FY 2006 TAA base allocations and reserve funding requests

Signed packet (https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2005/TEGL4-05.pdf):

EMPLOYMENT AND TRAINING ADMINISTRATION ADVISORY SYSTEM
U.S. DEPARTMENT OF LABOR
Washington, D.C. 20210
CLASSIFICATION: TAA
CORRESPONDENCE SYMBOL: ONR
DATE: September 8, 2005

TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 4-05

TO: STATE WORKFORCE AGENCIES
    STATE WORKFORCE LIAISONS
    STATE TRADE COORDINATORS
FROM: EMILY STOVER DeROCCO, Assistant Secretary
SUBJECT: Fiscal Year (FY) 2006 State Base Allocations and the Process for Requesting Additional Trade Adjustment Assistance (TAA) Program Reserve Funds
RESCISSIONS: None
EXPIRATION DATE: Continuing

1. Purpose. To provide states with the formula methodology used in developing the
Fiscal Year (FY) 2006 base allocations and to describe the process for requesting

additional TAA program reserve funds for training, job search allowances,
relocation allowances, and administration.

2. References. The Trade Act of 1974, as amended; the Governor-Secretary
Agreement; OMB Circular A-87; 20 CFR Part 617, as amended; 29 CFR Parts 96, 97,
98, and 99; Training and Employment Guidance Letter (TEGL) 2-04 “Trade
Adjustment Assistance (TAA) Program Reserve Funds,” dated July 14, 2004; and
TEGL 6-04 “Fiscal Year 2005 State Base Allocations and the Process for Requesting
Additional Trade Adjustment Assistance (TAA) Program Reserve Funds,” dated
October 4, 2004.

3. Background. The Employment and Training Administration (ETA) revised its fund
allocation process for the TAA program and implemented a formula based
methodology for distributing training funds on October 1, 2003. This approach
enables states to receive a base allocation at the start of the fiscal year. The formula
has proven effective in allowing states to better plan and manage funding resources
for addressing the training needs of trade-certified workers.

The funding formula facilitates the fair and equitable distribution of available
resources for training; encourages states to serve the greatest number of people with
the resources available in the current fiscal year; provides an incentive for states to
fund training plans through the end of the current fiscal year rather than
mortgaging this year’s funds for next year’s needs; provides states with the ability to
more effectively plan and manage the use of their TAA training resources; and is
consistent with ETA’s goal to secure rapid, suitable, and long-term employment for
adversely affected workers. Although a performance element was not added to the
formula for FY 2006, consideration is being given to adding a performance element
in future years.

4. Overview of Funding Process. The funding formula is applied to 75 percent, or
$165 million, of available TAA training funds to provide each state with a base
allocation. The factors used in determining each state’s share of the formula funds
include previous year allocations, accrued expenditures and participant levels. The
remaining 25 percent, or $55 million, is reserved for distribution to states
experiencing large, unexpected layoffs or having training needs that exceed
available funds.

States must submit a funding request and demonstrate that at least 50 percent of all
available TAA training funds have been accrued as expenditures, or otherwise
demonstrate need, in order to access reserve funds. To apply for reserve funds, as
well as job search and relocation allowance funds, states must use the Standard
Form (SF) 424, Application for Federal Assistance and the ETA-9117, Trade
Adjustment Assistance Reserve Funding Request Form (OMB Approval Number
1205-0275).

An additional 15 percent will be added for program administration to any base
allocation, reserve training funds or job search and relocation allowance funds
awarded to states.

5. FY 2006 Fund Allocation Process. For FY 2006, the formula is identical to the
formula used for FY 2005 -- 75 percent of training funds will continue to be made
available to states by formula, and 25 percent will be held in reserve. The process is
as follows:

A. TAA Formula Funds: 75 percent of the $220 million available for TAA
training — or $165 million — will be distributed to states using the following
formula:

• 50 percent of TAA formula funds, or $82.5 million, will be distributed based
on the average amount of training funds allocated to states for TAA training
in FY 2003 and the accrued training expenditures reported for FY 2004 and
the first two quarters of FY 2005 on the SF-269, Financial Status Report
(i.e., the sum of each state’s training allocation for FY 2003 and accrued
expenditures for training for FY 2004 and the first two quarters of FY 2005,
divided by 2.5).

Reliable and consistent accrued expenditure information across states was not
available prior to FY 2004; therefore, state allocations were used for FY 2003.
It should be noted that the allocated training funds in the calculations above
do not include administration, job search allowance or relocation allowance
funds.

