FY 2021 WOTC remaining allotments and backlog awards, Change 1

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                WOTC
               ADVISORY SYSTEM                           CORRESPONDENCE SYMBOL
          U.S. DEPARTMENT OF LABOR                       OWI
             Washington, D.C. 20210                      DATE
                                                         March 31, 2021

ADVISORY:       TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 06-20,
                CHANGE 1

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

FROM:           SUZAN G. LEVINE
                Principal Deputy Assistant Secretary

SUBJECT:        Change 1 to Training and Employment Guidance Letter No. 06-20, Work
                Opportunity Tax Credit (WOTC) Funding Allotments for Fiscal Year 2021

1. Purpose. This Change 1 to the Training and Employment Guidance Letter (TEGL) 06-20
   conveys the remaining balance for WOTC and explains application requirements for State
   Workforce Agencies (SWA) based on funding appropriated for Fiscal Year (FY) 2021
   through September 30, 2022. Additionally, this TEGL announces 12 states selected to
   receive additional FY 2021 backlog funding and provides instructions to those states on how
   to proceed. The remainder of TEGL No. 06-20 remains the same.

2. Action Requested. Grantees must meet the application requirements detailed in section 4 of
   this TEGL within 30 calendar days from the date of this TEGL issuance. Additionally, for
   the 12 states selected to receive additional FY 2021 backlog awards, grantees must meet the
   application requirements and submit the required application material detailed in section 4
   within 15 calendar days from the date of this TEGL issuance.

3. Summary and Background.

       a. Summary – On November 16, 2020, the Department issued TEGL No. 06-20, which
          announced the initial funding allotments of $3,647,090 under the Continuing
          Appropriations Act, 2021 and Other Extensions Act (Public Law 116-159). This
          Change 1 provides the full year allotments and state balances for FY 2021, as
          authorized under the Consolidated Appropriations Act, 2021 (P.L. 116-260). The
          amounts are listed on Attachment I “Work Opportunity Tax Credit FY 2021 State
          Allotments and Balance after Dissemination to States under Continuing Resolution
          (CR) 1.” ETA has available grant funds totaling $18,485,000 for normal operations
          in FY 2021. This Change 1 announces the remaining balance of $14,837,910 for
          normal operations in FY 2021. Additionally, the Consolidated Appropriations Act,
          2021 authorized an additional $2,500,000 in funding to support WOTC efforts to

 RESCISSIONS                                            EXPIRATION DATE
 None                                                   Continuing

          reduce processing backlogs and assist states in adopting or modernizing information
          technology for processing of certification requests. This Change 1 announces the 12
          states selected to receive FY 2021 backlog awards.

       b. Background – The U.S. Departments of Labor and Treasury jointly administer
          WOTC. The Department of Treasury, through the Internal Revenue Service (IRS),
          administers all tax-related provisions and requirements of the Federal tax credit. The
          Department of Labor, through the Employment and Training Administration (ETA),
          awards grants to states for administration of WOTC. WOTC is authorized until
          December 31, 2025 under Section 113 of Division EE, Title 3 -- Consolidated
          Appropriations Act, 2021.
4. Details. States must enter the remaining balance to state amount (provided in Attachment
   I) on their SF-424 Form - Application for Federal Assistance (OMB Control No. 4040-
   0004) as their request for FY 2020 funding.

   After allocating $20,000 to the 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, 2019 through September 30, 2020;
       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, 2019 through September 30,
          2020; 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, 2018 through
          September 30, 2019.

   Application Requirements for FY 2021 Funding. ETA requires grantees to submit an
   electronically signed copy of the SF-424 through Grants.gov for the Change 1, ETA-
   WOTC-TEGL-06-20-2021 at https://www.grants.gov/, within 30 calendar days from
   the date of this TEGL’s issuance. The official, electronically signed SF-424 Form must
   reflect the remaining balance to state amount listed in Attachment I for the requested
   estimated funding total in item #18 and the Catalog of Federal Domestic Assistance
   Number, 17.271 for item #11.

   Each applicant must have a Dun and Bradstreet Data Universal Numbering System (DUNS)
   number available and 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 resources, call 1-800-518-4726 or 1-606-545-5035 to speak to a Customer Support
   Representative or email: [email protected].

