Brief Overview of the House and Senate-Passed Bills on WIA Reauthorization

BRIEF OVERVIEW OF THE HOUSE AND SENATE–PASSED BILLS
ON REAUTHORIZATION OF THE
WORKFORCE INVESTMENT ACT
(including a Comparison with the Administration Proposal on Key Provisions)
November 2003

GOVERNANCE ISSUES

State Waiver Authority

The Administration originally proposed a significant broadening of the waiver authority currently in WIA, similar to that afforded in “super waivers.”
The House WIA bill does not include the “super waiver” authority for States as proposed by the Administration.
The Senate bill does not contain the “super waiver” authority for States as originally proposed by the Administration. The Senate does include an expedited waiver authority, whereby the Secretary may establish an expedited procedure for the granting of waivers that have already been granted to other States.

State Board Composition

The Administration originally proposed an elimination of the requirement for a business majority on the State Boards, and a requirement that all partner program agency heads have a seat on the Board.
The House bill retains a business majority on the State Board, and retains the requirements that local WIB members and locally elected officials be included as members of the State board. The House bill also requires that State partner program agency heads be included on the Board.
The Senate bill retains a business majority and requires partner program agency heads on the State Board. It does not require the membership of local board members, (although nominations for business appointments are made from state business associations and local boards). The Senate bill requires that only one locally elected official be seated, representing all other local officials in the State.

State Board Authority

The Administration originally proposed a significant increase in the authority of State boards – requiring them to develop criteria for certification of local boards and of One Stops – and providing them with a stronger role in laying out the vision for the entire statewide workforce investment system.
The House bill provides authority to the State board to establish certification criteria for local boards and for One Stops, but it limits the use of such certification criteria for One Stops to that of determining eligibility for additional infrastructure funding.
The Senate bill also provides the State boards with authority for developing criteria for use in the certification of local boards, consistent with current law. It does not provide the State board with authority for certifying One Stops however. Instead it requires the State board to develop objective criteria for use by local boards in assessing the effectiveness and ensuring continuous improvement of the One Stop delivery system. The Senate bill stresses the State Board's responsibility for providing guidance on the role of partner programs and partner program contributions to the One Stop infrastructure.

Local Areas

The Administration proposed the redesignation of local areas at the discretion of the State. The Administration proposal would have also eliminated the right of a local area to appeal the decision of a Governor on a local designation, to the Secretary of Labor.
Neither the House bill nor the Senate bill reopen the designation of local areas except in the cases of local areas with problems of poor performance or problems with fiscal integrity. While drafted somewhat differently, both bills would retain the designation of all existing local areas if the areas are performing successfully and have sustained fiscal integrity. Both bills also retain the right of a local area to appeal a Governor's decision on area designation to the Secretary.
The Senate bill specifically grants a unit of local government of 500,000 or more in population, the right to designation as a local area if they so desire – and such local areas are given a sort of 2 year “grace period” to perform successfully. After the initial 2 year designation, all local areas, including those of 500,000 or more population, must perform successfully (meeting 80% of their performance standards over a 2 year period, in accordance with the performance criteria in the statute) and sustain fiscal integrity.

Local Boards

The Administration proposed elimination of the requirement that WIA partners be guaranteed seats on local WIBs.
Both the House bill and the Senate bill, consistent with the Administration's proposal, eliminate the requirement that mandatory partners be members of local boards. The Senate bill further relaxes the requirements for local board membership with regard to education representation and adds faith-based organizations to the list of required members of local boards.
The House bill and Senate bill, consistent with the Administration's proposal, maintain the existing authority of local elected officials to appoint local WIBs, however both bills include a new requirement that business representatives must represent leading industry sectors and geographic regions. The Senate bill further stresses the requirement to include large and small businesses.
The House bill and Senate bill maintain the existing authority of local boards and local elected officials over local workforce systems (with the exception of their existing roles in the identification of local training providers, which was substantially rewritten and by-and-large delegated to states to determine).

FUNDING

Formulas:

The House bill includes very complex formula provisions for Adult and Youth programs, with the goal of holding all States 100% harmless (on a proportionate basis) with funding levels in FY 2003. Because of this complexity, a separate summary of the House bill's formula provisions is attached.

The Senate bill includes very different formula recommendations for the Adult and Dislocated Worker programs, as it does not consolidate Adult funding, it includes different formula factors, and it does not include the “100% hold-harmless” provisions included in the House.

