1. Incumbent Worker Training WIA Policy Letter No. 05-PL-11 Illinois Department of Commerce And Economic Opportunity Bureau of Workforce Development January 31, 2006

2. DCEO 01/31/20062 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.

3. DCEO 01/31/20063 Purpose of Letter No. 05-PL-11 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).

4. DCEO 01/31/20064 Purpose of Letter No. 05-PL-11 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.

5. DCEO 01/31/20065 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.

6. DCEO 01/31/20066 Employed versus Incumbent Workers 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.

7. DCEO 01/31/20067 Employed versus Incumbent Workers Incumbent worker: –Heretofore, authority to serve incumbent workers was limited to the governors 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.

8. DCEO 01/31/20068 Employed versus Incumbent Workers 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

9. DCEO 01/31/20069 Employed versus Incumbent Workers 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.

10. DCEO 01/31/200610 Employed versus Incumbent Workers 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).

11. DCEO 01/31/200611 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.

12. DCEO 01/31/200612 Benefits of Incumbent Worker Training 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.

13. DCEO 01/31/200613 Benefits of Incumbent Worker Training 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.

14. DCEO 01/31/200614 Benefits of Incumbent Worker Training 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.

15. DCEO 01/31/200615 How much may be diverted? Up to 10% of each of the local areas 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.

16. DCEO 01/31/200616 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.

17. DCEO 01/31/200617 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.

18. DCEO 01/31/200618 How is permission obtained 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.

19. DCEO 01/31/200619 What must be contained 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.

20. DCEO 01/31/200620 What must be contained in the modification? 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

21. DCEO 01/31/200621

22. DCEO 01/31/200622 What must be contained in the modification? 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.

23. DCEO 01/31/200623 What must be contained in the modification? 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).

24. DCEO 01/31/200624 What is an example of 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.

25. DCEO 01/31/200625 What is an example of 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.

26. DCEO 01/31/200626 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).

27. DCEO 01/31/200627 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 dont exceed the maximums. The WIA Program Funding Form is correct. Public comment requirements are met.

28. DCEO 01/31/200628 What criteria will DCEO use to approve the modification? 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.

29. DCEO 01/31/200629 What criteria will DCEO use to approve the modification? 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.

30. DCEO 01/31/200630 Where do I submit the modification request? Lora S. Dhom Bureau of Workforce Development Planning Unit Illinois Department of Commerce & Economic Development 620 East Adams, 5 th Floor Springfield, IL 62701-1615 ldhom@idceo.net

31. DCEO 01/31/200631 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).

32. DCEO 01/31/200632 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.

33. DCEO 01/31/200633 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.

34. DCEO 01/31/200634 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

35. DCEO 01/31/200635 What is required in a project plan? 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

36. DCEO 01/31/200636 What is required in a project plan? 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.

37. DCEO 01/31/200637 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.

38. DCEO 01/31/200638 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

39. DCEO 01/31/200639 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

40. DCEO 01/31/200640 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

41. DCEO 01/31/200641 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.

42. DCEO 01/31/200642 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).

43. DCEO 01/31/200643 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)

44. DCEO 01/31/200644 What is required in the narrative report? 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.

45. DCEO 01/31/200645 What is required in the narrative report? 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

46. DCEO 01/31/200646 What is required in the narrative report?

47. DCEO 01/31/200647 What does the Tracking Summary look like?

48. DCEO 01/31/200648 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.

49. DCEO 01/31/200649 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

50. DCEO 01/31/200650 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

51. DCEO 01/31/200651 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.