TAA merit staffing and training fund rule

Accessible letter PDF: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2010/TEGL01-10acc.pdf

CLASSIFICATION
      EMPLOYMENT AND TRAINING ADMINISTRATION               TAA
                  ADVISORY SYSTEM                          CORRESPONDENCE SYMBOL
             U.S. DEPARTMENT OF LABOR                      OTAA
                Washington, D.C. 20210                     DATE
                                                           July 2, 2010


ADVISORY:       TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 1-10

TO:             ALL STATE WORKFORCE LIAISONS
                ALL STATE WORKFORCE AGENCIES
                ALL ONE-STOP CENTER SYSTEM LEADS

FROM:           JANE OATES /s/
                Assistant Secretary

SUBJECT:        Promulgation of 20 CFR Part 618 Trade Adjustment Assistance: Merit
                Staffing of State Administration and Allocation of Training Funds to
                States


1. Purpose. To assist the State Workforce Agencies designated by the Governors as
“cooperating state agencies” (CSAs) for administration of the Trade Adjustment
Assistance (TAA) program in implementing the funding and merit staffing of state
administration provisions of the new regulations at 20 CFR Part 618, published on
April 2, 2010 (75 Fed. Reg. 16988 - 17002).

2. References. The Trade and Globalization Adjustment Assistance Act of 2009,
Division B, Title I, Subtitle I of the American Recovery and Reinvestment Act of 2009,
Public Law (P. L.) No. 111-5 (enacted February 17, 2009) (the TGAAA); the Trade Act of
1974, as amended (P. L. No. 93-618, as amended) (the Trade Act); 20 CFR Part 617; 29 CFR
Part 90; 20 CFR Part 618; Training and Employment Guidance Letter (TEGL) No. 9-09,
TEGL No. 22-08 and TEGL No. 4-08, Change 1.

3. Background. The TAA program, under Chapter 2 of Title II of the Trade Act (19
U.S.C. 2271 et seq.), provides adjustment assistance for workers whose jobs have been
adversely affected by international trade. TAA assistance includes training, case
management and reemployment services, income support, job search and relocation
allowances, a wage supplement option for older workers, and eligibility for a health
coverage tax credit.




 RESCISSIONS                                        EXPIRATION DATE
 None                                               Continuing

The states provide benefits and services in the TAA program as agents of the United
States. Each state does so through one or more state agencies designated as the CSA(s)
in a Governor-Secretary Agreement between the state’s Governor and the United States
Secretary of Labor (Secretary), as required under section 239 of the Trade Act. The CSA
may include the State Workforce Agency (if different from the agency that administers
the unemployment insurance (UI) laws for the state) and other state or local agencies
that cooperate in the administration of the TAA program, as provided in the Governor-
Secretary Agreement.

4. New Regulatory Provisions. A Final Rule (63 FR 16988, April 2, 2010) added a new
part 618 to 20 CFR to implement a new requirement that states merit staff the
administration of their TAA programs. It also, as required by the TGAAA, provided
the formula and methodology for the distribution to the states of TAA training funds.
This Final Rule may be found at <http://www.gpo.gov/fdsys/pkg/FR-2010-04-
02/pdf/2010-6697.pdf>. A subsequent rulemaking will expand part 618 to encompass
all of the TAA program, as revised by the TGAAA. Specifically, the Final Rule adds a
new section 618.890 of 20 CFR to provide that, after a transition period, a state must
engage only state government personnel to perform TAA-funded functions undertaken
to carry out the TAA program, and must apply to these personnel the standards for a
merit system of personnel administration, in accordance with Office of Personnel
Management (OPM) regulations at 5 CFR Part 900, subpart F.

However, a state whose Employment Service (ES) received an exemption from merit
staffing requirements under the Wagner-Peyser Act will retain an exemption from the
TAA merit staffing requirement. The ES exemption applies to state administration of
TAA to the extent that the state provides TAA-funded services using staff of an agency
that provides ES services. The exemption does not apply to the state’s administration of
TRA, which remains subject to the TAA merit staffing requirement. Further, the TAA
merit staffing requirement does not prohibit a state from outsourcing functions that are
not inherently governmental, as defined in Office of Management and Budget (OMB)
Circular No. A-76 (Revised), in any supplemental OMB guidance or superseding
authority, and in Department of Labor (Department) guidance.