The Senate bill formulas are as follows:

Dislocated Workers: Retains current law.
Adults: 40% unemployed; 25% civilian labor force; 35% disadvantaged adults.
Youth: Similar to the House bill – same formula factors (33.3% youth age 16-21; 33.3% unemployment; 33.3% disadvantaged youth -- but includes a 90%/130% hold-harmless/stop-gain.

Adult Program

The Administration originally proposed consolidation of the Adult, Dislocated Worker, and Wagner Peyser funding streams into a single Adult funding stream. As part of that proposal, the Administration recommended that 12% be held off the top for National Emergency Grants, and that the remaining 88% of funds be distributed to the States based upon a 2 part formula: with 26% distributed based upon a base formula taking into account allotment percentages in the consolidated programs in prior year; and 74% based upon a consolidated formula (taking into account 60% unemployment, 25% excess unemployment, and 15% disadvantaged). Once funding reached States, the Administration proposed a 50%/50% split between the States and local areas.

Like the Administration proposal, the House bill consolidates the Adult, Dislocated Worker, and Wagner Peyser funding streams into a single Adult program. Under the House bill, funding would be distributed as follows:

10% of the total for Adults is held by DOL for National Emergency Grants and other purposes. The remainder is sent to States and localities as follows:
- 50% held by States;
- 50% is sent locally by formula.
Different from the Administration proposal, the House bill requires that of the State's 50%, half of that, or 25% of the total State allotment must be distributed to local areas by a State-determined method of distribution that is objective and geographically equitable, which may include the One Stop infrastructure funding formula. Of these amounts, States may use such funds, or a portion of such funds, to employ State Employment Service staff for the delivery of core services, in consultation with local boards. However, such core services must be delivered consistent with local plans.
The Senate bill does not consolidate the Adult, Dislocated Workers, and Wagner Peyser funding streams into a single Adult program. Instead the bill retains separate funding streams, but requires the co-location of the Employment Service at comprehensive One Stop Centers.

Expenditures

The Administration originally proposed that reallotment and reallocation of funds be based on expenditures.
The House bill required that when determining the reallotment and reallocation of unspent funding, such determinations be based upon 30% of unspent “accrued expenditures” vs. “expenditures” (as was originally proposed by the Administration). Such unspent “accrued expenditures” would be based however, on the total amount available to a local area, including carry-in, as compared to obligations based on the current year's allocation under current law.
The Senate bill contains very similar spending requirements as the House bill, utilizing the same percentages based upon “accrued expenditures.” The Senate bill has 2 important differences from the House bill however: a different definition of “accrued expenditures;” and the Senate bill specifies that the new spending requirements cannot be imposed retroactively, but will take effect either in Program Year 2004, or in the first Program Year after the date of enactment of the reauthorization legislation.

ONE STOPS / INTEGRATED SERVICE DELIVERY

None of the 3 proposals establish separate titles in WIA for local boards or One Stops, however all would pull all of the One Stop activities together within Section 121 of title I.
The House bill requires Governors to determine an appropriate amount that all partner programs must contribute to the One Stop infrastructure. Once such determination is made, the State Board develops a formula through which the contributed infrastructure funds are to be distributed to local areas that meet certification criteria developed by State boards for the explicit purpose of determining eligibility for the receipt of such additional infrastructure funding.
The Senate bill provides 2 options for determining contributions from WIA, Wagner Peyser, and other partner programs for the non-personnel-related costs of the One Stop infrastructure. First, local areas have the option of determining funding contributions through the local MOU process. The Governor is required to provide guidance to state-administered programs regarding appropriate contributions if this option is chosen. If the local MOU process does not work (if any of the local partners do not agree with the MOU), then the Governor is required to determine appropriate funding contributions to be made by the State partner programs for that local area (without agreement). If this option is taken, “required” contributions are capped at 3% for WIA and Wagner Peyser programs; and at a graduated contribution leading to 1.5% in the 3^rd year of the authorization by other partner programs. These required caps do not place a limit on total contributions from partners, just the amounts that can be required by the Governor to be contributed to the non-personnel-related One Stop infrastructure costs. Required Partner Program contributions must come from administrative funds within those programs. Local areas that have already negotiated a functioning MOU in their implementation of WIA would not be required to renegotiate their agreement after enactment of reauthorization, unless one or more of the parties disagrees with such provisions.
The Senate bill does not require State certification of One Stops, either generally or for the receipt of infrastructure funding. Instead it requires the State board to develop objective criteria for use by local boards to determine the effectiveness and continuous improvement of the One Stop system.
Both the House bill and the Senate bill retain local authority (of local boards and locally elected officials) for the designation of One Stop providers, and for oversight of the One Stop system as provided under current law. Such local authority is not intended to be diminished through either bill.

TRAINING

Sequence of Services

Both the Administration proposal and the House bill change the sequence of services language in WIA (that language determining eligibility for intensive and training services), appearing to provide discretion to One Stops for determining what types of services are appropriate for individuals that will lead to “suitable employment.” This language on its face seems to allow individuals to more easily receive intensive or training services. However, the term “suitable employment” under both proposals is defined by the Governor, not local boards, and has a history in the administration of the U.I. work-test – this could potentially limit individuals' ability to receive training for jobs that would lead to upward mobility. For example, a low wage worker could be limited to training for a similar low wage job in his/her commuting area – a job “suitable” to his or her skills and work history.
The Senate bill relaxes the existing sequence of services language, but retains the important provision allowing for training that leads to self-sufficiency as determined by the local board, consistent with current law. Specifically the bill clarifies that individuals are eligible for intensive and training services if such services will lead to employment in jobs that will provide them with self-sufficiency as defined by the LWIB, or in the case of previously employed individuals, with employment in jobs that provide comparable or increased wages, to the extent practicable.

Training Reporting Requirements

The Administration proposal, similar to the House bill and Senate bills, proposed the elimination of the existing training provider reporting requirements in current law, and delegated the responsibility for identification, collection, and distribution of such information to States. While there is a limited role for local boards in the Administration's proposal and in the House bill, such role is dependent upon the discretion of the Governor.
The Senate bill provides local boards with authority to add performance criteria for training providers in their local areas in determining local training providers' eligibility.
The Administration proposal and the House bill eliminate the exemption for OJT and customized training providers from the State Training Provider List, thus requiring that Governors develop criteria for certifying such providers. The Senate bill maintains such exemptions.

Incumbent Worker Training

The House bill and the Senate bill, similar to the Administration proposal, allow local areas to spend up to 10% of their local Adult (and Dislocated Worker) program funds on incumbent worker training, with a matching requirement for employers determined by the local board, taking into account minimum contributions determined by the size of the employer.

Customized Training

The House bill and the Senate bill both eliminate the requirement for a 50% contribution by employers for customized training – allowing local boards to determine the appropriate contribution, taking into account such factors as the size of the employer. The Administration proposed that such matching requirements should be determined by the Governor.

Other Training Provisions

Both the House bill and the Senate bill, like the Administration proposal, rename ITAs -- Career Scholarships; and encourage the leveraging of other resources in addition to WIA funding for training.

BUSINESS SERVICES

The Senate bill includes significantly more language than the Administration proposal or the House bill to encourage the delivery of relevant services to business and to encourage the development of innovative service strategies to meet the needs, particularly the skill requirements, of employers. Such language is found in the Senate bill's State and local planning requirements; the State uses of funds; the local uses of funds; and the performance measurement provisions of the bill.

YOUTH

Under the House bill:

Youth programs are authorized at $1.25 billion, $250 million beyond the Administration's proposal, in order to cover the additional costs of the Administration's National Youth Challenge Grants.
In accordance with the Administration proposal, the House bill requires that 25% of WIA Youth formula funds be held at the national level for Youth Challenge Grants. Youth challenge grants are 80% competitive/20% discretionary, and can be spent on both in-school and out-of-school programs for youth age 14 to 19.
The remaining amount of Youth funding would then be distributed to States based on the formula described in the attached summary.
10% of the Youth funding is held by the State for Statewide activities and State administration. While there are allowable State uses of funds, there are no required State uses of funds for youth activities.
90% of a State's Youth funding is distributed as follows: 80% by the Youth formula previously described; and 20% at the discretion of the Governor.
State and local Youth funds must be spent as follows: Not less than 70% of expenditures must be spent on out-of-school youth age 16 to 21 (including dropouts, incarcerated youth in alternative schools, youth transitioning from foster care, and youth who have already graduated from high school, received a GED, or alternative standards for youth with disabilities); and not more than 30% of funds can be spent on in-school youth age 16-24, during non-school hours. This provision is in contrast to the Administration's proposal that required that all State and local Youth funds be spent on out-of-school youth age 16 to 21.
The requirement for Youth Councils is eliminated.

