WIOA STATE INFRASTRUCTURE FUNDING MECHANISM

DISCUSSION PAPER

Background

The Workforce Innovation and Opportunity Act (WIOA) requires each one-stop partner to contribute funds to help pay the infrastructure costs of the Workforce Solutions Offices operating in the local workforce development area (workforce area) (WIOA §121(b)(1)(B)(ii)).

The Local Workforce Development Boards (Boards), chief elected officials (CEOs), and one-stop partners negotiate and agree on the amounts that each required and optional partner will contribute for local infrastructure funding.They also negotiate and agree on the methods of calculating these amounts in order to include the infrastructure funding terms in the memorandum of understanding (MOU) as an infrastructure funding agreement (IFA), in accordance with WIOA §121(c)(2)(A)(ii) and §121(h)(1)(A)(i).

Each partner program’s contribution to infrastructure costs must be equitable and reasonable based on the partner’s proportionate use and relative benefit received, as required by WIOA final regulations §678.700 and §678.760 in Title 20 of the Code of Federal Regulations (CFR).Furthermore, a partner’s contribution must be an allowable, reasonable, necessary, and allocable cost to the program, consistent with the Cost Principles set forth in the Uniform Guidance in 2 CFR Part 200 and the state’s Uniform Grant Management Standards.

In accordance with 20 CFR §678.725, if a Board, its CEOs, and required one-stop partners do not reach unanimous consenton methods of funding local infrastructure through a local funding mechanism (LFM), and do not include that consensus agreement in a signed MOU, then the Board is required to notify the Texas Workforce Commission (TWC) by the date established by TWC.Once notified, TWC is required to implement the state infrastructure funding mechanism (SFM).

It is highly recommended that Boards, CEOs, and one-stop partners reach an agreement in determining equitable and stable methods of funding the infrastructure costs of Workforce Solutions Offices.Application of the SFM is considered a secondary, less desirable solution, while the locally developed infrastructure funding methodology is strongly preferred.

Issue

Failure by only one of the required partners to reach consensus in a workforce area with respect to infrastructure costs for a program yeartriggers implementation of the SFM.The result is a complex, time-consuming process inwhich TWC—not the one-stop partners—determines the proportionate share that each one-stop partner in the workforce area must contribute to infrastructure costs and the allocation method under which this is calculated.To avoid such consequences, TWC strongly recommends that Boards, CEOs, and required one-stop partners work diligently and in good faith to successfully negotiate infrastructure funding costs and methodologies.

Optional partners that are co-located are required to contribute to one-stop infrastructure cost funding; however, the SFM does not apply to optional partners and cannot be triggered by an optional partner’s disagreement on the terms of the IFA or itsrefusal to sign the IFA.

In the event of failed infrastructure funding negotiations, TWCmay first direct the Board, CEOs, and required one-stop partners into renegotiation. If the parties come to an agreement, sign an MOU, and proceed under the LFM, then there will be no need to implement the SFM. If renegotiation fails, then TWC will implement the SFM.

The SFM has eight steps that TWC must follow in accordance with 20 CFR §678.730 through §678.750.This extensive process requires TWC to create a cost allocation methodology, calculate statewide caps to determine the maximum amounts that required-partner programs could be required to contribute toward infrastructure funding, and to determine each required partner’s proportionate share in accordance with applicable program caps.(This process is detailed in Attachment 1.)

The statewide caps are required for purposes of the SFM, even when only one local area is unable to reach consensus on an IFA through the LFM.However, the caps restrict only those infrastructure cost contributions required by one-stop partners within the workforceareas that have not reached consensus. The caps used in the application of the SFM are referred to as the applicable program caps, which TWC must calculate by using the substeps listed in Step 6 of Attachment 1 and in accordance with WIOA §121(h)(2)(D)(ii) and 20 CFR §678.730 through §678.738.

The following table lists the limiting percentages for programmatic statewide caps on infrastructure funding under the SFM.It includes all Texas-required one-stop partners as determined by WIOA and prior consistent state law.

Program Type

/

Limiting Percentage

WIOA Title I programs (adult, dislocated worker, and youth) / 3%
Wagner-Peyser Act Employment Service / 3%
Adult Education and Family Literacy Act (AEFLA) / 1.5%
Vocational Rehabilitation (VR), Program Year (PY) 2017[1] / 0.75% of Fiscal Year (FY) 2016 Federal VR funding
Temporary Assistance for Needy Families (TANF) / 1.5% of funds from the previous year spent on work, education, and training activities, in addition toassociated administrative costs
Senior Community Service Employment Program (SCSEP) / 1.5%
Trade Adjustment Assistance (TAA) program / 1.5%
State unemployment insurance (UI) program / 1.5%
Veterans employment and training programs (Jobs for Veterans State Grants) / 1.5%
Supplemental Nutrition Assistance Program (SNAP) employment and training programs / 1.5%*
Texas Education Code §133 apprenticeship training programs / 1.5%*
Subsidized child care programs / 0.1%*
Optional(non-required) partners / SFM does not apply

* TWC-established cap.

The U.S. Department of Labor requires Boards and their one-stop partners to implement their PY 2017 IFAs no later than January 1, 2018. The deadline for a Board to notify TWC of an impasse needs to be set at least a few months in advance of the federal deadline to allow sufficient time for all calculations and determinations to be completed well before January 1, 2018.

Decision Point:

Staff recommends that the Commission:

  • adopt the SFM process as described in WIOA §121(h)(2)(D);
  • approve the limiting percentages for programmatic statewide caps on infrastructure funding as described above; and
  • for PY 2017, establish an October 1, 2017, deadline for Boards to reach unanimous consensus on infrastructure funding or to notify TWC of their failure to reach consensus with all of their required one-stop partners.

DP - WIOA State Infrastructure Funding Mechanism (06 20 17)Notebook.docx1

[1]The limiting percentages for VR will increase 0.25 percenteach PY as follows:

  • PY 2018—limiting percentage will be 1 percent of FY 2017 federal VR funding;
  • PY 2019—limiting percentage will be 1.25 percent of FY 2018 federal VR funding; and
  • PY 2020 and subsequent years—limiting percentage will be 1.5 percent of FY 2019 federal VR funding.