FY 2012 second TAA funding distribution

Accessible letter PDF: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2012/TEGL_1_12_acc.pdf

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                TAA
               ADVISORY SYSTEM                           CORRESPONDENCE SYMBOL
                                                         OTAA
          U.S. DEPARTMENT OF LABOR
                                                         DATE
             Washington, D.C. 20210
                                                         July 12, 2012


ADVISORY:         TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 1-12

TO:                STATE WORKFORCE AGENCIES
                   STATE WORKFORCE LIAISONS
                   ONE-STOP CENTER SYSTEM LEADS
                   STATE WORKFORCE ADMINISTRATORS
                   STATE AND LOCAL WORKFORCE BOARD CHAIRS AND
                   DIRECTORS
                   STATE LABOR COMMISSIONERS

FROM:             JANE OATES /s/
                  Assistant Secretary

SUBJECT:          Fiscal Year (FY) 2012 Second Distribution of Trade Adjustment Assistance
                  (TAA) Program Funding to States and the Process for Requesting TAA
                  Program Reserve Funds

1. Purpose. To provide State Workforce Agencies or agencies designated by Governors as
“Cooperating State Agencies” (CSAs) (also jointly referred to as “states”) with the formula
methodology used in developing the FY 2012 Second Distribution of TAA program funds to
states, which follows the FY 2012 Initial Allocation of funds, and to describe the process for
states to use to request TAA program reserve funds for Training, Employment and Case
Management Services, Job Search Allowances, and Relocation Allowances, including the State
Administration of these benefits.

2. References.

          Chapter 2 of Title II of the Trade Act of 1974, as amended (Pub. L. 93-618) (1974
           Act and, as amended, Trade Act);
          Trade and Globalization Adjustment Assistance Act of 2009, Division B, Title I,
           Subtitle I of the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5)
           (TGAAA);
          Trade Adjustment Assistance Extension Act of 2011 (Pub. L. 112-40) (TAAEA);
          20 CFR part 618;
          Training and Employment Guidance Letter (TEGL) No. 11-02, Operating
           Instructions for Implementing the Amendments to the Trade Act of 1974 Enacted by
           the Trade Act of 2002, and its Changes 1; 2, and 3;
          TEGL No. 1-10, Promulgation of 20 CFR Part 618 Trade Adjustment Assistance:
           Merit Staffing of State Administration and Allocation of Training Funds to States;


 RESCISSIONS                                             EXPIRATION DATE
 None                                                    Continuing

          TEGL No. 10-11, Operating Instructions for Implementing the Amendments to the
           Trade Act of 1974 Enacted by the Trade Adjustment Assistance Extension Act of 2011
           (TAAEA); and
          TEGL No. 13-11, Fiscal Year (FY) 2012 State Initial Allocations and the Process for
           Requesting Trade Adjustment Assistance (TAA) Program Reserve Funds.

3. Background. On October 21, 2011, President Obama signed the TAAEA into law. The
TAAEA reauthorized and made substantial changes to the TAA program as explained in TEGL
No. 10-11. The TAAEA amended Section 236(a)(2)(A) of the Trade Act to establish a $575
million annual cap (appropriation) on TAA funding for Training, Job Search Allowances and
Relocation Allowances, Employment and Case Management Services, including State
Administration of these benefits for both FY 2012 and FY 2013, and established a $143,750,000
cap for this funding for the first quarter of FY 2014 (October 1, 2013 through December 31,
2013). The TAAEA did not amend Section 236(a)(2)(B) and (C) of the Trade Act governing the
allocation of funds, which:

   •   Requires 65 percent of fiscal year funds to be distributed by formula as soon as
       practicable after the beginning of the fiscal year, with 35 percent of the fiscal year funds
       held in reserve for distribution later in the fiscal year;
   •   Provides a “hold harmless” minimum allocation for the initial distribution to ensure that a
       state receives at least 25 percent of the state’s initial allocation for the previous fiscal
       year;
   •   Sets a deadline of July 15 for the distribution of 90 percent of the funds, referred to as the
       “Second Distribution”; and
   •   Establishes specific formula factors that the Department of Labor (Department or We)
       must consider in determining the apportionment of the initial distribution of funds.

We apply the regulations codified at 20 Code of Federal Regulations (CFR) 618.900 – 618.940
to govern the distribution of TAA funds appropriated to carry out sections 235 through 238 of
the Trade Act. Nothing in the TAAEA or any later guidance changed the methodology or
formula for calculating the distribution of these funds. Further, the process by which states may
request reserve funds also is unchanged. On January 17, 2012, TEGL No. 13-11 announced the
amount of the initial allocations to states of FY 2012 funds to be made when the Department
received its full year appropriation, explained the formula methodology used to determine those
allocations, and described the process for states to use to request TAA program funds before the
distribution of those allocations and otherwise as needed, in accordance with 20 CFR 618.920.
Since that time, the Department received its full year appropriation and distributed the initial
allocation in accordance with the table provided in the attachment to TEGL No. 13-11.