The OPM regulations specify the merit system standards required for certain Federal
grant programs. These standards have always been required for personnel
administering UI (section 303(a)(1) of the Social Security Act) and have also been
required for Wagner-Peyser Act-funded ES programs in the states (20 CFR 652.215).
They also were required for all personnel administering TAA from 1975 until 2005
under the Governor-Secretary Agreements.




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OPM’s merit system standards at 5 CFR 900.603 are as follows:
     (a) Recruiting, selecting, and advancing employees on the basis of their relative
     ability, knowledge, and skills, including open consideration of qualified
     applicants for initial appointment.
     (b) Providing equitable and adequate compensation.
     (c) Training employees, as needed, to assure high quality performance.
     (d) Retaining employees on the basis of the adequacy of their performance,
     correcting inadequate performance, and separating employees whose inadequate
     performance cannot be corrected.
      (e) Assuring fair treatment of applicants and employees in all aspects of
     personnel administration without regard to political affiliation, race, color,
     national origin, sex, religious creed, age or handicap and with proper regard for
     their privacy and constitutional rights as citizens. This “fair treatment” principle
     includes compliance with the Federal equal employment opportunity and
     nondiscrimination laws.
     (f) Assuring that employees are protected against coercion for partisan political
     purposes and are prohibited from using their official authority for the purpose of
     interfering with or affecting the result of an election or a nomination for office.

The purpose of requiring the application of these merit principles to state administration
of the TAA program is to promote consistency, efficiency, accountability, and
transparency. The new merit staffing provisions become applicable to TAA-funded
positions on December 15, 2010, as codified in the new regulation at 20 CFR 618.890(b), to
allow states sufficient time for transition.

The second new regulatory requirement in part 618 concerns the methodology by
which the Department allocates training funds to the states. In addition to increasing
the funds annually available under the training cap, the TGAAA prescribed a formula
for allocating training funds to the states. As required by the TGAAA, and codified in
the new regulation at 20 CFR 618.910(f), the initial allocation of training funds is
determined by four factors: (1) the trend in the number of workers covered by
certifications of eligibility during the most recent four consecutive calendar quarters for
which data is available; (2) the trend in the number of workers participating in training
during the most recent four consecutive calendar quarters for which data is available;
(3) the number of workers estimated to be participating in training during the fiscal
year; and (4) the amount of funding estimated to be necessary to provide approved
training during the fiscal year. At present, the Department will assign each of these
factors an equal weight. A “hold harmless” provision, 20 CFR 618.910(c), requires that a
state’s initial allocation be at least 25 percent of the amount the state received in its
initial allocation the prior fiscal year.




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For each of the four factors, the Department will determine the national total and each
state’s percentage of the national total. Based on a state’s percentage of each of these
factors, the Department will determine the percentage that the state will receive of the
amount available for initial allocations, and will adjust that percentage to account for
the hold harmless provision (20 CFR 618.910(e)). The total initial allocations to the
states will total 65 percent of the training funds appropriated (as mandated by section
236(a)(2)(C) of the Trade Act, as amended by the TGAAA and codified at 20 CFR
618.910(a)).

The Department’s practice has been that, if the formula would result in an initial
allocation of less than $100,000 to a state, then that state’s allocation was reallocated to
the other states. Where a state had an initial allocation of less than $100,000, it could
request reserve funds in order to obtain the limited TAA funding that the state
required. This practice is now codified in the new regulation at 20 CFR 618.910(d).

The TGAAA amended the Trade Act to require the Department to make the initial
distribution to states “as soon as practicable after the beginning of each fiscal year.”
The Act further requires that 90 percent of a fiscal year’s training funds be distributed to
the states by July 15 of that fiscal year. As provided in the new regulation at 20 CFR
618.930, the Department will consider requests for reserve funds received prior to
June 1, before making a formula distribution to meet the 90 percent requirement.

