FY 2022 WOTC remaining allotments and backlog awards, Change 2

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                WOTC
               ADVISORY SYSTEM                           CORRESPONDENCE SYMBOL
          U.S. DEPARTMENT OF LABOR                       OWI
             Washington, D.C. 20210                      DATE
                                                         April 29, 2022

ADVISORY:       TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 3-21,
                CHANGE 2

TO:             STATE WORKFORCE AGENCIES
                STATE WORKFORCE ADMINISTRATORS
                WORK OPPORTUNITY TAX CREDIT COORDINATORS

FROM:           ANGELA HANKS
                Acting Assistant Secretary

SUBJECT:        Change 2 to Training and Employment Guidance Letter No. 3-21, Work
                Opportunity Tax Credit (WOTC) Initial Funding Allotments for Fiscal Year
                2022

1. Purpose. This Change 2 to Training and Employment Guidance Letter (TEGL) No. 3-21
   conveys the remaining balance for Fiscal Year (FY) 2022 WOTC funding allotments and
   explains application requirements for State Workforce Agencies (SWAs) based on
   appropriated funding. Additionally, this Change 2 TEGL announces 18 states selected to
   receive additional FY 2022 backlog award funding and provides instructions to those states
   on how to proceed. The rest of TEGL No. 3-21 remains the same.

2. Action Requested. Grantees must meet the application requirements detailed in section 4
   within 30 calendar days from the date of this TEGL issuance.

3. Summary and Background.
     a. Summary - On November 15, 2021, the Employment and Training Administration
        (ETA) issued TEGL No. 3-21, which announced the initial WOTC funding
        allotments of $3,240,420 under the Extending Government Funding and Delivering
        Emergency Assistance Act, 2022 (Public Law 117-43). On December 3, 2021, the
        Further Extending Government Funding Act of 2022 (P.L. 117-70) provided a second
        continuing resolution (CR) in the amount of $3,900,335, through February 18, 2022.
        ETA issued a Change 1 TEGL on December 27, 2021, which announced additional
        FY 2022 WOTC funding authorized under CR# 2. The Consolidated Appropriations
        Act of 2022 (P.L. 117-103) was signed into law on March 15, 2022, authorizing the
        full FY 2022 appropriations. This Change 2 TEGL announces the FY 2022 full-year
        allotment and state balances for funding. ETA has available grant funds totaling
        $18,485,000 for normal operations in FY 2022. This Change 2 TEGL announces the
        remaining balance of $11,344,245 for normal operations in FY 2022. The state
        allotment amounts are listed on Attachment I, “Work Opportunity Tax Credits FY

   RESCISSIONS                                            EXPIRATION DATE
   None                                                   Continuing

          2022 State Allotments and Balance after Dissemination to States under Continuing
          Resolutions (CR) 1 and 2.”

          Additionally, the Consolidated Appropriations Act of 2022 authorized an additional
          $3,500,000 in funding to support efforts to reduce WOTC processing backlogs and
          assist states in adopting and/or modernizing information technology for processing of
          certification requests. This Change 2 TEGL announces the 18 states selected to
          receive FY 2022 backlog awards, and their respective award amounts, in Section 4.

          ETA requests that SWAs submit application(s) for funding according to the
          instructions in Section 4 of this TEGL.

       b. Background – The WOTC is set forth under section 51 of the Internal Revenue Code
          of 1986, and is effective until December 31, 2025, under Section 113 of Division EE,
          Title 3 -- Consolidated Appropriations Act, 2021 (P.L. 116-260). The U.S.
          Department of the Treasury, through the Internal Revenue Service (IRS), administers
          all tax-related provisions and requirements of the tax credit. The U.S. Department of
          Labor, through ETA, awards grants to states for administration of the WOTC.

4. Details.
   Allotment Formula. ETA determines state allotments for normal WOTC operations
   according to the following methodology. After allocating $20,000 to the U.S. Virgin Islands,
   ETA distributes the remaining funds to the SWAs by administrative formula with a $66,000
   minimum allotment and a 95 percent stop-loss/120 percent stop-gain from the previous year
   allotment-share percentage. The administrative formula is calculated as follows:

   a. 50 percent is based on each state’s relative share of total WOTC certifications issued
      from October 1, 2020 through September 30, 2021;
   b. 30 percent is based on each state’s relative share of the Civilian Labor Force averages for
      the 12-month period from October 1, 2020 through September 30, 2021; and
   c. 20 percent is based on each state’s relative share of adult recipients of Temporary
      Assistance for Needy Families averages from October 1, 2019 through September 30,
      2020.
   Application Requirements for FY 2022 Funding. ETA requires grantees to submit an
   electronically signed copy of the SF-424 Form through Grants.gov for funding opportunity
   number ‘ETA-WOTC-TEGL-3-21-22-C2’ at https://www.grants.gov, within 30 calendar
   days from the issuance date of this TEGL. The official, electronically signed SF-424 Form
   must reflect the remaining balance to the state amount listed in Attachment I for the
   requested estimated funding total in item #18, the Catalog of Federal Domestic Assistance
   Number “17.271” for item #11, and the grantee’s 12-character Unique Entity Identifier listed
   for item #8c on the SF-424 Form. Also, Item #18e of the SF-424 must indicate the amount
   of Indirect Costs claimed by the recipient, if any.

States selected for FY 2022 WOTC Backlog Award funding must enter the award amount for
their state on a separate SF-424 Form, Application for Federal Assistance (OMB Control
No. 4040-0004), and submit an electronically signed copy of the SF-424 through Grants.gov
for Funding Opportunity Number ‘ETA-WOTC-TEGL-3-21-22-C2’ at www.grants.gov,
within 30 calendar days from the date of this TEGL’s issuance.

Starting on April 4, 2022, the DUNS Number will be replaced by a new, non-proprietary
identifier requested in and assigned by SAM.gov. This new identifier is being called the
Unique Entity Identifier (UEI), or the Entity ID. Each applicant must have a UEI number
available, and it must be registered with the System for Award Management (SAM) at
https://www.sam.gov, before submitting an application. To submit the required documents,
applicants must follow the “Apply for Grants” link on Grants.gov and download the links for
the grant application package. For this grant opportunity, applicants should not follow the
“Find Grants” link, as this is not a competitive funding opportunity. If applicants encounter a
problem with Grants.gov and do not find an answer in any of the other available resources,
they should call 1-800-518-4726 or 1-606-545-5035 to speak to a Customer Support
Representative, or send an email to [email protected]. Please note: Effective June 2017,
applicants can no longer access SAM using Internet Explorer (IE) web browser versions
older than IE11.

Revised Award Descriptions. As part of a Federal government-wide effort to describe grant
activities consistently and accurately, ETA is revising its standard grant award descriptions.
States may see the following text in the grant award or in online descriptions of the WOTC
grants:

   •   Purpose: The purpose of this grant is to allow state workforce agencies (SWAs) to
       administer WOTC per ETA guidance and provisions of the Internal Revenue Code of
       1986, Section 51, as amended. Law designates the SWAs as the only agencies that
       can issue a Certification (26 USC sec. 51(d)(12).
   •   Activities to be performed: SWAs must use funds to implement the requirements
       set forth in the WOTC Statement of Work, including to: Designate a state coordinator
       who oversees the administration of WOTC for each state grant; Determine eligibility
       of individuals as members of targeted groups on a timely basis, and issue employer
       certifications, denials, or notices of invalidation for tax credits on a timely basis, and
       in accordance with the policies and procedures set forth by ETA; and Establish and
       maintain appropriate forms’ quality review process, record keeping, and reporting
       capability related to the orderly management of WOTC certification requests. .
   •   Expected Outcomes: For WOTC grants, SWAs will issue determinations
       (certifications or denials) for employers’ certification requests, which facilitate tax
       credits determined by the U.S. Department of the Treasury. For WOTC backlog
       awards, SWAs will increase efficiency in processing employers’ certification requests
       and develop plans that include an estimated timeline to eliminate existing backlogs of
       certification requests.
   •   Intended Beneficiaries: Job seekers who have access to a higher number of
       employment opportunities, and employers who seek to increase hiring of qualified job
       applicants. Other beneficiaries include state and local partner agencies in the

           American Job Center network that coordinate efforts to promote WOTC to
           employers, job seekers, and other Workforce Innovation and Opportunity Act
           (WIOA) partners.
   •       Subrecipient Activities: SWAs, as WOTC grant recipients, do not typically
           subaward funds. States that wish to subaward funds should seek approval from the
           Grant Officer.

FY 2022 WOTC Backlog Awards. ETA will distribute WOTC backlog awards to
approximately 18 new states with the most critical needs to alleviate processing backlogs and
assist states in adopting or modernizing information technology for processing of
certification requests. To inform the selection process, ETA analyzed the following data:

   a. FY 2021 backlog total and the percentage ratio it represents of the state’s total
      workload;
   b. FY 2020 and FY 2021 financial reports; and
   c. FY 2021 qualitative data based on states’ narratives.

ETA carefully reviewed these three sources of data to gain an understanding of the states’
needs and any contributing factors that led to the states’ backlog. ETA did not consider the
states that received backlog awards in FY 2020 nor FY 2021 due to the overlapping grant
period of performance. ETA examined the remaining states’ backlogs and information
technology modernization needs to identify this third set of selected states. Additionally,
ETA analyzed FY 2020 and FY 2021 financial reports to determine a state’s ability to use
additional funding and did not select states with extraordinarily low expenditure rates to
receive backlog funds. Finally, ETA reviewed the narratives that the states previously
submitted in FY 2021, and reconfirmed states’ information in FY 2022. The narratives
explain the states’ existing processing systems, how the system impacts their ability to
efficiently process certification requests, and how the states could use this award to make
improvements to their existing systems or procedures to reduce their backlog. The selected
states expressed interest in this additional backlog funding to help them attain staff support,
enhance their current partial automated systems, and develop automated systems. Based on
these factors, ETA identified 18 states with the most critical need to address backlog or
system modernization issues and to receive additional funding. Based on the availability of
$3,500,000 in funds, ETA established three funding tiers to distribute these awards to 18
states:

    • Tier 1 = $100,000
    • Tier 2 = $200,000
    • Tier 3 = $300,000

The selected states and corresponding funding amounts for these awards are as follows:

              $100,000                      $200,000                        $300,000
       •    District of Columbia      •   Arkansas                    •   Iowa
       •    Massachusetts             •   Georgia                     •   Maryland
       •    Nebraska                  •   Maine                       •   Tennessee

        •   Puerto Rico                 •   Michigan                    •   Texas
        •   Vermont                     •   Minnesota                   •   Wisconsin
        •   U.S. Virgin Island          •   Mississippi
                                        •   New Mexico

   Note: If a state fails to submit the required application materials in a timely manner, or
   decides to refuse the award, ETA reserves the right to either redistribute such funds to the
   other selected states and/or consider additional state(s) for an award, as appropriate. A
   subsequent Change TEGL will announce these funds after award, if applicable.

   General Administration. SWAs are responsible for using their FY 2022 funding allotments
   to conduct WOTC activities outlined in the WOTC Statement of Work. See Attachment II of
   TEGL No. 3-21, Work Opportunity Tax Credit (WOTC) Initial Funding Allotments for Fiscal
   Year 2022, for the Work Opportunity Tax Credit (WOTC) Statement of Work, available here:
   https://wdr.doleta.gov/directives/corr_doc.cfm?docn=3188.

   Reporting Requirements.
   a) Quarterly Financial Report – SWAs must report fiscal expenditures quarterly using
      ETA Form 9130. Financial reports are due no later than 45 days following the end of
      each quarter. Timely submission of these reports is important to ensure proper
      accounting of funds.

   b) Quarterly Performance Report – SWAs must use the web-based Enterprise Business
      Support System (EBSS) Tax Credit Reporting System to report quarterly activities and
      outcomes using ETA Form 9058. Performance reports are due no later than 45 days
      following the end of each quarter. Timely submission of these reports is important for
      administration purposes.

5. Inquiries. Please direct inquiries to the appropriate WOTC Regional Coordinator listed on
   the WOTC website at https://www.dol.gov/agencies/eta/wotc/contact/regional-offices.

6. References.
   • Training and Employment Guidance Letter (TEGL) No. 03-21, Work Opportunity Tax
      Credit (WOTC) Initial Funding Allotments for Fiscal Year 2022
      (https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=3188);
   •  Change 1 to TEGL No. 03-21, Work Opportunity Tax Credit (WOTC) Initial Funding
      Allotments for Fiscal Year 2022
      (https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=6032);
   •  Section 51 of the Internal Revenue Code of 1986, as amended
      (https://uscode.house.gov/view.xhtml?path=/prelim@title26/subtitleA/chapter1/subchapt
      erA/part4/subpartF&edition=prelim);
   • P.L. 117-43 -- Extending Government Funding and Delivering Emergency Assistance
      Act of 2022 (https://www.congress.gov/117/plaws/publ43/PLAW-117publ43.pdf);
   • P.L. 117-70 -- Further Extending Government Funding Act of 2022
      (https://www.congress.gov/117/plaws/publ70/PLAW-117publ70.pdf);

   •   P.L. 117-86 -- Further Additional Extending Government Funding Act of 2022
       (https://www.congress.gov/117/plaws/publ86/PLAW-117publ86.pdf); and
   •   P.L. 117-103 -- Consolidated Appropriations Act of 2022
       (https://www.congress.gov/117/bills/hr2471/BILLS-117hr2471enr.pdf).

7. Attachment(s).
   •  Attachment I: Work Opportunity Tax Credits FY 2022 State Allotments and Balance
      after Dissemination to States under Continuing Resolutions (CR) 1 through 2

                                 U. S. Department of Labor                                     Attachment I
                           Employment and Training Administration
                             Work Opportunity Tax Credits
        FY 2022 State Allotments and Balance after Dissemination to States under
                        Continuing Resolutions (CR) 1 through 2

                        FY 2022 Full     Obligated under   Obligated under       Balance to
                       Year Allotment     CR# 1 (10/1/21   CR# 2 (12/04/21         States
                          Amount        through 12/03/21) through 02/18/22)
         State

Total                     $18,485,000         $3,240,420            $3,900,335   $11,344,245

Alabama                       290,402              49,516              59,600        181,286
Alaska                         66,000              11,570              13,926         40,504
Arizona                       286,961              52,952              63,735        170,274
Arkansas                      136,147              25,123              30,239         80,785
California                  2,423,147             440,238             529,894      1,453,015
Colorado                      315,145              51,705              62,235        201,205
Connecticut                   150,908              22,045              26,535        102,328
Delaware                       85,229              12,450              14,987         57,792
District of Columbia           66,000              11,570              13,926         40,504
Florida                       830,118             153,178             184,374        492,566
Georgia                       507,265              93,604             112,666        300,995
Hawaii                         69,506              11,570              13,926         44,010
Idaho                          78,682              13,884              16,711         48,087
Illinois                      743,297             137,158             165,090        441,049
Indiana                       287,632              53,076              63,884        170,672
Iowa                          230,290              42,494              51,149        136,647
Kansas                        122,420              22,590              27,190         72,640
Kentucky                      372,478              68,732              82,729        221,017
Louisiana                     303,161              50,870              61,229        191,062
Maine                          68,617              12,662              15,240         40,715
Maryland                      419,689              61,872              74,472        283,345
Massachusetts                 400,530              64,697              77,873        257,960
Michigan                      604,874             111,615             134,346        358,913
Minnesota                     292,845              45,859              55,197        191,789
Mississippi                   218,305              38,192              45,969        134,144
Missouri                      398,548              73,542              88,520        236,486
Montana                        66,000              11,570              13,926         40,504
Nebraska                      140,394              25,906              31,183         83,305
Nevada                        157,767              24,098              29,005        104,664
New Hampshire                  66,000              11,570              13,926         40,504
New Jersey                    337,889              59,236              71,300        207,353
New Mexico                    162,673              25,378              30,546        106,749
New York                    1,104,812             186,758             224,791        693,263
North Carolina                477,001              88,019             105,944        283,038
North Dakota                   66,000              11,570              13,926         40,504
Ohio                          700,755             129,308             155,641        415,806
Oklahoma                      274,022              50,564              60,862        162,596
Oregon                        274,174              46,475              55,940        171,759
Pennsylvania                  748,005             138,026             166,136        443,843
Puerto Rico                    77,585              13,877              16,703         47,005
Rhode Island                   75,240              13,884              16,711         44,645
South Carolina                263,650              46,722              56,236        160,692
South Dakota                   66,000              11,570              13,926         40,504
Tennessee                     688,169             126,985             152,846        408,338
Texas                       1,379,023             214,333             257,982        906,708
Utah                          114,167              18,635              22,431         73,101
Vermont                        66,000              11,570              13,926         40,504
Virginia                      435,789              73,484              88,449        273,856
Washington                    437,804              69,658              83,844        284,302
West Virginia                 124,597              22,991              27,674         73,932
Wisconsin                     327,288             60,393                72,693       194,202
Wyoming                        66,000             11,570                13,926        40,504
  State Total              18,465,000          3,236,914             3,896,115    11,331,971
Virgin Islands                 20,000               3,506                4,220        12,274