Allocating Grants to States for Reemployment Services and Eligibility Assessments (RESEA) in Accordance With Title III, Section 306 of the Social Security Act (SSA)

Published date08 August 2019
Record Number2019-16988
SectionNotices
CourtEmployment And Training Administration,Labor Department
Federal Register, Volume 84 Issue 153 (Thursday, August 8, 2019)
[Federal Register Volume 84, Number 153 (Thursday, August 8, 2019)]
                [Notices]
                [Pages 39018-39020]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2019-16988]
                =======================================================================
                -----------------------------------------------------------------------
                DEPARTMENT OF LABOR
                Employment and Training Administration
                Allocating Grants to States for Reemployment Services and
                Eligibility Assessments (RESEA) in Accordance With Title III, Section
                306 of the Social Security Act (SSA)
                AGENCY: Office of Unemployment Insurance (OUI), Employment and Training
                Administration (ETA), Department of Labor (DOL).
                ACTION: Notice.
                -----------------------------------------------------------------------
                SUMMARY: The Bipartisan Budget Act of 2018 (BBA), Public Law 115-123
                (2018), established permanent authorization for the RESEA program by
                enacting section 306 of title III, (SSA). This notice announces the
                formula to allocate base funds for the RESEA program, as provided under
                Section 306(f)(1), SSA, 42 U.S.C. 506(f)(1).
                 On April 4, 2019, ETA published a notice in the Federal Register
                (84 FR 13319) requesting public comment concerning the development of a
                proposed formula that ETA will use to distribute funding to States for
                RESEA. The notice presented a description of a proposed allocation
                formula and public comments were requested. The comment period closed
                on May 6, 2019. This notice summarizes and responds to the comments
                received and publishes the final allocation formula that will take
                effect in Fiscal Year (FY) 2021.
                DATES: The RESEA allocation formula described in this notice will take
                effect in FY 2021.
                ADDRESSES: Questions about this notice may be submitted to the U.S.
                Department of Labor, Employment and Training Administration, Office of
                Unemployment Insurance, 200 Constitution Avenue NW, Room S-4524,
                Washington, DC 20210, Attention: Lawrence Burns, or by email at [email protected].
                FOR FURTHER INFORMATION CONTACT: Lawrence Burns, Division of
                Unemployment Insurance Operations, at 202-693-3141 (this is not a toll-
                free number), TTY 1-877-889-5627, or by email at
                Burns.[email protected].
                SUPPLEMENTARY INFORMATION:
                I. Introduction
                 Since 2005, DOL and participating State workforce agencies have
                been addressing individual reemployment needs of Unemployment Insurance
                (UI) claimants and working to prevent and detect UI improper payments
                through the voluntary UI Reemployment and Eligibility Assessment (REA)
                program and, beginning in FY 2015, through the voluntary RESEA program.
                 On February 9, 2018, the President signed the BBA, which included
                amendments to the SSA creating a permanent authorization for the RESEA
                program. The RESEA provisions are contained in section 30206 of the
                BBA, enacting new section 306 of the SSA. 42 U.S.C. 506. Section 306,
                SSA also contains provisions for funding the RESEA program.
                 The primary goals of the RESEA program are to: Improve employment
                outcomes for individuals that receive unemployment compensation (UC) by
                reducing average duration of receipt of UC through employment;
                strengthen program integrity and reduce improper payments; promote
                alignment with the broader vision of the Workforce Innovation and
                Opportunity Act through increased program integration and service
                delivery for job seekers; and establish RESEA as an entry point to
                other workforce system partner programs for individuals receiving UC.
                Core services that must be provided to RESEA participants are:
                 UI eligibility assessment, including review of work search
                activities, and referral to adjudication, as appropriate, if an issue
                or potential issue is identified;
                 Labor market and career information that address the
                claimant's specific needs;
                 Enrollment in Wagner-Peyser Act funded Employment
                Services;
                 Support to the claimant to develop and implement an
                individual reemployment plan; and
                 Information regarding, and access to, American Job Center
                services and providing referrals to reemployment services and training,
                as appropriate, to support the claimant's return to work.
