Discussion, Consideration and Possible Action Regarding

Program Year 2016 Adult Education & Literacy Grantee Performance Targets

Introduction –Each year TWC sets several Participant Served Targets for AEL grantees. In the past this has taken the form of a “Total Participants Served” target and 2 subset targets: one for Career Pathways (which includes both “standard” AEL and additional, more advanced education components including integrated education & training, customization for employers, and credentialing support for internationally-trained professionals) and one for Transitions (services intended to promote transition to post-secondary education).

In PY15, AEL Participant Targets were set primarily by dividing the allocation (excluding amounts allocated for professional development and for performance achievement) by an average cost. The average cost used was calculated by dividing this adjusted allocation by the state performance target of 101,000. This resulted in an average cost of $608.80 per participant served being used to set PY15 targets for Total Participants Served. Career Pathway and Transitions Targets were then set based on a percentage of the overall Total Participants Served targets.[1]

TWC’s AEL Strategic Plan set a goal of 20,000 students being in Career Pathways (CP) by 2020. Discussions with grantees have revealed that some grantees are having trouble meeting their current targets because the historic target setting model didn’t explicitly reflect the differences in costs between standard AEL and CP (which as noted, includes more than standard AEL) and actually required grantees to obtain additional resources to pay the additional CP costs.

The issue is that if a grantee had a target of 5,000 Total Participants and CP target of 250, if the grantee wanted to put 350 in CP, the Total Participants target would make it difficult to do so because the cost for a single CP participant is considerably more than the cost for standard AEL. Many grantees had difficulty obtaining funding to provide the base levels of CP service expected by TWC, much less enough to serve even more. Each additional person served in CP likely costs nearly 4 times more than a person only in standard AEL. So if a grantee wanted to add an additional 100 people to CP, they could not do so unless they were able to get considerably more outside contributions.

However due to changes made in the Workforce Innovation and Opportunity Act (WIOA), AEL funding may now be spent to fund CP. Therefore staff developed a new “cost-per” based target setting methodology for PY16 that sets a cost per target for standard AEL and then a “CP” cost premium that covers the cost of the additional advanced services. This means that the overall CP cost per is the standard AEL average cost + the CP cost premium. This should make it easier for grantees to expand their CP and offerings.

To develop these targets, staff projected PY15 yearend performance numbers and used that data to develop a standard AEL average cost. For the CP premium, staff used the $1,800 cost per target for the Skills Development Fund which has similar customization costs to those in CP. The remainder of this material walks through the steps involved.

In addition to the Total Participant targets and the CP targets, TWC sets Transitions targets and for PY16, TWC will be setting targets for the new Integrated EL Civics program[2].

PY15 Yearend Projections – To project Total Participants served, staff used the relationship between the PY14 YTD performance through 9 months and the yearend performance through 12 months to determine how much PY15 YTD performance through 9 months was likely to increase by the end of PY15. OverallPY14 performance at 9 months was 86.6% of the year end performance. However, because this was not constant across grantees, the projections were performed using each grantee’s unique relationship. Summing up the individual projections, staff project that the grantees will together serve 97,725.

Staff applied a similar concept for Total Expenditures but the relationships were different. PY14 expenditures through 9 months were only 64.6% of yearend expenditures (perhaps the result of delayed billing). In addition, individual projections have to be mindful of the total amounts to the grantees in PY15 (TWC shouldn’t project expenditures higher than the total amounts available). Based on this methodology, staff projected PY15 grantee expenditures totaling nearly $67.5M.

Projecting yearend CP performance was more complicated than Total Participants because CP was clearly in a developmental stage in PY14. YTD CP performance through the first 9 months of PY14 was only 60% of the yearend performance. It was clear from reviewing the enrollment patterns last year that this was a function of new programs coming online and enrollment ramping up – it was not a meaningful pattern that could be applied to PY15. Therefore, staff applied the basic Total Participants served relationship and then forced the projection downward slightly (creating a more conservative projection). While YTD PY15 performance through 9 months is 2,918 served, and strict application of the enrollment pattern data for Total Participants from PY14 would result in a projection of 3,412, staff adjusted this projection downward to 3,300.

