Part 20.
TEXAS WORKFORCE COMMISSION
Chapter 800.
GENERAL ADMINISTRATION
Subchapter B. ALLOCATIONS
The Texas Workforce Commission (Commission) proposes the repeal of
the following sections of Chapter 800, relating to General Administration:
Subchapter B, Allocations, §800.73 and §800.74
The Commission proposes the following new sections to Chapter 800, relating
to General Administration:
Subchapter B, Allocations, §800.73 and §800.74
The Commission proposes amendments to the following sections of Chapter
800, relating to General Administration:
Subchapter B, Allocations, §§800.52, 800.71, and 800.75
PART I. PURPOSE, BACKGROUND, AND AUTHORITY
PART II. EXPLANATION OF INDIVIDUAL PROVISIONS
PART III. IMPACT STATEMENTS
PART IV. COORDINATION ACTIVITIES
PART I. PURPOSE, BACKGROUND, AND AUTHORITY
The purpose of the proposed Chapter 800 rule change is to establish an
integrated policy for the deobligation and reallocation of Local Workforce
Development Board (Board) administered funds. This policy will further the
Commission's support of an integrated workforce system and will promote cost
benefits through improved, administrative efficiencies in the local workforce
development areas (workforce areas).
In addition, amendments are proposed to reflect changes pursuant to House
Bill (HB) 2604, enacted by the 79th Texas Legislature, Regular Session (2005),
which directs the transfer of the Disabled Veterans' Outreach Program and
Local Veterans' Employment Representative grant from the Agency to the Texas
Veterans Commission.
The proposed changes fulfill statutory requirements embodied in Texas Labor
Code §301.001, as amended, establishing the Commission to:
(1) operate an integrated workforce development system in this state, in
particular through the consolidation of job training, employment, and employment-related
programs;
(2) standardize, simplify, and make more consistent the procedure of determining
amounts for deobligation and reallocation;
(3) streamline and achieve administrative efficiency and effectiveness
in order to foster the integration of workforce development programs, minimize
administrative burdens and costs, and maximize the proportion of funding available
for services; and
(4) delete various obsolete provisions, add to various provisions to make
references more accurate and complete, and make various technical corrections.
Additionally, Texas Labor Code §302.002 directs the Agency's executive
director to:
(1) consolidate the administrative and programmatic functions of the programs
under the authority of the Commission to achieve efficient and effective delivery
of services; and
(2) contract with the Boards for program planning and service delivery.
Based on the Commission's commitment to an integrated workforce development
system--wherein siloed funding streams and diverse programs are blended into
a functionally unified whole--the Commission requested and received two waivers
from the U.S. Department of Labor (DOL). The purpose of the waivers was to
align the policies for the deobligation and reallocation of Board-administered
funds. By standardizing and making the procedure of deobligation and reallocation
more consistent, the Commission promotes the integration and administration
of workforce development programs.
The waivers allow the Commission to make midyear deobligations and reallocations
in order to better manage workforce funding. Based on the approved waivers,
the rules have been amended to allow deobligations based on an evaluation
of a Board's expenditures, pertinent performance data, and a reasonable cost
per participant in months five through eight of the appropriate program year
for each funding source, and to integrate the processes for the reallocation
of funds. This process is more responsive and allows the Commission to better
address the changing needs of workforce areas. Should any related federal
waivers expire, the Commission will be subject to federal requirements in
effect at that time.
The Commission believes that having its actions clearly delineated in rule
provides the best opportunity for the Boards and the Commission to have a
common understanding of how expenditures and performance are reviewed, and
the impact of the review on potential deobligations. Boards have consistently
performed well, ensuring that services are available throughout their workforce
areas, but at times the expenditures and performance indicate that the formula
for the allocation may be lagging behind current local economic conditions.
The Commission encourages Boards to resize their program and, where appropriate,
make voluntary deobligations.
As noted, Boards' performance has permitted the Commission to minimize
deobligations. Over the past six years, the Commission has deobligated less
than two-thirds of one percent of block grant allocations to workforce areas.
The Commission's record of carefully considered, judicious, and extremely
modest deobligations further serves to promote its guiding principle: the
most successful deobligation policy results in no deobligations, because services
are being provided and funds expended in the workforce area to which they
are allocated.
The Commission embraces this concept and supports Boards in their efforts
to meet employers' needs for qualified workers. The proposed rules establish
clear standards for potential deobligations and reallocations to further foster
ongoing and substantive communications between the Commission in its oversight
role, and the Boards in their role as stewards of the funds. The proposed
rules establish a common framework for measuring the local service delivery
system against the needs-based formulas established by statute and regulation.
Moreover, the proposed rules provide a significant opportunity for the Boards
to offer information that informs the Commission about any activities or changes
in the local economy that might mitigate a deobligation.
The proposed rules further support the Commission's goal of an integrated
workforce system and allow for increased efficiency in meeting the workforce
development needs of employers and job seekers.
PART II. EXPLANATION OF INDIVIDUAL PROVISIONS
(Note: Minor, nonsubstantive editorial changes are made throughout Subchapter
B of this chapter that do not change the meaning of the rules and, therefore,
are not discussed in the Explanation of Individual Provisions.)
SUBCHAPTER B. ALLOCATIONS
§800.52. Definitions.
The Commission proposes adding new §800.52(10), the definition of
"relative proportion of the program year."
§800.71. General Deobligation and Reallocation Provisions
The Commission proposes amending §800.71(b)(7) by removing the reference
to "Veterans' Employment and Training" as a category of funding to reflect
the direction of HB 2604. Therefore, §800.71(b)(8) - (10) are renumbered
as new §800.71(b)(7) - (9), respectively.
§800.73. Child Care Match Requirements and Deobligation.
The Commission proposes repealing current §800.73, Expenditure, Local
Match, and Obligation Levels, and adding new §800.73, Child Care Match
Requirements and Deobligation, which delineates the policy to which Boards
must adhere for securing local child care matching funds, as well as the policy
for potential deobligations of federal child care funds that remain unmatched
after the fourth month of the program year.
§800.74. Deobligation of Funds.
The Commission proposes repealing current §800.74 and adding new §800.74,
which establishes an integrated deobligation policy. Currently, with the exception
of WIA formula allocated funds, funds may be deobligated at the end of the
third and ninth months of the program year. Federal Trade Adjustment Assistance
Act funds have an additional point for deobligation at the sixth month. The
Commission believes the current three-month point for deobligation occurs
too soon during the program year to fully analyze the relationship between
expenditures, service delivery design, and performance-and the ninth month
is too late in the program year to adequately align reallocations, service
delivery design, and enhancements to performance. Therefore, for all Board-administered
funds including WIA formula allocated funds, the Commission proposes replacing
the current three-month, six-month, and nine-month deobligation points with
a new midyear deobligation period that begins at the end of the fifth month
and continues through the end of the eighth month in the first year of funds
availability.
The proposed deobligation of Board-administered funds, if applicable, would
be based on expenditures, pertinent performance data, and related cost per
participant data occurring during the fifth month and continuing through the
eighth month. For WIA formula funds, the Commission will review data during
the first program year of funds availability in the appropriate program year.
Additionally, the proposed rule sets forth another deobligation point for
WIA funds at the end of the first year of funds availability if Boards have
not expended 80% of each category of WIA formula funds.
Boards will be notified by the Commission of any potential deobligations
and will be encouraged to voluntarily deobligate any excess funding or provide
justification for projected expenditures, as set forth in the proposed rule.
For Board-administered funds other than WIA formula allocated funds, the
Commission will base a potential deobligation on each Board's expenditure
of an amount equal to 90% of the corresponding proportion of the category
of funds for each of the previous three months. For WIA funds, the Commission
will base a potential deobligation on each Board's expenditure of an amount
equal to 80% of the corresponding proportion of the category of WIA formula
allocated funds for each of the previous three months.
Funds contracted within sixty days prior to a period during which the Board
may be subject to deobligations will not be subject to deobligation.
It is important to note that the Commission currently has established an
incentive for reaching an 80% expenditure benchmark for WIA formula allocated
funds. Boards that reach the 80% expenditure threshold at the end of the first
program year are eligible to receive the Commission's Statewide Activity funds,
some of the most flexible federal dollars available for unique local initiatives.
If a Board fails to meet the 90% or 80% expenditure benchmarks for any
three-month period, the Commission will review a Board's performance for the
appropriate category of funds, and the reasonableness of the cost per participant
for that category of funds. In reviewing a Board's performance, the Commission
will determine whether 95% of the applicable performance measure has been
achieved. Additionally, the Commission will determine whether a Board has
achieved a reasonable cost per participant, based upon the factors set forth
in §800.74(d)(2)(A) - (E).
The proposed rule clarifies that the amount the Commission may deobligate
is no greater than the difference between a Board's actual expenditures as
of the end of the third consecutive month in which a Board has failed, and
the relative proportion of the program year's expected expenditures.
Recognizing that an individual workforce area's service delivery system
presents unique opportunities and challenges, the Commission is permitting
an opportunity for Boards to justify their current and projected expenditure
levels, pertinent performance data, and service levels prior to the Commission's
consideration of a potential deobligation of Board-administered funds, including
WIA formula allocated funds.
§800.75. Reallocation of Funds.
Currently, funds administered by the Commission, with the exception of
WIA formula allocated funds, are reallocated to eligible workforce areas based
on criteria in §800.75(a). A separate method for reallocating WIA formula
allocated funds has been employed to address statutory requirements set forth
in WIA §128 and §133. Under WIA, all workforce areas not subject
to a deobligation receive amounts available for reallocation. Unlike other
Board-administered funds, no consideration has been given to a workforce area's
demonstrated need, capacity, or current or past performance.
A waiver granted by the DOL waives federal requirements set forth in WIA §128
and §133 and authorizes the Commission to reallocate recaptured WIA formula
funds to workforce areas using the same procedures and criteria the Commission
employs for other Board-administered funds. The waiver will promote maximum
expenditure of recaptured funds, enabling the Commission to streamline administrative
practices and further enhance the Texas workforce system's effectiveness in
meeting the needs of employers and job seekers.
Therefore, the Commission proposes amending §800.75(a) by including
WIA formula allocated funds. The Commission also proposes removing §800.75(a)(2)
and §800.75(b)(3) because these paragraphs are no longer applicable.
The Commission seeks to facilitate the maximum expenditure of deobligated
Board-administered funds through the redistribution of WIA funds to workforce
areas that have achieved not only targeted expenditure levels but also have
met established performance targets. Redistributing funds based solely on
whether a Board achieves its expenditure target does not fully address performance
issues-such as whether the Board has met employers' needs for a highly skilled
and job-ready workforce.
The Commission also proposes amending §800.75(a) and §800.75(b)(1)
by removing the reference to "Veterans' Employment and Training" funds to
reflect the direction of HB 2604. Additionally, the Commission proposes amending §800.75(b)(1)
to include WIA formula allocated funds.
Effective Date
The Commission proposes that the provisions regarding the deobligation
of WIA formula allocated funds based upon 80% of the relative proportion of
the program year shall be in effect starting with Program Year 2006 funds
(beginning July 1, 2006). The Commission further proposes that the provisions
regarding the deobligation of non-WIA formula allocated funds based upon 90%
of the relative proportion of the program year shall be in effect starting
with Program Year 2007 funds (beginning October 1, 2006).
PART III. IMPACT STATEMENTS
Randy Townsend, Chief Financial Officer, has determined that for each year
of the first five years the rules will be in effect, the following statements
will apply:
There are no additional estimated costs to the state government expected
as a result of enforcing or administering the rules.
We cannot estimate whether there will be additional costs to local governments
(i.e., Boards) as a result of enforcing or administering the rules.
There are no estimated reductions in costs to the state and local governments
as a result of enforcing or administering the rules.
There is no increase or loss in revenue to the state or local governments
as a result of enforcing or administering the rules.
Enforcing or administering the rules does not have foreseeable implications
relating to costs or revenues of the state or local governments.
There is no probable economic cost to persons required to comply with the
rules.
There is no estimated adverse economic effect on small businesses.
In order to mitigate any potential additional costs necessary to manage
services and monitor expenditures based on this new methodology, the Commission
will provide Boards with a management tool to assist in the calculation of
financial benchmarks.
The Agency hereby certifies that the proposal has been reviewed by legal
counsel and found to be within the Agency's legal authority to adopt.
Mark Hughes, Director of Labor Market Information, has determined that
there is no significant negative impact upon employment conditions in the
state as a result of the rules.
Luis M. Macias, Director of Workforce Development Division, has determined
that for each year of the first five years the rules are in effect, the public
benefit anticipated as a result of enforcing the proposed rules will be to
ensure that the review of the expenditures, performance, and per participant
costs are fully understood and aligned to provide the most comprehensive understanding
of the service delivery system in a workforce area before decisions are made
on the deobligation of Board-administered funds.
PART IV. COORDINATION ACTIVITIES
In the development of these rules for publication and public comment, the
Commission sought the involvement of each of Texas' 28 Boards and the TWC
Advisory Committee. The Commission provided the policy concept regarding the
rule amendments to the Boards for consideration and review. During the rulemaking
process, the Commission considered all information gathered in order to develop
rules that provides clear and concise direction to all parties involved.
Comments on the proposed rules may be submitted to TWC Policy Comments,
Workforce and UI Policy, 101 East 15th Street, Room 440T, Austin, Texas 78778;
faxed to (512) 475-3577; or e-mailed to TWCPolicyComments@twc.state.tx.us.
The Commission must receive comments postmarked no later than 30 days from
the date this proposal is published in the
Texas
Register
.