4. Second Distribution. In accordance with section 236(a)(2)(B)(ii) of the Trade Act and 20
CFR 618.930, 90 percent of the full FY 2012 appropriation must be distributed to states by July
15, 2012. Therefore, after the Second Distribution, 10 percent of the FY 2012 appropriation will
remain available until the end of the fiscal year, at which time these funds minus any acceptable
reserve requests, will be distributed to states. States may request these funds, as needed, by
following the instructions included below in section B of this TEGL, as provided under 20 CFR
618.920, the regulation governing reserve fund distributions.

We derived the total amount of the FY 2012 Second Distribution by using 90 percent of the FY
2012 appropriation, as the starting point, leaving 10 percent to be held in reserve for states that


may request reserve funds before the end of the fiscal year. Next, we subtracted the sum of the
Initial Distribution and all acceptable reserve fund requests received by the Department on or
before June 1, 2012 from this amount. The remaining amount was the total Second Distribution
amount to be distributed by formula to states, as announced in Attachment A of this TEGL. The
Second Distribution will be distributed to those states that received an Initial Allocation in an
amount greater than their hold harmless amount, using the same methodology as used for the
Initial Allocation set forth in 618.910 and explained below in section A.

   A. Formula for Calculating State Second Distribution Amounts. We derived the Second
   Distribution funding amounts for each state using the formula factors described in 20 CFR
   618.910. This formula uses the most recent four consecutive calendar quarters for which data
   from all states is available. These factors are:

       1. The trend in number of workers covered by certifications during the most recent four
       consecutive calendar quarters for which data are available;

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

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

       4. The estimated amount of funding needed to provide approved training to such workers
       during the fiscal year.

   We calculated Factor 1 using the most recent four quarters (FY 2011 Quarter 2 through FY
   2012 Quarter 1) of data for certified workers by state, then weighing each quarter’s data by
   40 percent, 30 percent, 20 percent, and 10 percent, respectively, from the most recent quarter
   to the earliest quarter. This approach established a trend giving the most recent quarters a
   greater impact on each factor than an earlier quarter.

   We calculated Factor 2 using the most recent four quarters (FY 2011 Quarter 2 through FY
   2012 Quarter 1) of data for certified workers participating in training by state, and the
   quarters were weighted 40 percent, 30 percent, 20 percent, and 10 percent, respectively, from
   the most recent quarter to the earliest quarter. As with Factor 1, this approach established a
   trend, giving the most recent quarters a greater impact on each factor than an earlier quarter.

   We calculated Factor 3 by dividing the weighted average number of training participants for
   the state determined in Factor 2 by the sum of the weighted averages for all states and
   multiplying the resulting ratio by the projected national average of training participants for
   the fiscal year, using the estimates underlying the Department’s most recent budget
   submission or update.

   We calculated Factor 4 by multiplying the estimated number of participants in Factor 3 by
   the average training cost for the state. We calculated the average training cost by dividing
   total training expenditures for the most recent four quarters by the average number of training
   participants for the same time period.

   Once each of the four factors were determined for each state, all four factors were assigned
   an equal weight, in accordance with 20 CFR 618.910(f)(3). Next, using each state’s

   percentage of each of these weighted factors, we determined the unadjusted percentage that
   the state will receive of the total Second Distribution amount. The dollar value of that
   percentage is presented on Attachment A.

   B. TAA Reserve Funds. States may request reserve funds before the Final Distribution to
   cover the costs of Training, Job Search Allowances and Relocation Allowances, Employment
   and Case Management Services and State Administration of these benefits. Reserve funds
   will be distributed to states in accordance with 20 CFR 618.920 on an as-needed basis in
   response to reserve fund requests to provide monies to those states that experience large,
   unexpected layoffs or otherwise have training needs that are not met by their initial
   allocation. These funds must be requested using the Form ETA-9117 (OMB No. 1205-
   0275).

   In order to be eligible to receive TAA reserve funds, a state must demonstrate that at least 50
   percent of its total funds have been spent or that it needs more funds to meet unusual or
   unexpected events. A state requesting reserve funds also must provide a documented
   estimate of expected funding needs through the end of the fiscal year. That estimate must be
   based on an analysis that addresses at least the following data:

       1. The average cost of training in the state;
       2. The expected number of participants in training through the end of the fiscal year; and
       3. The remaining funds that the state has available for training.