• 50 percent of TAA formula funds, or $82.5 million, will be distributed based
on the average number of training participants for FY 2003, FY 2004 and the
first two quarters of FY 2005 as reported on the ETA-563, Quarterly
Determinations, Allowance Activities and Employability Services (OMB
Approval Number 1205-0016) (i.e., the sum of each state’s reported
participants for FY 2003, FY 2004 and the first two quarters of FY 2005,
divided by 2.5).

With regard to participant data, each fiscal year’s participants are calculated
by taking new participants reported as enrolling in training during that year
and adding them to individuals reported in training on the last day of the
prior fiscal year. Participant level data includes all trade-affected workers
with an approved training plan, regardless of funding source.

• To minimize significant fluctuations in state funding from prior years, the
formula for FY 2006 also contains the “hold-harmless” feature used in FYs
2004 and 2005. The “hold-harmless” factor ensures that each state’s base
allocation is at least 85 percent of the base allocation the state received in FY
2005.

• In those instances where the formula approach would have given states less
than $100,000, those states will not receive a base allocation and will need to
use WIA formula funds for TAA training and/or request trade reserve funds
in accordance with the procedures described in Section B.

The base allocations for each state are attached.

B. TAA Reserve Funds: The remaining 25 percent of the $220 million requested for
TAA training — or $55 million — will be designated for reserve funding. Reserve
funds will be distributed to states on an as-needed basis and are designed to
provide funding to those states that experience large, unexpected layoffs or have
training needs that are not met by their base allocation. In order to be eligible for
TAA reserve funds, states must demonstrate that at least 50 percent of all
available TAA training funds during FY 2006 have been expended on an accrual
basis, or otherwise demonstrate need. States requesting reserve funds must

complete the SF-424 and ETA-9117 and submit them in accordance with
instructions contained in TEGL 2-04.
In addition to the criteria contained in TEGL 2-04, factors that will be taken into
consideration during the review of these funding requests will include: the
expenditure of FY 2006 base allocation funds, the expenditure of prior TAA fiscal
year funds, the availability of WIA and other sources of funds, the number of
participants currently enrolled in training, the number of participants with
approved training plans who have not started training, the number of
anticipated new enrollees, the number of petitions certified, the average take-up
rate for training, the average training cost per participant, the average training
duration, and the average training completion rate.

C. Job Search and Relocation Allowances: States may also request job search and
relocation allowances for trade-affected workers who are unable to find
employment within their local commuting area. These funds should be
requested using the ETA-9117 and can be submitted at any time or in
combination with a request for reserve training funds.

D. TAA Program Administration Funds: States will continue receiving an
additional 15 percent of all base allocation, reserve, and job search/ relocation
allowances for program administration. The administrative funds will be
included each time funds are obligated to states by ETA.

The program administration estimates for each state are also included in the
attached.

Consistent with the TAA Annual Cooperative Financial Agreement, ETA may
recapture any funds that states are unable to utilize within a reasonable period of
time, but only after consultation with and appropriate notification to the state.

6. Program Reporting. The formula approach to distributing TAA funds emphasizes
the importance of accurate and timely reporting of training participant and
expenditure data on the ETA-563 and SF-269. Reported data on these forms are
critical in determining the level of funds states will receive each year for serving
trade affected workers. It is also in each state’s best interest to ensure accurate and
timely reporting on the Trade Act Participant Report (TAPR) (OMB Number 1205-
0392). Data on the TAPR are used to derive the average training duration and the
training completion rate when evaluating state requests for TAA reserve funds.
Moreover, reported outcomes data on the TAPR will be given serious consideration
for use in subsequent year TAA formula funding. In addition, accurate information
on the SF-424 and ETA-9117 submitted by states is essential to accurately assessing
requests for TAA reserve funds and job search and relocation allowances.

7. National Emergency Grants (NEG)/ Dual Enrollment. Consideration was given to
including prior year dual enrollment grants in the TAA formula for calculating state
base allocations. After careful examination, it was determined that the inclusion of
these NEG awards would be inappropriate because NEGs are discretionary funds
available for unanticipated mass layoffs. Receipt of a prior year NEG for a single,
large layoff may not be the best predictor that the state will experience future layoffs
of that size. NEGs remain available through the normal NEG application process

once TAA program funds become unavailable or insufficient to support the training
needs of TAA-certified individuals.

8. Action Required. States should ensure that all trade and workforce investment
program staff are informed of and knowledgeable about this advisory.

9. Inquiries. States should direct all inquiries to the appropriate ETA regional office.

10. Attachment. FY 2006 State Base Allocations and Administrative Allotments.

Attachment: FY 2006 State Base Allocations and Administrative Allotments (page 6 of the signed packet):

• Each state's administrative allotment represents 15% of its FY 2006 base allocation.

** Each state's allocation represents the sum of its FY 2006 base allocation and its administrative allotment.