Although not a part of these new regulations, the Department will also, in accordance
with the TGAAA and implementing guidance documents, such as TEGL No. 9-09 and
TEGL No. 4-08, Change 1, provide to states that receive training funds, either through
an initial allocation or through a request for reserve funds, an additional 15 percent for
TAA administration and employment and case management services, as well as an
additional $350,000 to each state specifically for employment and case management
services.

The funding provision is formally effective on May 3, 2010; however, consistent with
the TGAAA, it has already been used to determine FY 2010 allocations to states, as
described in TEGL No. 9-09.

5. Action Requested. CSAs are required to implement the requirements of 20 CFR
Part 618 under the provisions of their respective Governor-Secretary Agreements by the
dates specified in the regulation. Funding provisions are effective May 3, 2010; and
merit staffing provisions for positions funded with TAA funds are effective December
15, 2010.

As provided under 20 CFR 618.930, CSAs should make any request for needed Reserve
Funds by the June 1 regulatory deadline in writing to the appropriate Regional Office to
ensure that they receive those funds before the July 15 allocations.



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6. Inquiries. CSAs should direct all inquiries to the appropriate Employment and
Training Administration Regional Office.

7. Attachments.

   Attachment A: Trade Adjustment Assistance Final Rule on Merit Staffing of State
   Administration and Allocation of Training Funds to States—Fact Sheet

   Attachment B: Trade Adjustment Assistance Final Rule on Merit Staffing of State
   Administration and Allocation of Training Funds to States—Questions and Answers




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Attachment 1 (official PDF): https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2010/TEGL01-10a1.pdf

U.S. Department of Labor
                       Employment and Training Administration

         Trade Adjustment Assistance Final Rule on Merit Staffing of State
            Administration and Allocation of Training Funds to States

                                         Fact Sheet

In the first substantive rulemaking on the Trade Adjustment Assistance (TAA) program
in over 15 years, the Department is issuing a regulation implementing changes to the
TAA funding formula, as required by The Trade and Globalization Adjustment
Assistance Act of 2009 (TGAAA) (P.L. No. 111-5). The TGAAA, which was part of the
American Recovery and Reinvestment Act of 2009, reauthorized and substantially
expanded the TAA program. The rule also requires (with exceptions) that TAA-funded
personnel administering services and benefits to workers covered by certifications must
be state employees covered by a merit system of personnel administration.

Formula for Allocation of Training Funds
The changes to the funding formula contained in this rule improve the way the
Department provides TAA funding to states. The new formula, mandated by the
TGAAA and explained in this regulation, provides states with a predictable level of
funding at the start of a Fiscal Year, and allows for additional allocations of funds that
respond more quickly to states’ needs than the preceding formula the Department had
used. This regulation describes the formula factors, and how they will be applied.
Additionally, this regulation reflects the increase in training funds provided in the
TGAAA – the Department may now provide states with $575 million in training funds in
a fiscal year, rather than the previous limit of $220 million per year. A hold harmless
provision requires that a state receive in the initial allocation at least 25 percent of that
state’s initial allocation in the prior fiscal year. Because the funding formula is set out in
the statute, it was used to determine state funding allocations for Fiscal Year 2010.

Use of State Merit Staff
States administer the provision of benefits and services in the TAA program as agents of
the United States. Each state does so through a state agency designated in an Agreement
between the state’s Governor and the United States Secretary of Labor. This regulation
requires that, after a transition period, a state must (with exceptions) engage only state
government personnel to perform TAA-funded functions undertaken to carry out the
state’s responsibilities under the Trade Act, and must apply to these personnel the
standards for a merit system of personnel administration.

Effective Date
The Rule goes into effect May 3, 2010. In response to comments received on the
proposed rule, the Department has adopted a longer transition period with a deadline of
December 15, 2010, for states to comply with the merit staffing requirements.




                                                                                   June 2010

Attachment 2 (official PDF): https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2010/TEGL01-10a2.pdf

U.S. Department of Labor
                           Employment and Training Administration

             Trade Adjustment Assistance Final Rule on Merit Staffing of State
                Administration and Allocation of Training Funds to States

                                     Questions and Answers

What does this regulation do?
This rule prescribes the system for allocating Trade Adjustment Assistance (TAA) training funds
to states, as required by the Trade and Globalization Adjustment Assistance Act (TGAAA) (P.L.
No. 111-5). The TGAAA was included in the American Recovery and Reinvestment Act of 2009
and amends the Trade Act. The rule also requires that TAA-funded personnel providing services
and benefits to workers covered by TAA certifications must be state employees covered by a
merit system of personnel administration, with some exceptions discussed below.

What is the new funding methodology?
The changes to the funding methodology contained in this rule improve the way the Department
provides TAA training funds to states. The new formula, mandated by the TGAAA and
explained in this regulation, provides states with a predictable level of funding by formula at the
start of a Fiscal Year, and allows for additional allocations of funds that respond more quickly to
states’ needs than the preceding formula the Department had used. The initial allocations to the
states will be determined by the formula factors described below and will total 65 percent of the
training funds appropriated—65 percent of $575 million, as specified in the TGAAA. The
remaining 35 percent will be held in reserve. A “hold harmless” provision requires that a state
receive in the initial allocation at least 25 percent of that state’s initial allocation in the prior
fiscal year.

Reserve funds will be distributed to the states on an as-needed basis. This will provide needed
funds to states experiencing large, unexpected layoffs; to states that did not receive an initial
allocation; and to states whose training needs were not met by their initial allocation. The rule
also codifies the past practice of providing no initial allocation to states that would receive less
than $100,000 under the formula. It also reflects the requirement in the TGAAA that at least 90
percent of the TAA training funds be distributed by July 15 each year. Taken together, these
changes allow the distribution of TAA training funds to be more closely aligned with the states’
actual needs.




                                                  1                                       June 2010

                                   U.S. Department of Labor
                             Employment and Training Administration

              Trade Adjustment Assistance Final Rule on Merit Staffing of State
                 Administration and Allocation of Training Funds to States

                                         Questions and Answers

How does the funding formula in this rule differ from the formula used before the
TGAAA?
The funding formula differences are detailed in the table below:

       Old Funding Formula                                  New Funding Formula
        (used FY 2004-2008)                                    (used in FY 2010)
        Formula Factors (2)                                   Formula Factors (4)

1. Accrued training expenditures.                1. The trend in the number of workers
                                                 covered by certifications of eligibility during
2. Average number of training                    the most recent four consecutive calendar
participants.                                    quarters for which data is available;

                                                 2. The trend in the number of workers
                                                 participating in training during the most recent
                                                 four consecutive calendar quarters for which
                                                 data is available;

                                                 3. The number of workers estimated to be
                                                 participating in TAA approved training during
                                                 the fiscal year; and

                                                 4. The amount of funding estimated to be
                                                 necessary to provide approved training during
                                                 the fiscal year.


Hold Harmless (85%)*                            Hold Harmless (25%)
Based on 12 Quarters of Data                    Based on 4 Quarters of Data
75% of Available Funds Allocated in             65% of Available Funds Allocated in Initial
Initial Distribution                            Distribution
25% Reserve Funding                             35% Reserve Funding
                                                90% Fund Distribution by July 15
*Hold Harmless: A state will receive no less than the specified percent of the initial allocation that it
received the previous year.

What does the merit staffing requirement do?
States administer the provision of benefits and services in the TAA program as agents of the
United States. Each state does so through a state agency designated in an Agreement between
the state’s Governor and the United States Secretary of Labor. This regulation requires that,
after a transition period, a state must (with exceptions described below) engage only state
government personnel to perform TAA-funded functions undertaken to carry out the state’s


                                                      2                                           June 2010

                                U.S. Department of Labor
                          Employment and Training Administration

             Trade Adjustment Assistance Final Rule on Merit Staffing of State
                Administration and Allocation of Training Funds to States

                                    Questions and Answers

responsibilities under the Trade Act, and must apply to these personnel the standards for a merit
system of personnel administration.

What are the standards for a merit system of personnel administration?
The merit system standards, established by Office of Personnel Management regulation at 5 CFR
900.603, are:
      (a) Recruiting, selecting, and advancing employees on the basis of their relative
      ability, knowledge, and skills, including open consideration of qualified
      applicants for initial appointment.
      (b) Providing equitable and adequate compensation.
      (c) Training employees, as needed, to assure high quality performance.
      (d) Retaining employees on the basis of the adequacy of their performance,
      correcting inadequate performance, and separating employees whose inadequate
      performance cannot be corrected.
      (e) Assuring fair treatment of applicants and employees in all aspects of personnel
      administration without regard to political affiliation, race, color, national origin,
      sex, religious creed, age or handicap and with proper regard for their privacy and
      constitutional rights as citizens. This “fair treatment” principle includes
      compliance with the Federal equal employment opportunity and
      nondiscrimination laws.
      (f) Assuring that employees are protected against coercion for partisan political
      purposes and are prohibited from using their official authority for the purpose of
      interfering with or affecting the result of an election or a nomination for office.

Why is the Department mandating the use of state merit staff personnel to administer the
program?
The state personnel working in the TAA program make complex determinations about the newly
expanded federally-funded services and benefits which workers covered by TAA certifications
may receive. Many of the benefits available under the TAA program are entitlements for eligible
workers. As in other DOL programs involving entitlements, benefit decisions must be made by
merit staffed state employees. State personnel serving under a merit system are unbiased, non-
partisan public servants who are directly accountable to government entities. The standards for
their performance and their determinations on the use of public funds require that decisions be
made in the best interest of the public and of the population to be served. By requiring merit
staffing, the Department seeks to ensure that benefit decisions and services are provided in the
most consistent, efficient, accountable, and transparent way.

Is the merit staffing requirement a new requirement for TAA?
No. Since the program began in 1975, states have administered the TAA program as agents of
the United States. This relationship is established through agreements between Governors and
the Secretary of Labor and is commonly referred to as the Governor-Secretary Agreement. From
1975, when the Department began administration of the TAA program, until 2005, the Governor-

                                                3                                      June 2010

                               U.S. Department of Labor
                         Employment and Training Administration

             Trade Adjustment Assistance Final Rule on Merit Staffing of State
                Administration and Allocation of Training Funds to States

                                   Questions and Answers

Secretary Agreements required that TAA-funded administrative functions be carried out
exclusively by staff subject to the merit standards. In 2005, the Governor-Secretary Agreements
were modified to remove this requirement for all but the administration of trade readjustment
allowances. By reinstating the requirement, this rule simply restores what had been the long-
standing practice for the thirty years prior to 2005.

Are there exemptions to the use of merit staff?
There is a partial exemption from the use of merit staff for three states which have received an
exemption from the Employment Service merit staffing requirements under the Wagner-Peyser
Act. Those three states are Colorado, Massachusetts, and Michigan. The merit staffing
requirement also does not prevent a state from outsourcing functions that are not inherently
governmental, as defined by the Office of Management and Budget Circular number A-76. Non-
inherently governmental functions are, generally, those that do not involve the exercise of
discretion in program administration, such as janitorial and information technology services.

Will the merit staffing requirement apply to all TAA administration funds, or just funds
that were appropriated after the enactment of the TGAAA?
The merit staff requirement applies to staff performing all TAA-funded administration and
employment and case management service activities beginning on December 15, 2010,
regardless of when the funds used were appropriated.

May Workforce Investment Act (WIA) staff provide services to TAA eligible participants?
Yes. The regulation permits the delivery of services to TAA participants for which they are
eligible under partner programs, including WIA. Those services may be provided under the rules
governing the program that funds them. The Department encourages co-enrollment of workers
in both the WIA and TAA programs to ensure that adversely affected workers receive services to
help them to return to work. States will need to coordinate and integrate partner programs
through the One-Stop system to ensure workers covered by TAA certifications are provided an
array of comprehensive services that will facilitate their transition back into the workforce.

When does this new regulation take effect?
The Rule goes into effect 30 days after it is published in the Federal Register. In response to
comments received on the proposed rule, the Department has adopted a longer transition period
with a deadline of December 15, 2010, for states to comply with the merit staffing requirements
in the rule.

Will this be the only regulation for the TGAAA?
No. This rulemaking addresses only the staffing of TAA-funded functions and the allocation of
TAA training funds to the states. A later NPRM will include the remaining aspects of the
TGAAA, such as the expanded program coverage and increased benefits.



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