A) IN GENERAL.—Funds allocated to a 
local area under section 133(b) may be used to 
provide, through the one-stop delivery system—
‘‘(i) customized screening and referral 
of qualified participants in training serv-
ices to employers; 
‘‘(ii) customized employment-related 
services to employers on a fee-for-service 
basis; 
‘‘(iii) customer support to navigate 
among multiple services and activities for 
special participant populations that face 
multiple barriers to employment, including 
individuals with disabilities; 
‘‘(iv) employment and training assist-
ance provided in coordination with child 
support enforcement activities of the State 
agency carrying out subtitle D of title IV 
of the Social Security Act; 
‘‘(v) activities to improve services to 
local employers, including small employers 
in the local area, and increase linkages be-
tween the local workforce investment sys-
tem and employers; and 
‘‘(vi) activities to facilitate remote ac-
cess to services provided through a one- 
stop delivery system, including facilitating 
access through the use of technology.
‘‘(B) WORK
SUPPORT
ACTIVITIES
FOR 
LOW-WAGE WORKERS.— 
‘‘(i) IN GENERAL.—Funds allocated to 
a local area under 133(b) may be used to 
provide, through the one-stop delivery sys-
tem and in collaboration with the appro-
priate programs and resources of the one- 
stop partners, work support activities de-
signed to assist low-wage workers in re-
taining and enhancing employment. 
‘‘(ii) ACTIVITIES.—The activities de-
scribed in clause (i) may include assistance 
in accessing financial supports for which 
such workers may be eligible and the provi-
sion of activities available through the one- 
stop delivery system in a manner that en-
hances the opportunities of such workers 
to participate, such as the provision of em-
ployment and training activities during 
nontraditional hours and the provision of 
on-site child care while such activities are 
being provided.’’; and 
(B) by adding after paragraph (3) the fol-
lowing new paragraph:
‘‘(4) INCUMBENT
WORKER
TRAINING
PRO-
GRAMS.— 
‘‘(A) IN GENERAL.—The local board may 
use up to 10 percent of the funds allocated to 
a local area under section 133(b) to carry out 
incumbent worker training programs in accord-
ance with this paragraph. 
‘‘(B) TRAINING ACTIVITIES.—The training 
programs for incumbent workers under this 
paragraph shall be carried out by the local area 
in conjunction with the employers of such work-
ers for the purpose of assisting such workers in 
obtaining the skills necessary to retain employ-
ment and avert layoffs. 
‘‘(C) EMPLOYER MATCH REQUIRED.— 
‘‘(i) IN GENERAL.—Employers partici-
pating in programs under this paragraph 
shall be required to pay a proportion of the 
costs of providing the training to the in-
cumbent workers. The Governor shall es-
tablish, or may authorize the local board to 
establish, the required portion of such 
costs, which shall not be less than— 
‘‘(I) 10 percent of the costs, for 
employers with 50 or fewer employees;
‘‘(II) 25 percent of the costs, for 
employers with more than 50 employ-
ees but fewer than 100 employees; 
and 
‘‘(III) 50 percent of the costs, for 
employers with 100 or more employ-
ees. 
‘‘(ii) CALCULATION OF MATCH.—The 
wages paid by an employer to a worker 
while they are attending training may be 
included as part of the requirement pay-
ment of the employer.’’. 
SEC. 113. PERFORMANCE ACCOUNTABILITY SYSTEM. 
(a) STATE PERFORMANCE MEASURES.— 
(1) 
IN
GENERAL.—Section 
136(b)(1) 
(29 
U.S.C. 2871(b)(1)) is amended— 
(A) in subparagraph (A)(i), by striking 
‘‘and the customer satisfaction indicator of per-
formance described in paragraph (2)(B)’’; and 
(B) in subparagraph (A)(ii), by striking 
‘‘paragraph (2)(C)’’ and inserting ‘‘paragraph 
(2)(B)’’. 
(2) INDICATORS
OF
PERFORMANCE.—Section 
136(b)(2) (29 U.S.C. 2871(b)(2)) is amended—
(A) in subparagraph (A)(i), by striking 
‘‘(except for self-service and information activi-
ties) and (for participants who are eligible 
youth age 19 through 21) for youth activities 
authorized under section 129’’; 
(B) by amending subparagraph (A)(i)(IV) 
to read as follows: 
‘‘(IV) the efficiency of the pro-
gram in obtaining the outcomes de-
scribed in subclauses (I) through 
(III).’’; 
(C) by amending subparagraph (A)(ii) to 
read as follows: 
‘‘(ii) CORE INDICATORS FOR ELIGIBLE 
YOUTH.—The core indicators of perform-
ance for youth activities authorized under 
section 129 shall consist of— 
‘‘(I) entry into employment, edu-
cation or advanced training, or mili-
tary service; 
‘‘(II) attainment of secondary 
school diplomas or the General Edu-
cational 
Development 
credential 
(GED) (including recognized alter-
native standards for individuals with 
disabilities); 
‘‘(III) literacy or numeracy gains; 
and 
‘‘(IV) the efficiency of the pro-
gram in obtaining the outcomes de-
scribed in subclauses (I) through 
(III).’’; 
(D) by striking subparagraph (B); and 
(E) by redesignating subparagraph (C) as 
subparagraph (B), and by adding at the end of 
such subparagraph (as so redesignated) the fol-
lowing new sentence: ‘‘Such indicators may in-
clude customer satisfaction of employers and 
participants with services received from the 
workforce 
investment 
activities 
authorized 
under this subtitle.’’. 
(3) 
LEVELS
OF
PERFORMANCE.—Section 
136(b)(3)(A) (29 U.S.C. 2871(b)(3)(A)) is amend-
ed— 
(A) in clause (i), by striking ‘‘and the cus-
tomer satisfaction indicator described in para-
graph (2)(B)’’;
(B) in clause (ii), by striking ‘‘and the cus-
tomer satisfaction indicator of performance, for 
the first 3’’ and inserting ‘‘for the 2’’; 
(C) in clause (iii)— 
(i) in the heading, by striking ‘‘FOR 
FIRST 3 YEARS’’; and 
(ii) by striking ‘‘and the customer sat-
isfaction indicator of performance, for the 
first 3’’ and inserting ‘‘for the 2’’; 
(D) in clause (iv)— 
(i) by striking subclause (I); 
(ii) by redesignating subclauses (II) 
and (III) as subclauses (I) and (II), re-
spectively; and 
(iii) in subclause (I) (as so redesig-
nated)— 
(I) by striking ‘‘taking into ac-
count’’ and inserting ‘‘which shall be 
adjusted based on’’; 
(II) by inserting ‘‘such as unem-
ployment rates and job losses or gains 
in particular industries’’ after ‘‘eco-
nomic conditions’’; and 
(III) by inserting ‘‘such as indi-
cators of poor work history, lack of
work experience, low levels of literacy 
or English proficiency, disability sta-
tus, and welfare dependency’’ after 
‘‘program’’; 
(E) by striking clause (v); and 
(F) by redesignating clause (vi) as clause 
(v). 
(4) 
ADDITIONAL
INDICATORS.—Section 
136(b)(3)(B) is amended by striking ‘‘paragraph 
(2)(C)’’ and inserting ‘‘paragraph (2)(B)’’. 
(b) LOCAL
PERFORMANCE
MEASURES.—Section 
136(c) (29 U.S.C 2871(c)) is amended— 
(1) in paragraph (1)(A)(i), by striking ‘‘, and 
the customer satisfaction indicator of performance 
described in subsection (b)(2)(B),’’; 
(2) in paragraph (1)(A)(ii), by striking ‘‘sub-
section 
(b)(2)(C)’’ 
and 
inserting 
‘‘subsection 
(b)(2)(B)’’; and 
(3) by amending paragraph (3) to read as fol-
lows: 
‘‘(3) DETERMINATIONS.—In determining such 
local levels of performance, the local board, the chief 
elected official, and the Governor shall ensure such 
levels are adjusted based on the specific economic 
characteristics (such as unemployment rates and job
losses or gains in particular industries), demographic 
characteristics, or other characteristics of the popu-
lation to be served in the local area, such as poor 
work history, lack of work experience, low levels of 
literacy or English proficiency, disability status, and 
welfare dependency.’’. 
(c) REPORT.—Section 136(d) (29 U.S.C. 2871(d)) is 
amended— 
(1) in paragraph (1), by striking ‘‘and the cus-
tomer satisfaction indicator’’ in both places that it 
appears; 
(2) in paragraph (2)(E), by striking ‘‘(excluding 
participants who received only self-service and infor-
mational activities)’’; and 
(3) by adding at the end the following: 
‘‘(4) DATA VALIDATION.—In preparing the re-
ports described in this subsection, the States shall 
establish procedures, consistent with guidelines 
issued by the Secretary, to ensure the information 
contained in the report is valid and reliable.’’. 
(d) SANCTIONS
FOR STATE.—Section 136(g) (29 
U.S.C. 2871(g)) is amended— 
(1) in paragraph (1)(A), by striking ‘‘or (B)’’; 
and
(2) in paragraph (2), by striking ‘‘section 503’’ 
and inserting ‘‘section 136(i)’’. 
(e) SANCTIONS FOR LOCAL AREAS.—Section 136(h) 
(29 U.S.C. 2871(h)) is amended— 
(1) in paragraph (1), by striking ‘‘or (B)’’; and 
(2) by amending paragraph (2)(B) to read as 
follows: 
‘‘(B) APPEAL TO GOVERNOR.—A local area 
that is subject to a reorganization plan under 
subparagraph (A) may, not later than 30 days 
after receiving notice of the reorganization plan, 
appeal to the Governor to rescind or revise such 
plan. In such case, the Governor shall make a 
final decision not later than 30 days after the 
receipt of the appeal.’’. 
(f) INCENTIVE GRANTS.—Section 136(i) (29 U.S.C. 
2871(i)) is amended to read as follows: 
‘‘(i) INCENTIVE GRANTS FOR STATES AND LOCAL 
AREAS.— 
‘‘(1) INCENTIVE GRANTS FOR STATES.— 
‘‘(A) IN
GENERAL.—From funds appro-
priated under section 174, the Secretary may 
award grants to States for exemplary perform-
ance in carrying programs under this chapters 
4 and 5 of this title. Such awards may be based
on States meeting or exceeding the performance 
measures established under this section, on the 
performance of the State in serving special pop-
ulations, including the levels of service provided 
and the performance outcomes, and such other 
factors relating to the performance of the State 
under this title as the Secretary determines is 
appropriate. 
‘‘(B) USE OF FUNDS.—The funds awarded 
to a State under this paragraph may be used to 
carry out any activities authorized under chap-
ters 4 and 5 of this title, including demonstra-
tions and innovative programs for special popu-
lations. 
‘‘(3) INCENTIVE GRANTS FOR LOCAL AREAS.— 
‘‘(A) IN GENERAL.—From funds reserved 
under sections 128(a) and 133(a), the Governor 
may award incentive grants to local areas for 
exemplary performance with respect to the 
measures established under this section and 
with the performance of the local area in serv-
ing special populations, including the levels of 
service and the performance outcomes. 
‘‘(B) USE OF FUNDS.—The funds awarded 
to a local area may be used to carry out activi-