   General Administration. SWAs are responsible for using the FY 2021 funds to conduct the
   WOTC activities outlined in Attachment II, Statement of Work through September 30,
   2022. SWAs must enter the remaining balance to the state amount (provided in Attachment
   I) on their SF-424 Form - Application for Federal Assistance (OMB Control No. 4040-
   0004), as their request for remaining FY 2021 funding, and submit an electronically signed
   copy of the SF-424 through Grants.gov for the Change 1, ETA-WOTC-TEGL-06-20-
   2021 at www.grants.gov, within 30 calendar days from the date of this TEGL’s
   issuance.

   States selected for additional backlog funding must enter the award amount for their
   assigned funding amount on an 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 the Change 1, ETA-WOTC-TEGL-06-20-2021 at
   www.grants.gov, within 15 calendar days from the date of this TEGL’s issuance.

   FY 2021 WOTC Backlog Awards. ETA will distribute a second set of WOTC backlog funds
   to approximately 12 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 2020 backlog total and the percentage ratio it represents of the state’s
          total workload;
       b. FY 2020 financial reports; and
       c. FY 2020 qualitative data based on states’ narratives, which explain how the
          states could use this award to make improvements to their existing systems or
          procedures and reduce their backlog.

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 funding last year because they are currently still spending FY 2020 backlog
funding. ETA examined the remaining states’ backlogs and information technology
modernization needs to identify this second set of selected states. Additionally, ETA analyzed
FY 2020 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 states previously submitted in FY 2020. 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 12 states with the most critical need to address backlog to receive backlog
funding. Based on the availability of $2,500,000 in funds, ETA established four funding tiers to
distribute these awards to 12 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 follow:

                $100,000                     $200,000                  $300,000
              Alabama                      Illinois                 Arizona
              Hawaii                       Montana                  Oklahoma
              Louisiana                    Ohio                     North Dakota
              New Hampshire                                          South Dakota
                                                                      Utah

   Note: If a state fails to submit the required application materials timely, 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.

5. Inquiries. Please direct all questions to the appropriate Regional WOTC Coordinator listed
   on the WOTC website at: https://www.dol.gov/agencies/eta/wotc/contact/regional-offices.
6. References.
    Section 51 of the Internal Revenue Code of 1986 as amended;
    Training and Employment Guidance Letter 06-20;
    P.L. 116-260 -- Consolidated Appropriations Act, 2021; and
    P. L. 116-159 -- Continuing Appropriations Act, 2021.

7. Attachments.
    Attachment I: WOTC FY 2021 State Allotments and Balance after Dissemination to
      States under Continuing Resolution (CR) 1
    Attachment II: Work Opportunity Tax Credit Statement of Work

                         U. S. Department of Labor                          Attachment I
                   Employment and Training Administration
                   Work Opportunity Tax Credits
FY 2021 State Allotments and Balance after Dissemination to States
               under Continuing Resolution (CR) 1

                         FY 2021 Full      Obligated under    Balance to
                        Year Allotment      CR# 1 (10/1/20      States
                           Amount         through 12/11/20)
           State

Total                      $18,485,000          $3,647,090    $14,837,910

Alabama                        282,464              58,663        223,801
Alaska                           66,000             13,022         52,978
Arizona                        302,064              62,734        239,330
Arkansas                       143,313              27,875        115,438
California                   2,511,345             494,571      2,016,774
Colorado                       294,952              54,478        240,474
Connecticut                    125,757              26,118         99,639
Delaware                        71,024              13,482         57,542
District of Columbia             66,000             13,022         52,978
Florida                        873,808             181,476        692,332
Georgia                        533,963             110,896        423,067
Hawaii                           66,000             13,022         52,978
Idaho                            79,200             13,022         66,178
Illinois                       782,418             162,496        619,922
Indiana                        302,770              62,880        239,890
Iowa                           242,410              50,345        192,065
Kansas                         128,863              26,763        102,100
Kentucky                       392,082              81,429        310,653
Louisiana                      290,187              60,267        229,920
Maine                            72,228             15,001         57,227
Maryland                       352,949              73,302        279,647
Massachusetts                  369,066              70,936        298,130
Michigan                       636,709             132,234        504,475
Minnesota                      261,601              52,807        208,794
Mississippi                    217,864              42,278        175,586
Missouri                       419,524              81,899        337,625
Montana                          66,000             13,022         52,978
Nebraska                       147,783              30,692        117,091
Nevada                         137,465              22,601        114,864
New Hampshire                   66,000              13,022         52,978
New Jersey                     337,913              70,179        267,734
New Mexico                     144,769              27,145        117,624
New York                     1,065,362             190,746        874,616
North Carolina                 502,106             104,279        397,827
North Dakota                    66,000              13,022         52,978
Ohio                           737,637             141,740        595,897
Oklahoma                       288,444              47,425        241,019
Oregon                         265,119              47,332        217,787
Pennsylvania                   787,374             158,478        628,896
Puerto Rico                     79,162              16,441         62,721
Rhode Island                     79,200             13,022         66,178
South Carolina                 266,524              51,625        214,899
South Dakota                    66,000              13,022         52,978
Tennessee                      724,388             150,444        573,944
Texas                        1,222,663             234,242        988,421
Utah                           106,306              22,078         84,228
Vermont                          66,000             13,022         52,978
Virginia                       419,190              68,922        350,268
Washington                     397,365              82,526        314,839
West Virginia                  131,155              23,964        107,191
Wisconsin                      344,514              66,113        278,401
Wyoming                         66,000              13,022         52,978
  State Total               18,465,000           3,643,144     14,821,856
Virgin Islands                   20,000              3,946         16,054

                                                                                             Attachment II

                                  Work Opportunity Tax Credit (WOTC)

                                           Statement of Work

State Workforce Development Agencies, also known as State Workforce Agencies (SWA), are to use
Fiscal Year 2020 funds to realize the following responsibilities:

    1. Designate a state coordinator, who oversees the administration of WOTC, for each state grant.

    2. Determine eligibility of individuals as members of targeted groups, on a timely basis, and
 performing a “quality review” by a second staff person for each determination within 48 hours of
 receipt.

    3. 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 the Employment and Training
 Administration (ETA).

    4. Develop a backlog reduction plan which includes an estimated timeline to reduce and eliminate
 existing backlogs based on current policies and procedures, and notify your regional coordinator prior
 to implementation.

    5. Develop working agreements with partner agencies in the American Job Center network (also
 known as the One-Stop Career Center system) and coordinating efforts to promote WOTC to
 employers and job seekers and other Workforce Innovation and Opportunity Act (WIOA) partners.

    6. Develop working agreements with other SWAs for the timely and orderly processing of “out of
 state” Certification Requests (i.e., applications) requiring SWAs to provide available documentation
 and records for WOTC potentially eligible applicants/new hires relocating and working in another
 state.

    7. Establish and implement an appeals resolution process in accordance with the guidelines provided
 by ETA.

    8. Establish and maintain appropriate forms’ review, record keeping, and reporting capability related
 to the orderly management of WOTC certification requests.

    9. Establish and maintain an orderly system for regularly verifying the eligibility of a random sample of
 individuals certified under WOTC and initiating effective corrective action when appropriate as
 indicated by results of such activities.

    10. Negotiate formal cooperative agreements with local workforce areas, State Vocational
 Rehabilitation Agencies, Veterans Administration and related groups, Employment Networks and
 other state and local agencies, and organizations for the purposes of issuing Conditional Certifications
 where appropriate.

                                                                                          Attachment II

11. Negotiate formal cooperative agreements with appropriate state agencies to expedite verification of
information provided to the SWA by participating target group members.

12. Train state and participating agency staff and provide monitoring and technical assistance to these
agencies, as appropriate, for conducting target group preliminary eligibility determinations and issuing
Conditional Certifications.

13. Cooperate with employment and training organizations already working with the private sector such
as: veteran organizations, employer committees, and workforce development boards to inform
employers about the tax benefits to be derived from participation and the eligibility requirements under
WOTC.

14. Assure that all data exchanges conducted through or during the course of performance of this grant
will be conducted in a manner consistent with applicable Federal law and TEGL NO. 39-11 (issued June
28, 2012). All such activity conducted by ETA and/or recipient/s will be performed in a manner
consistent with applicable state and Federal laws.

Other Grant Agreement Conditions

By entering into this agreement, the SWA agrees to the following conditions:

       The SWA must adhere to provisions of the Internal Revenue Code of 1986, Section 51, as
        amended, in administering WOTC. Law designates the SWAs as the only agencies that can issue
        a Certification (26 USC sec. 51(d)(12)). The SWAs can enter into cooperative agreements with
        certain participating agencies and together provide other WOTC related services (e.g., outreach
        activities).
       ETA will review funding use against the quarterly spending plan. When expenditures are
        substantially below plan, ETA may de-obligate funds for redistribution.