FY 2024 WOTC incremental allotments, Change 1

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                WOTC
               ADVISORY SYSTEM                           CORRESPONDENCE SYMBOL
          U.S. DEPARTMENT OF LABOR                       OWI DNPTTA
             Washington, D.C. 20210                      DATE
                                                         January 4, 2024

ADVISORY:        TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 06-23,
                 CHANGE 1

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

FROM:            BRENT PARTON
                 Principal Deputy Assistant Secretary

SUBJECT:         Change 1 to Training and Employment Guidance Letter No. 06-23, Work
                 Opportunity Tax Credit (WOTC) Initial Funding Allotments for Fiscal Year
                 2024

1. Purpose. This Change 1 to Training and Employment Guidance Letter (TEGL) No. 06-23
   conveys additional Fiscal Year (FY) 2024 WOTC funding allotments and application
   requirements for State Workforce Agencies (SWAs), based on funding appropriated through
   a continuing resolution (CR) through February 2, 2024. The rest of TEGL No. 06-23
   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 14, 2023, the Employment and Training Administration
           (ETA) issued TEGL No. 06-23, which announced the initial FY 2024 WOTC funding
           allotments of $2,423,384 under the Continuing Appropriations Act, 2024 and Other
           Extensions Act (Pub. L. 118-15). The continuing resolution (CR) allowed for
           incremental grant funding for states’ administration of the WOTC, pro-rated based on
           the CR's end date of November 17, 2023. On November 16, 2023, the Further
           Continuing Appropriations and Other Extensions Act, 2024 (Pub. L. 118-22) became
           law, providing a second continuing resolution (CR2) through February 2, 2024. This
           Change 1 TEGL announces additional FY 2024 WOTC allotments under CR2 in the
           amount of $3,889,243. The state allotment amounts are listed in Attachment I, “Work
           Opportunity Tax Credit Fiscal Year 2024 Funding under Continuing Resolution #2.”

           ETA requests that SWAs submit applications for funding as allotted in Attachment I
           to this TEGL. Once Congress authorizes final appropriations, or a third CR for FY
           2024, ETA will publish a Change 2 to this TEGL to announce either the full-year
 RESCISSIONS                                            EXPIRATION DATE
 None                                                   Continuing

          allotments and state balances or additional CR3 funding, as applicable. If applicable,
          ETA will also announce any additional funding appropriated to reduce processing
          backlogs and assist states in adopting or modernizing information technology for
          processing certification requests.

       b. Background – The WOTC is set forth under section 51 of the Internal Revenue Code
          of 1986, as amended (26 U.S.C. § 51), and is effective until December 31, 2025,
          under the Consolidated Appropriations Act, 2021 (Pub. L. 116-260), Division EE,
          Title 1, Section 113. 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 WOTC.

4. Details. States must enter their state-specific allotment amount (provided in Attachment I)
   on their SF-424 Form, Application for Federal Assistance (OMB Control No. 4040-004), as
   their official request for additional (CR2) FY 2024 funding for normal WOTC operations.
   States must enter the value listed in the “Total” column of Attachment I.

   Allotment Formula. In February 2023, ETA published a Request for Comment in the
   Federal Register (88 FR 10540) requesting public comment on proposed modifications to
   WOTC procedural guidance and the administrative formula used to calculate annual state
   allotments. The proposed formula changes included an inflation-adjusted increase to state
   minimum funding allotments and revised metrics used in the formula methodology. ETA
   will use the revised administrative formula to calculate states’ remaining balances for FY
   2024 allotments once Congress passes the full-year FY 2024 appropriation. ETA will
   announce the full-year FY 2024 allotments and revised administrative formula in a
   subsequent Change TEGL.

   While under a continuing resolution, incremental allotments to states are based on the prior
   fiscal year’s allotment percentage. ETA determined FY 2024 continuing resolution #2 state
   allotment amounts (provided in Attachment I) for normal WOTC operations by calculating
   each state’s relative share of FY 2023 full-year funding, and multiplying each state’s relative
   share by the total FY 2024 WOTC CR2 prorated funding amount through February 2, 2024.
   ETA determined FY 2023 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
   percentage. We calculate the administrative formula as follows:

   a. 50 percent is based on each state’s relative share of total WOTC certifications issued
      from October 1, 2021, through September 30, 2022;
   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, 2021, through September 30, 2022; 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, 2020, through September 30,
      2021.

Application Requirements for FY 2024 Funding. ETA requires grantees to submit an
electronically signed copy of the SF-424 Form, Application for Federal Assistance (OMB
Control No. 4040-0004), as their official request for funding opportunity number ‘ETA-
WOTC-TEGL-06-23-2024-C1’ at https://www.grants.gov, within 30 calendar days from the
issuance date of this TEGL.

The official, electronically signed SF-424 Form should be marked as a “Continuation”
application for item #2 and must reflect the amount listed in Attachment I as the state’s
requested estimated funding total in item #18. Grantees must enter the Catalog of Federal
Domestic Assistance Number ‘17.271’ for item #11, and the grantee’s 12-character Unique
Entity Identifier (UEI number) should be listed for item #8c. Each applicant must have a
UEI number available, and it must be registered in the System for Award Management at
SAM.gov before submitting an SF-424 application.