                II. Background
                 Section 306, SSA, specifies three uses for amounts appropriated for
                the RESEA program and designates the proportion of annual
                appropriations to be assigned to these uses: (1) Base funding (84
                percent to 89 percent of the appropriation depending on the year) for
                States to operate the RESEA program, (2) outcome payments (10 percent
                to 15 percent of the
                [[Page 39019]]
                appropriation depending on the year) designed to reward States meeting
                or exceeding certain criteria, and (3) up to one percent for the
                Secretary of Labor to use for research and technical assistance to
                States. 42 U.S.C. 506(f). With respect to the base funding, section
                306(f)(1)(A), SSA, states:
                 IN GENERAL.-- For each fiscal year after fiscal year 2020, the
                Secretary shall allocate a percentage equal to the base funding
                percentage \1\ for such fiscal year of the funds made available for
                grants under this section among the States awarded such a grant for
                such fiscal year using a formula prescribed by the Secretary based
                on the rate of insured unemployment (as defined in section 203(e)(1)
                of the federal-State Extended Unemployment Compensation Act of 1970
                (26 U.S.C. 3304 note)) in the State for a period to be determined by
                the Secretary. In developing such formula with respect to a State,
                the Secretary shall consider the importance of avoiding sharp
                reductions in grant funding to a State over time. 42 U.S.C Sec.
                506(f)(1)(A).
                ---------------------------------------------------------------------------
                 \1\ The term ``base funding percentage'' as used here is a
                percentage of the funds appropriated for RESEA grants to operate the
                program in a fiscal year. Section 306(f)(1)(B), SSA, defines the
                base funding percentage for fiscal years 2021 through 2026 as 89
                percent and for fiscal years after 2026 as 84 percent.
                ---------------------------------------------------------------------------
                III. Response to Public Comment
                 ETA received a total of 19 comments from 14 commenters concerning
                the RESEA base allocation formula. These comments include: 6 comments
                regarding the general formula, 3 comments concerning carry-over
                provisions, 4 comments concerning the proposed hold-harmless provision,
                3 comments concerning the establishment of minimum funding levels, and
                3 comments concerning administrative and other program cost limits. The
                following is a summary of these comments and ETA's responses.
                A. General Formula Comments
                 Several commenters addressed formula design directly, including
                general concern expressed by multiple states that provisions must be
                made to ensure adequate funding levels for small and rural states.
                Members of the Committee on Ways and Means, U.S. House of
                Representatives, expressed concern that the proposed formula used
                elements that eliminated the Insured Unemployment Rate (IUR) rather
                than relied on the IUR as required in section 306(f), SSA. 42 U.S.C
                Sec. 506(f)(1)(A). Two States suggested considering additional
                factors, such as costs per RESEA and program and performance data. One
                State recommended the use of statistically-adjusted unemployment data
                over a 10-year period, with an emphasis on more recent data, in place
                of the IUR as a means of providing more stable funding levels. One
                State expressed support for the proposed formula allocation
                methodology, but recommended revisiting the formula if future
                legislation expanded program eligibility to additional populations. One
                State recommended ETA reserve a portion of RESEA funds to respond to
                sudden economic changes or other unforeseen circumstances that would
                require a one-time influx of additional funding.
                 In response to these comments, as discussed more fully below, ETA
                has developed a revised allocation formula that uses two primary input
                variables: the IUR and the civilian labor force (CLF). These two
                factors are included in the formula because section 306, SSA, requires
                the formula to be based on the IUR and the CLF addresses the
                differences in state size. 42 U.S.C. 506(f)(1). It also includes
                additional provisions, discussed below, that are intended to prevent
                significant State funding fluctuations over time and to provide minimum
                funding for smaller or rural States. The use of additional data
                factors, such as cost per RESEA, were considered, but not included
                because of the increased burden of collecting and maintaining this data
                and the risk of creating additional funding fluctuations as States
                change their program design from year to year. The RESEA legislation
                does not authorize ETA to maintain a RESEA funding reserve. The final
                allocation formula is described below.
                B. Carry-Over Provisions Comments
                 Three States commented on the proposed 25 percent carry-over limit,
                expressing preference to have it increased to 30 or 35 percent, or
                eliminated altogether. States also suggested that the formula should
                allow for a higher carry-over limit upon special request by a State. In
                response to these comments, ETA has increased the carry-over limit to
                30 percent. This change ensures the majority of funds continue to be
                used to provide RESEA services in a timely manner while also providing
                States with additional flexibility to support program costs that may
                span across years, such as contractual costs.
                C. Hold-Harmless Provision Comments
                 ETA received four comments from four commenters on the proposed
                five percent hold-harmless provision. Two comments expressed concern
                that the hold-harmless provision would not be applied in the initial
                distribution under the allocation formula. One commenter expressed
                concern that a fixed hold-harmless provision would negatively impact
                States with a stable IUR. The final comment recommended a gradual,
                tiered-approach to implementing the hold-harmless provision that would
                increase the hold-harmless rate over several years until it is fully
                implemented at the maximum five percent level.
