Incumbent Worker Training WIA Policy Letter No. 05-PL-11 Illinois Department of Commerce And Economic Opportunity Bureau of Workforce Development January

Incumbent Worker TrainingWIA Policy Letter No. 05-PL-11

Illinois Department of Commerce

And Economic Opportunity

Bureau of Workforce Development

January 31, 2006

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Purpose of Letter No. 05-PL-11

• Provide guidance to implement new waiver authority granted to Illinois by DOL allowing diversion of 10% of local WIA allocations to train incumbent workers.

• Help EDRs, LWIAs, and LWIBs develop a full continuum of workforce services for the unemployed, underemployed, and new entrants to the labor force.

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• Provide a mechanism for EDRs, LWIAs, and LWIBs to use local WIA funds to meet the leverage requirements for second year funding for incumbent worker training projects started with WIA 15% funds through the critical skill shortages initiative (CSSI).

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• Prepare the state and local areas for (possible) passage of WIA reauthorization legislation, which includes ongoing authority for local areas to voluntarily divert WIA adult and dislocated worker funds to train incumbent workers.

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Employed versus Incumbent Workers

• Employed workers:– Authority to serve employed adults and

dislocated workers has always existed in WIA and is not associated with the new waiver authority.

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• Employed workers:– Employed adults or dislocated workers

determined to need intensive services (beyond self-accessed core services) to obtain or retain employment that leads to self-sufficiency.

– Must be determined eligible, registered, provided the same level of customer choice of training providers as other registrants, and outcomes associated with employed workers count for federal performance standards.

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• Incumbent worker:– Heretofore, authority to serve incumbent

workers was limited to the governor’s 15 percent funds, as an optional state activity (see WIA sec. 134(a)(3)(iv)(l).

– Authorization for local areas to serve incumbent workers has now been created via approval of the waiver request submitted in the state plan.

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• Incumbent worker:– An individual (or group of individuals) with an

employment relationship with a participating employer or group of participating employers in a “targeted” industry (as cited in the local plan), or an employer being provided incumbent worker training as part of an economic development incentive package

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• Incumbent workers:– Are not subject to WIA eligibility requirements;– Do not have a choice of training providers;– Participant files are not maintained (beyond what

is required by DCEO for reporting); – And, individual employment outcomes are not

counted for WIA federal performance standards.

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• Participating Employers:– Participating employer means, an employer

participating in the WIA-funded incumbent worker training (IWT) program.

– A group of employers must be actively participating in the WIA IWT program and must be industry focused (e.g., industry-related organization, OEM supply chain, or CSSI consortium).

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Benefits of Incumbent Worker Training

• Incumbent worker training helps employers upgrade the skills of their workforces in order to become and remain competitive in both regional and global markets. IWT is therefore “employer driven” and responds to changes in market conditions as well as the introduction of new technology into the workplace. The employer is the primary customer and primary beneficiary of the training.

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• Workers also benefit in several ways:– Workers obtain new work-related skills;– Sometimes training results in formal skill

certifications (enhancing employability);– Sometimes training prepares the workers for

job upgrades, with a commensurate increase in wages;

– And, sometimes jobs are retained that would have otherwise been moved out of the area.

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• The local WIA program may also benefit.– IWT allows for a more comprehensive range of

workforce services – “a full continuum”.– IWT may attract greater participation by local

employers in the one-stop system.– IWT may result in LWIBs and LWIAs having a

“seat at the table” in the local economic development community.

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• The local program may benefit in other ways.– May provide an opportunity for EDRs, LWIBs,

and LWIAs to develop and refine multi-company training programs positioning LWIBs and LWIAs to compete for state GRF funding under the ETIP program.

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How much may be diverted?

• Up to 10% of each of the local area’s adult, dislocated worker, and youth allocations, starting with the PY 2005 allocations may be diverted.

• The 10% limit applies to each program independently – no more than 10% of the allocation from any one of the programs may be diverted.

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How much may be diverted?

• The percentage diverted may vary across the three programs.

• The percentage to be diverted applies only to the new allocation – not total availability, which includes carryover from prior years.

• The decision to divert funds for IWT is purely voluntary.