The Senate bill is similar to the House bill on Youth Programs, with the following major differences:

Youth are defined as 14-21 for in-school youth; and 16-21 for out-of-school youth.
Provides a such sums authorization level for youth programs, with a protection that no funding for national Challenge Grants may be awarded until such time as the youth formula funding reaches $1 billion (similar to the funding structure in WIA for YO grants). Once funding reaches $1 billion, any additional funding, up to $250 million would go into Youth Challenge Grants. Once funding reaches $250 million, funding beyond that level again goes back into the youth formula funding stream to States and localities.
The split between State and local funding is 15% State; 85% local; and
The split between In-School and Out-of-School Youth is: 60% In-School; 40% Out-of-School.

PERFORMANCE

The Administration proposal and the House bill propose streamlined performance measures for Adults and Youth, eliminating the skills attainment and customer satisfaction measures for Adults, and adding an efficiency measure for youth and adults. Both bills however, clarify that States and local areas may continue to measure customer satisfaction as part of their own performance measurement systems. The measures are as follows:
For Youth:
I.      Entry into employment, advanced training or the military;
II.    Attainment of secondary school diploma or equivalent;
III.   Attainment of literacy or numeracy skills; and
IV.   Efficiency measure.

For Adults:
I.     Entry into employment;
II.    Retention in employment;
III.   Earnings Gains
IV.   Efficiency Measure.
The Senate bill also includes streamlined measures, but retains skills attainment and customer satisfaction as measures for the Adult and Dislocated Worker programs, and does not include the efficiency measure sought by the Administration. The Senate measures are as follows:
For Youth:
I.     Entry into employment, education, or advanced training, or military service;
II.   Attainment of Secondary school diplomas or their equivalents, and postsecondary certificates;
III.   Literacy or numeracy gains.

For Adults:
I.    Entry into unsubsidized employment;
II.   Retention in unsubsidized employment 6 months after entry into employment;
III.  Increases in earnings from unsubsidized employment; and
IV.  Attainment of a recognized credential.
V.   Customer Satisfaction.
The Senate bill also allows states and localities to use a regression model approach in determining performance.

HOUSE WIA FORMULAS

ADULT FORMULA

FEDERAL-TO-STATE ALLOTMENTS

10% held by Secretary (for NEG, demos, and technical assistance)
90% allocated to states:
- 26% “Base formula” (Wagner-Peyser factors)
- 74% “Consolidated formula” (Adult and DW) (60% unemployment, 25% excess unemployment, 15% disadvantaged) with a 90/130 stop/gain

If overall funding for the “base formula” exceeds the FY 03 level, additional funds will be distributed based on a state's relative share of the civilian labor force.

If the combined base and consolidated formulas do not hold all states harmless at FY 03 levels, funding from states with an “excess allotment” (defined as a three percent funding gain or greater if the Secretary determines less money is need to hold all states harmless) will be redistributed proportionately by the Secretary to states whose allocation has fallen below FY 03 levels. If this redistribution still does not hold all states harmless, the Secretary is required to use NEG funding to make up the difference

STATE-TO-LOCAL ALLOCATION

50% by formula to locals
- 85% of which goes by factors in fed to state consolidated formula (90/130 hold harmless)
- 15% of which is distributed by Governor-determined formula, in consultation with state and local boards, objective and geographically equitable distribution
Governors discretion
- 50% of which must be distributed to locals on a geographically equitable basis; funds may be used to continue to employ ES workers, and services must be provided consistent with local plans.
- 50% of which is at Governor discretion for rapid response, One Stops, etc.

YOUTH FORMULA (ages 16-24)

Increases allotment to $1.25 billion, up from $1 billion in FY 03

FEDERAL-TO-STATE ALLOTMENTS (90/130 stop/gain allowable each year)

WIA formula factors up to FY 03 funding level
If funding increases above FY 03 allotment, the formula shifts for this excess funding only, to three equally divided factors -- state population aged 16-19, state unemployment, and state disadvantaged youth aged 16-21.

STATE-TO-LOCAL ALLOCATION (90/130 stop/gain allowable each year)

10% held by Governor for statewide activities
90% allocated to local areas
- 80% by formula to local areas (33% population 16-19 in local area, 33% local unemployment, 33% disadvantaged aged 16-21)
- 20% by Governor determined formula, in consultation with state and local boards

BRIEF OVERVIEW OF THE HOUSE AND SENATE–PASSED BILLSON REAUTHORIZATION OF THE WORKFORCE INVESTMENT ACT (including a Comparison with the Administration Proposal on Key Provisions) November 2003

BRIEF OVERVIEW OF THE HOUSE AND SENATE–PASSED BILLS
ON REAUTHORIZATION OF THE
WORKFORCE INVESTMENT ACT
(including a Comparison with the Administration Proposal on Key Provisions)
November 2003