Grantees previously indicated the estimated amount of Indirect Costs to be claimed by the
recipient for FY 2024 expenditures under the SF-424 Form submitted for the CR1 funding
distribution announced in TEGL No. 06-23. Therefore, grantees should NOT resubmit this
information again in item #15, ‘Descriptive Title of Applicant’s Project,’ as part of this SF-
424 application request for CR2 funding.

All States must submit an electronically signed copy of the SF-424 through Grants.gov.
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].

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

   •   Purpose: The purpose of this grant is to allow SWAs to administer WOTC per ETA
       guidance and provisions of the IRS Code of 1986, Section 51, as amended. Law
       designates the SWAs as the only agencies that can issue a Certification (26 U.S.C. §
       51(d)(12)). The statute refers to SWAs as state employment security agencies,
       established in accordance with the Wagner-Peyser Act, 29 U.S.C.§ 49 et seq.
   •   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 processes, 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. 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 their
           ETA Grant Officer.

   General Administration. With their FY 2024 grant award, SWAs are responsible for
   conducting the WOTC activities outlined in the WOTC Statement of Work. (See Attachment
   II of TEGL 06-23, Work Opportunity Tax Credit (WOTC) Initial Funding Allotments for
   Fiscal Year 2024, available here: https://www.dol.gov/agencies/eta/advisories/tegl-06-23).
   As noted above, this Change 1 TEGL provides incremental funding proportional to funds
   appropriated through the February 2, 2024 expiration date in Continuing Resolution #2; the
   timing and amount(s) of subsequent incremental funding depends on future appropriations.

   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 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 (U.S.C. § 51)
      (https://uscode.house.gov/view.xhtml?path=/prelim@title26/subtitleA/chapter1/subchapt
      erA/part4/subpartF&edition=prelim);
   •  Chapter 4B of Title 29 of the United States Code (Labor)
      (https://uscode.house.gov/view.xhtml?path=/prelim@title29/chapter4B&edition=prelim );

   •   Pub. L. 116-260, Consolidated Appropriations Act, 2021, which authorizes WOTC
       (https://www.congress.gov/116/plaws/publ260/PLAW-116publ260.pdf);
   •   Pub. L. 117-328, Consolidated Appropriations Act, 2023
       (https://www.congress.gov/117/plaws/publ328/PLAW-117publ328.pdf);
   •   Pub. L. 118-15, Continuing Appropriations Act, 2024 and Other Extensions Act
       (https://www.congress.gov/118/plaws/publ15/PLAW-118publ15.pdf);
   •   Pub. L. 118-22, Further Continuing Appropriations and Other Extensions Act, 2024
       (https://www.congress.gov/118/plaws/publ22/PLAW-118publ22.pdf);
   •   Training and Employment Guidance Letter No. 06-23, Work Opportunity Tax Credit
       (WOTC) Initial Funding Allotments for Fiscal Year 2024, and Attachments
       (https://www.dol.gov/agencies/eta/advisories/tegl-06-23); and
   •   Federal Register (88 FR 10540): Work Opportunity Tax Credit, Request for Comments
       Regarding Proposed Modifications to Procedural Guidance and Administrative Formula .

7. Attachment(s).
   •  Attachment I: Work Opportunity Tax Credit Fiscal Year 2024 State Allotments under
      Continuing Resolution (CR) 2

                                                                                Attachment I
                                Work Opportunity Tax Credit
                       FY 2024 Funding under Continuing Resolution #2

                                            CR #2
State                            11/18/23 thru 2/2/24 (21.04%)              Total

                                                                        $3,889,243

Alabama                                                                    58,046
Alaska                                                                     13,886
Arizona                                                                    72,452
Arkansas                                                                   27,214
California                                                                518,300
Colorado                                                                   62,991
Connecticut                                                                35,772
Delaware                                                                   17,036
District of Columbia                                                       13,886
Florida                                                                   209,588
Georgia                                                                   101,392
Hawaii                                                                     17,548
Idaho                                                                      15,727
Illinois                                                                  148,570
Indiana                                                                    57,492
Iowa                                                                       46,030
Kansas                                                                     30,909
Kentucky                                                                   74,451
Louisiana                                                                  60,596
Maine                                                                      13,886
Maryland                                                                   83,888
Massachusetts                                                              80,058
Michigan                                                                  120,902
Minnesota                                                                  60,598
Mississippi                                                                43,635
Missouri                                                                   79,662
Montana                                                                    13,886
Nebraska                                                                   28,062
Nevada                                                                     34,997
New Hampshire                                                              13,886
New Jersey                                                                 68,762
New Mexico                                                                 35,742
New York                                                                  263,771
North Carolina                                                            107,475
North Dakota                                                               13,886
Ohio                                                                      151,553
Oklahoma                                                                   54,772
Oregon                                                                     54,802
Pennsylvania                                                              149,512
Puerto Rico                                                                17,152
Rhode Island                                                               15,039
South Carolina                                                             52,699
South Dakota                                                               13,886
Tennessee                                                                 137,551
Texas                                                                     275,639
Utah                                                                       22,820
Vermont                                                                    13,886
Virginia                                                                   87,106
Washington                                                                 87,509
West Virginia                                                              24,904
Wisconsin                                                                  67,337
Wyoming                                                                    13,886
Virgin Islands                                                              4,208