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How does spending for IWT affect other compliance policies?

• Policies remain unchanged:– 10 percent administrative limit still applies;– 30 percent minimum youth expenditures for

out-of-school youth still applies;– Reallocation policy (see 01-PL-26) still applies;– And, prohibition against encouraging business

relocations that result in layoffs at the original location still applies.

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How is permissionobtained to divert funds for IWT?

• There is a two-step process.– The local five-year plan must be modified in

accordance with Policy Letter No. 05-PL-11.– And, one or more project plans must be

submitted to DCEO, prior to expending any funds diverted for IWT.

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What must becontained in the modification?

• A narrative discussion identifying the industries to be targeted for IWT. The industry designations should be specific (i.e., no “other” categories).

• Identification of any local CSSI projects that will use this authority to meet the leverage requirement.

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• A completed WIA Program Funding Form that specifies the amounts to be diverted from each program.

• The latest WIA Program Funding form (electronic version) may be obtained from Mike Baker or Lora Dhom

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• Assurances:– All required WIA services for youth, adults,

and dislocated workers will continue.– The LWIB will continue to meet WIA

performance and expenditure (obligations) benchmarks.

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• Assurances:– And, any economic development incentive

projects will comply with state and federal requirements governing such incentives or be subject to clawback requirements.

Federal limitations include the prohibition against encouraging relocation of firms that result in layoffs at the original site (WIA Rule 667.268).

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What is an exampleof a “clawback” provision?

• Participating employers must agree to repay costs to ____ in the event that workers receiving training are involuntarily separated from employment (without cause) due to lack of employment within two years of the completion of training. Repayment shall be on a proportionate basis, based on the portion of the two years remaining and the proportion of the trainees so separated from employment.

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What is an exampleof a “clawback” provision?

• Local areas may wish to review clawback provisions in Illinois state law cited in:

– The Community Investment Recovery Act, 740 ILCS 30/5 and,

– The Corporate Accountability for Tax Expenditures Act, 20 ILCS 715/25.

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Are there other procedural requirements?

• The public comment requirements for a plan modification must be met.

• The modification must be submitted under a cover letter signed by the LWIB chair and the CEO(s) or the designated signatory.

• The modification must be submitted during the period authorized by the approved waiver (i.e., through June 30, 2007).

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What criteria will DCEO use to approve the modification?

• Modification is submitted before 06/30/07.

• Target industries are specifically identified.

• CSSI-related IWT projects are identified.

• Diverted funds don’t exceed the maximums.

• The WIA Program Funding Form is correct.

• Public comment requirements are met.

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• All required assurances are included.– Diversion of funds is unlikely to affect ability

to address ongoing WIA performance issues.– Diverted funds will likely be obligated and will

not create a danger of subjecting the local area (or the state) to reallocation.

• The modification is submitted under appropriate signatures.

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• Whether the amount diverted is likely to interfere with the ability of the LWIA to address ongoing performance-related problems. – In instances where DCEO feels performance

issues may be impacted a meeting will be arranged with the LWIA prior to approval of the modification.

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Where do I submit the modification request?

Lora S. DhomBureau of Workforce DevelopmentPlanning UnitIllinois Department of Commerce & Economic Development620 East Adams, 5th FloorSpringfield, IL 62701-1615

[email protected]

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The second step is project planning.

• Prior to expending IWT funds, the LWIA must submit one or more project plans to DCEO (also submitted to Lora Dhom).

• If the IWT funds are to be used to meet the leverage requirement for a CSSI project, a separate plan is not required (i.e., follow the CSSI procedures for project planning).

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Must I wait for DCEO approval of the project plan?

• Individual project plans are not subject to approval by DCEO. Once a plan is submitted, the local area is free to proceed.

• However, DCEO will review each project plan and if there are concerns, the department will communicate those concerns to the local area.

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If DCEO is not approving project plans,why review them?

• DCEO would have preferred to approve all plans, but wants to avoid delaying local areas due to potentially lengthy review processes. An “exception” process is faster.

• Also, since this a new program, DCEO needs to closely monitor implementation to evaluate the benefits of IWT and avoid unintended consequences.

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What is required in a project plan?

• Identifying information (i.e., LWIA)

• Project name and number

• Primary project contact information

• Target sectors, industries, & occupations

• Participating companies & their roles

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• Description of:– The need for the training– Expected outcomes– The type and quality of the training;– Key project activities (milestones) by date– Amount of IWT funds budgeted for the project

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• Discuss the employer matching contribution – Source, amount, and commitment– How was the matching percentage calculated?

• Number of workers to be trained– Recommend describing credentials obtained

• Number of workers to receive job upgrades– Recommend describing any wage increases– Number to move into new targeted jobs

• For economic development related projects, describe jobs retained or created.

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What criteria will DCEO use to review project plans?

• Benefiting employer(s) must be in an industry cited in the approved local plan or the IWT must be part of an economic development incentive package.

• The training program must be adequately specified and job specific.

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What criteria will DCEO use to review project plans?

• Benefits to the workers: Enhanced employability Job upgrades Increased wages Increased job security

• Costs must be reasonable

• Matching requirement must be met

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What would be “red flags” that might concern DCEO?

• Projects that have little or no relationship to targeted high growth industries and occupations

• Projects targeting occupations that can be classified as “dead end”

• Projects that cannot demonstrate tangible benefits to workers, as well as employers

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What would be “red flags” that might concern DCEO?

• Projects that appear unrelated to the rest of the WIA program (e.g., no “spillover” effects, such as new employer customers or access to “backfill” jobs)

• Projects that appear too expensive, given the training to be provided and the number of workers to be trained

• Matching commitment is unclear

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What reporting is required?

• Project level reports:– Narrative report– Participant “Tracking Summary” submitted in

an excel spreadsheet (created via IWDS)– Employer records entered into IWDS– Financial reporting through GRS

• Reports are due quarterly, within 30 days of the end of the calendar quarter.

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What reporting is required?

• Narrative reports and spreadsheets submitted to Lora Dhom.

• Note, we put in some additional plan versus actual requirements in the reporting form.

• Also note that the participant data will be matched with IDES wage data for program evaluation purposes (a commitment made to DOL in the state plan).

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What is required in the narrative report?

• Identifying information (i.e., LWIA)• Project name and number• Primary project contact information• Overall project status indicator:

On schedule Ahead of schedule Behind schedule (explain) Need assistance (explain)

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• List of the targeted sector, industry, occupations, and partners involved

• Discuss progress made during the quarter:– Outcomes achieved;

– Major project activities undertaken;

– Any obstacles that may have impeded progress;

– And, benefits to the companies and workers observed.

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• Has expenditure data been entered into GRS?• Has participant data been entered into IWDS?

– Actually an excel spreadsheet created by IWDS– Hard copy of spreadsheet to be attached to report– Also send an electronic copy of spreadsheet to DCEO

• Plan versus actual data including workers trained, worker jobs upgraded, and workers moved into targeted jobs

• Comments, questions, and requests for TAT

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What does the Tracking Summary look like?

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What are the matching requirements?

• Non-federal share of the total cost is required on a sliding scale:– 10% for firms with 50 or fewer workers;– 25% for firms with 51 to 100 workers; and, – 50 % for firms with more than 100 workers.

• Matching cost must meet requirements in OMB circular A-102, subpart C, section 24.

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What about groups of employers of different sizes?

• The policy allows four methods.– Based on the sum of all employees in the

participating firms – Adjusted proportionately for the relative shares

each employer represents of total employees– Requirement applied separately to each

participating employer– Based on 50 percent of the total costs

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What costs are allowable?

• Costs that are reasonable and necessary for the conduct of the training

• No costs that are specifically prohibited by WIA

• Examples:– Curriculum costs

– Tuition & fees

– Books & supplies

– Pre & post testing

– Instructor costs

– Travel costs

– Training facility cost

– Use of equipment

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What costs are allowable?

• Examples:– Fees for technical

certifications

– Refresher courses for occupational certifications

• Trainee wages and fringe as match only

• Although not prohibited, supportive service costs are generally discouraged.

Documents

Incumbent Worker Training WIA Policy Letter No. 05-PL-11 Illinois Department of Commerce And Economic Opportunity Bureau of Workforce Development January