5. Use of Funds. A state’s allocation under the Second Distribution of funds will be provided
in a single lump sum to the state. These funds may be used to pay the costs for the provision of
Training, Job Search Allowances, Relocation Allowances, and Employment and Case
Management Services, including State Administration of these benefits. Consistent with the FY
2012 Initial Allocation and as provided in the TAAEA, the Second Distribution includes State
Administration funds. Use of the FY 2012 funds is subject to the following restrictions:

   •   State Administration. As provided by Section 235A(1) of the Trade Act, not more than
       10 percent of a state’s allocation may be used for administration of the TAA program
       benefits funded by the allocation. The definition of State Administration has not
       changed, and continues to include costs that would previously have been charged to the
       administration grant. This includes the necessary and reasonable costs of administering
       TAA Training, Job Search Allowances, Relocation Allowances, and Employment and
       Case Management Services, and may include the administrative costs associated with
       processing waivers of the training requirement, collecting, and validating and reporting
       data.

   •   Employment and Case Management Services. Under Section 235A(2) of the Trade Act,
       a state must use at least 5 percent of the funds to provide Employment and Case
       Management Services. A state may use more than 5 percent of its allocation to provide
       Employment and Case Management Services if it determines it needs more funds to
       provide those services to trade-affected workers in its state.

6. Recapture of TAA Funds. The TAAEA amended Section 245 of the Trade Act to add
paragraph (c), “Reallotment of Funds,” which provides authority for the Employment and
Training Administration (ETA) to recapture unobligated TAA funds that were allotted to a state
and that have not been fully obligated during the second and third year after the funds were

provided, and to reallot those funds to states with a demonstrated pattern of need. Consistent
with the TAAEA and the TAA FY 2012 Annual Cooperative Financial Agreement, funds
provided in the Second Distribution or any subsequent allocation, including funds distributed to
states in response to Reserve Fund requests, may be deobligated in the event of underutilization.
Underutilized funds will be recaptured only after consultation with, and notification to, the state.
We will provide further guidance about the recapture of funds.

7. Action Requested. States will inform all appropriate staff of the contents of these
instructions.

8. Inquiries. States should direct all inquiries to the appropriate ETA Regional Office.

9. Attachment. Fiscal Year 2012 Trade Adjustment Assistance Second Distribution of Funds,
by State

Attachment 1: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2012/TEGL_1_12_att.pdf

Attachment A
                                 Trade Adjustment Assistance
               Fiscal Year 2012 Second Distribution of Funds
                                               By State ($)

    Alabama                                  3,751,960     Nebraska                                     340,516
    Alaska                                      50,659     Nevada                                       300,981
    Arizona                                    987,204     New Hampshire                                572,193
    Arkansas                                 3,477,932     New Jersey                                  1,463,411
    California                               4,914,323     New Mexico                                   754,626
    Colorado                                 1,381,644     New York                                    4,200,434
    Connecticut                              2,238,807     North Carolina                              7,520,317
    Delaware                                   130,633     North Dakota                                 149,955
    District Of Columbia                             -     Ohio                                       10,020,619
    Florida                                  2,161,121     Oklahoma                                     896,136
    Georgia                                  3,092,436     Oregon                                      4,484,918
    Hawaii                                           -     Pennsylvania                                8,929,188
    Idaho                                      872,853     Puerto Rico                                  243,504
    Illinois                                 4,032,401     Rhode Island                                 913,340
    Indiana                                  4,288,910     South Carolina                              3,436,491
    Iowa                                     3,206,701     South Dakota                                 239,467
    Kansas                                     482,913     Tennessee                                   4,633,236
    Kentucky                                 3,977,863     Texas                                       6,378,553
    Louisiana                                  517,981     Utah                                         902,806
    Maine                                    1,501,345     Vermont                                      148,549
    Maryland                                   432,872     Virginia                                    3,272,251
    Massachusetts                            2,697,119     Washington                                  5,039,263
    Michigan                                14,802,321     West Virginia                               1,696,159
    Minnesota                                3,857,906     Wisconsin                                   7,307,926
    Mississippi                                433,220     Wyoming                                             -
    Missouri                                 2,649,065     TOTAL                                     140,674,046
    Montana                                    889,018


*
 The Second Distribution of FY 2012 funding to states follows the Initial Allocation of FY 2012 funds announced in
TEGL No. 13-11. A state’s allocation under the Second Distribution of funds will be provided in a single lump sum
to the state. These funds may be used to pay the costs for the provision of Training, Job Search Allowances,
Relocation Allowances, and Employment and Case Management Services, including State Administration of these
benefits. Consistent with the FY 2012 Initial Distribution and as provided in the Trade Adjustment Assistance
Extension Act of 2011 (TAAEA), the distribution includes state administration funds.