Based on projections of 97,725 for Total Participants served, 3,300 for CP served, and $67.5M in Total Expenditures and application of a $1,800 CP cost premium (each of the 3,300 CP Participants are assumed to need an additional $1800 above the standard AEL costs to cover the additional advanced services)staff calculateda standard AEL average cost of $629 per participant. However, in the aggregate, the overall average cost per participant (including 3,300 in CP and 94,425 in standard AEL) is $690.57 per Participant.

Average Cost Per Standard AEL Participant / $629
Total Career Pathways Average Cost / $2,429 ($629 for Std AEL + $1800 Training Premium)
Overall Average Cost / $689.78 (94,425 * $629 + 3300 * $2429) / 97,725

Details regarding these projections are available on pages 1-3 of the Target Setting Attachment.

PY16 Target Setting – Having developed reasonable average cost assumptions for Standard AEL and CP (which will also be applied to EL Civics since that program is similar to CP in its incorporation of advanced services into the program), staff developed targets as follows:

1)Broke out the PY16 Allocations into 3 primary sub-allocations:

  1. EL Civics Allocation (set by TWC Finance);
  2. Amount Minimally Available for Career Pathways (15% of the AEL Total Allocation excluding Professional Development, El Civics, & Performance-based funding); and
  3. Amount Remaining for Standard AEL (Total Allocation minus Professional Development, El Civics, & Performance-based funding and the funding reserved as a minimum for Career Pathway).

2)Calculated targets for EL Civics, CP, and Standard AEL Participants by dividing each of the sub-allocations in step 1 by each of the appropriate average cost ($2,429 for EL Civics and CP, $629 for Standard AEL) and summed the results to produce the Total Participants Served Targets.

3)Set the Transitions Targets as a percentage of the “Standard AEL Targets”[3]

  1. Calculated the current Transitions % (Transitions Participants divided by Standard AEL Participants);
  2. Set Transition Targets at a percentage of the PY16 Standard Targets based on the following:
  3. If the PY15 current Transitions % >10%, use 10%;
  4. If the PY15 current Transitions % <5%, use 5%; otherwise
  5. The average of the PY15 current Transitions % and 10% (which pushes performance towards the 10% mark).

Details regarding these calculations are available on pages 4-6 of the Target Setting Attachment. In addition, page 7 provides a comparison between PY15 and PY16 targets.

Key Points – There are several key points to this approach:

1)The Total Participant Targets are not “locked”. Staff are requesting the Commission approve the target-setting methodology outlined above so that targets can be automatically adjusted based on the grantees actual service patterns. This means that if a grantee serves more than the minimum number of CP and/or EL Civics Participants, their Total Participants Target will drop in recognition that the cost per for CP and EL Civics Participants is nearly 4 times higher than the cost for a Standard AEL Participant. Essentially, if a grantee serves 1 extra CP/EL Civics Participant, they will likely not be able to serve nearly 3 Standard AEL Participants. This will ensure that the pressure to hit an overall combined number of Participants across AEL programs does not create a disincentive to greatly expand the use of integrated education & training programs such as Career Pathways and EL Civics.

2)Since the “standard AEL” targets drop as the CP & AEL service levels rise above their targets, the Transition Targets also adjust if CP and/or AEL performance increases.

3)The aggregate of the grantee targets is 82,703 Total Participants (assuming grantees do not use the flexibility afforded by the new methodology to target a higher percentage of their funds at CP and EL Civics). While this target setting methodology will probably result in the state not hitting the overall state target for AEL Participants Served, staff believe that this approach is consistent with Commission guidance to provide grantees additional flexibility, and also a reflection that TWC’s expectations for grantees have grown, even in the Standard AEL program. This can be particularly seen when considering that PY15 assumed an overall average cost per participant (in any AEL program) of $608.80 while the overall average cost per participant for PY16 is $760, due to explicitly accounting for the increased costs of CP and EL Civics, as well as evaluating actual projected expenditure and service data for PY15.

Commission Request – Staff request the Commission approve the PY16 AEL target setting methodology outlined and authorize staff to apply it based on changes in grantee funding and service levels.

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[1] The specific percentages varied between 5% and 10% depending on where each grantee’s actual PY14 was at the time.

[2] WIOA also requires integrated education and training to be provided with the EL Civics funding. This new integrated EL Civics program is more similar to Career Pathways than to the old Standard AEL-based EL Civics program that was provided pre-WIOA.

[3] The Transitions targets are based on a percentage of the Standard AEL targets because Career Pathways and EL Civics both include an advanced education component already.