                 In response to these comments, ETA incorporated the recommended
                gradual, phased implementation strategy in which the maximum potential
                reduction increases from 3 to 5 percent over a 3-year period. This
                phased implementation results in a longer transition period for states
                that may face reductions resulting from the new allocation formula to
                adjust their program design and will help prevent significant
                disruptions in service delivery. ETA is also clarifying that the hold-
                harmless provision will be applied during the initial formula
                allocation of funds in FY 2021 and each State, after applying the hold-
                harmless provision, will receive a FY 2021 allotment that is no less
                than an amount equal to at least 97 percent of its FY 2020 maximum
                RESEA grant award. Each State's FY 2020 maximum RESEA grant award will
                be provided in forthcoming FY 2020 RESEA operating guidance.
                D. Minimum Funding Level Comments
                 Three States provided comments pertaining to the absence of a
                minimum funding level for rural and less populated States. Two States
                provided comments recommending inclusion of a minimum funding level and
                a third State expressed concern that an additional ``leveling factor''
                beyond the hold-harmless provision must be included to further protect
                small States from potential funding fluctuations associated with
                changes in the IUR. In response to these comments, ETA has incorporated
                a minimum funding level into the allocation formula as described below.
                The inclusion of a minimum funding level will allow all states,
                regardless of size, population density, or economic conditions, to
                implement or maintain an RESEA program.
                E. Administrative Costs and Other Funding Limitations.
                 Three States provided comments on RESEA requirements that are not
                related to the formula allocation. One State submitted a comment
                recommending greater flexibility in administrative cost limits to
                support alternative approaches to grant management, such as the use of
                cost allocation plans. One State commented that all limits on RESEA
                funds should be removed to provide States with maximum flexibility in
                [[Page 39020]]
                determining how to administer the RESEA program. A third State
                recommended providing States that are pursing program automation with
                additional program administration resources. Because none of these
                comments are related to the proposed formula allocation methodology,
                ETA made no changes to the proposed formula allocation.
                IV. Description of Base Allocation Formula
                 The final base allocation formula has been modified in response to
                the public comments. The new formula uses two primary input variables:
                The IUR and the CLF Under this formula, each State's average IUR for
                the 12 months ending June 30 will be divided by the national average
                IUR. The two resulting ratios will be multiplied together, producing a
                combined IUR-CLF weighting factor. A State's allotment of the available
                RESEA funding will reflect the proportion of its State-specific
                combined weighting factor compared to the sum of all States combined
                weighting factors. Use of the IUR ensures that States with high IURs,
                and hence greater unemployment, receive a higher proportion of RESEA
                funds. Use of the CLF as a factor controls for State size.
                V. Description of the Hold-Harmless Provision
                 The statutory language requires the Secretary to consider the
                importance of avoiding sharp reductions in grant funding to a state
                over time. 42 U.S.C. Sec. 506(f)(1)(A). To satisfy this requirement,
                DOL will incorporate a phased hold-harmless provision as follows:
                 (1) In FY 2021, each State will receive no less than an amount
                equal to at least 97 percent of its FY 2020 maximum grant award;
                 (2) In FY 2022, each State will receive no less than an amount
                equal to at least 96 percent of its FY 2021 allotment;
                 (3) In FY 2023 and subsequent years, each State will receive no
                less than an amount equal to at least 95 percent of its previous
                year's allotment.
                VI. Minimum Funding Provisions
                 No State will receive an amount equal to less than 0.28 percent of
                the total available funding for FY2021 RESEA's base funding level. This
                approach mirrors the minimum funding provisions in the Wagner-Peyser
                Act (29 U.S.C. 49e) and acknowledges that all States have certain fixed
                costs to administer the program.
                VII. Carry-Over Threshold
                 If a State has a balance of up to 30 percent of its previous year's
                award, the State may carry that amount over from one year to the next.
                However, a State agency carrying over an amount in excess of 30 percent
                will have any amount in excess of the 30 percent reduced from its
                subsequent year's allocation, and the resulting additional resources
                will be included in the distribution to States that are under the 30
                percent threshold. This provision is intended to ensure States are
                using the majority of funds to provide reemployment services to
                claimants in the year for which it is allocated and provide States with
                flexibility to support costs and activities that may span across years.
                VIII. Conclusion
                 The RESEA funding formula articulated in this notice will be
                utilized beginning in FY 2021. It is ETA's intent to provide States
                with funding planning targets annually in advance of the actual
                guidance and allocation.
                John Pallasch,
                Assistant Secretary for Employment and Training, Labor.
                [FR Doc. 2019-16988 Filed 8-7-19; 8:45 am]
                 BILLING CODE 4510-FW-P
                

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT