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WIA incentive and sanction policy
Summary ETA revised how state Workforce Investment Act Title I performance results affected incentive grants and sanctions. It explained performance measures, reporting, corrective action, and appeals. The letter rescinded TEGLs 8-99 and 19-02; ETA now labels it Canceled.
Document
Federal guidance
Agency
U.S. Department of Labor, Employment and Training Administration (ETA)
Document number
TEGL No. 9-07
Date issued
October 10, 2007
Status
Withdrawn
ETA lists this advisory Canceled as of 2026-10-24. Its letter expressly rescinds TEGL 8-99 and TEGL 19-02 and prints Expiration Date: Continuing.
Status last verified October 24, 2026
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Accessible letter PDF: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2007/TEGL09-07acc.pdf
CLASSIFICATION
EMPLOYMENT AND TRAINING ADMINISTRATION WIA Performance
ADVISORY SYSTEM CORRESPONDENCE SYMBOL
U.S. DEPARTMENT OF LABOR PROTECH
Washington, D.C. 20210 DATE
October 10, 2007
TRAINING AND EMPLOYMENT GUIDANCE LETTER No. 9-07
TO: ALL STATE WORKFORCE AGENCIES
ALL STATE WORKFORCE LIAISONS
FROM: EMILY STOVER DeROCCO /s/
Assistant Secretary
SUBJECT: Revised Incentive and Sanction Policy for Workforce Investment Act Title
IB Programs
1. Purpose. To provide states guidance on the Employment and Training
Administration’s (ETA) revised policy related to incentives and sanctions under title
IB of the Workforce Investment Act (WIA) for performance accountability purposes.
2. References. Workforce Investment Act of 1998 (Public Law 105-220), Section 136,
20 CFR part 666; Training and Employment Guidance Letter (TEGL) No. 8-99,
Negotiating Performance Goals; and Incentives and Sanctions Process under Title I of the
Workforce Investment Act (WIA); TEGL 19-02, Sanctions Policy for Failure to Meet State
Negotiated Performance Levels Under Title I of the Workforce Investment Act; TEGL 3-03,
Change 3, Data Validation for Employment and Training Programs; TEGL 14-03,
Change 1, Performance Reporting Submission Procedures for the Workforce Investment
Act Standardized Record Data (WIASRD) and the Annual Report under Title IB of the
Workforce Investment Act for Program Year (PY) 2003 and 2004; TEGL 17-05, Common
Measures Policy for the Employment and Training Administration’s (ETA) Performance
Accountability System and Related Performance Issues; and Training and Employment
Notice (TEN) 9-06, Timeline for Program Year (PY) 2005 Workforce Investment Act
Performance Reporting and PY 2005 Data Validation (all programs).
3. Background. A stated goal of WIA is to increase the employment, retention, and
earnings of participants. Section 136 of the WIA specifies core indicators of
performance as the basis of a comprehensive performance accountability system that
includes measures of employment, retention, and earnings, as well as attainment of
credentials or diplomas (in the case of young people age 14-18), attainment of skills,
and customer satisfaction for a total of 17 WIA performance measures. States
negotiate levels of performance for each of these measures. Based on results
RESCISSIONS EXPIRATION DATE
TEGL 8-99; TEGL 19-02 Continuing
reported in their annual reports that are submitted each October, states may qualify
for an incentive for performance that exceeds the negotiated performance levels, or
be subject to sanctions for performance that does not meet the negotiated
performance levels.
In 2002, using the WIA performance accountability system as a model, a number of
federal agencies developed a set of common performance measures to be used for
Federally-funded job training and employment programs with a similar purpose.
Beginning in PY 2005, ETA incorporated the definitions of these common
performance measures into the WIA title IB performance reporting requirements,
including the performance reporting for several of ETA’s other workforce
investment programs.
The value of implementing the common performance measures is the ability to
describe, in a similar manner, the core purposes of the workforce system: how many
people obtain jobs (entered employment); how many stay employed (retention); and
how much do people finding employment earn (average earnings). Multiple sets of
performance measures have burdened states and grantees, as they have been
required to report performance outcomes based on varying definitions and
methodologies. By minimizing the different reporting and performance
requirements, common performance measures contribute to facilitating the
integration of service delivery, reducing barriers to cooperation among programs,
and enhancing the ability to assess the effectiveness and impact of the workforce
investment system.
4. Revised WIA Incentive and Sanction Policy. ETA incorporated the definitions for
the common performance measures into the WIA performance accountability
system beginning in PY 2005. For the WIA Adult and Dislocated Worker programs,
the existing retention and earnings measure definitions were changed to reflect the
common performance measure definitions (no change was required for the entered
employment measure). The youth common performance measures are substantially
different than the statutory measures for youth, and it was not possible to
incorporate the common performance measures for youth into the WIA older and
younger youth measure definitions. As a result, states generally report against the
three youth common measures in addition to the 17 statutory performance measures
and are evaluated, for performance purposes, against the 17 statutory measures.
At the same time, states have begun to further integrate and streamline program
services, and have requested waivers to streamline performance reporting by
reporting against the common performance measures only instead of the current
WIA statutory performance measures. States with an approved reporting waiver
are accountable for results against 9 performance measures (which includes the
three substantially different youth measures), rather than the 17 measures for which
the other states are accountable. Because of this, states that were granted waivers to
report common performance measure outcomes only for the PY 2005 performance
year were exempt from consideration for an incentive grant, since they were
reporting and being assessed against a different set of measures than the majority of
states, still being assessed against the WIA statutory measures.
The number of approved waiver requests continues to increase, and ETA has re-
examined its incentive and sanction policy so these states would not be
automatically exempted from incentive eligibility, thereby avoiding a possible
disincentive to further program integration. In developing a revised incentive and
sanction policy, ETA officials have sought to balance the competing interests of
fairness and flexibility provided for in the WIA waiver authority. We also want to
ensure that all states are afforded the opportunity to be considered for an incentive
grant, if the state exceeds its negotiated levels of performance. Additionally, it is
important to further establish the important correlation between timely and accurate
data to quality performance information.
To accomplish these goals, ETA has reconsidered its interpretation of what it means
to “exceed” WIA performance measures, as well as what combination of measures
will be considered under the revised incentive and sanction policy to allow both
waiver and non-waiver states to be eligible for incentive grants. ETA continues to
encourage high performance and continuous improvement, while not providing
waiver states with an unfair advantage over other states. Therefore, for purposes of
determining eligibility for incentive grants under 20 CFR 666.200(a), ETA will
consider a state to have exceeded the negotiated levels of performance for the WIA
required core indicators of performance when the state exceeds the levels for the
common performance measures if it is a waiver state, or when it exceeds the
measures for a substantially comparable set of measures if it is a non-waiver state.
In effect, in order to hold all states to a comparable standard of performance for
incentive purposes, we are treating all states as if they had requested the common
measures performance waiver, without imposing the burden of applying for the
waiver on states that would otherwise not request such a waiver.
Therefore, beginning with the PY 2006 performance measures outcomes, only those
states that exceed their negotiated performance levels for the following applicable
measures for the WIA Adult, Dislocated Worker, and Youth programs will be
considered in the incentive and sanction determinations. These applicable measures
are (also see the Attachment):
WIA Adult and Dislocated Worker Measures
The WIA measures for non-waiver states and the common measures waiver
states are the same for the Adult and Dislocated Worker programs.
These measures are:
1) Entered Employment Rate;
2) Employment Retention Rate; and
3) Average Six Months Earnings.
WIA Youth Measures
The WIA Youth measures for non-waiver states and the common measures
waiver states are not the same. There are four WIA measures for non-waiver
states and three measures for the common measures waiver states.
The four WIA measures for non-waiver states are:
1) Older Youth Entered Employment Rate;
2) Older Youth Employment Retention Rate;
3) Younger Youth Diploma or Equivalent Rate; and
4) Younger Youth Retention Rate.
The three youth measures for the common measures waiver states are:
1) Placement in Employment or Education;
2) Attainment of a Degree or Certificate; and
3) Literacy and Numeracy Gains (with potentially one exception: the
outcomes against the literacy/numeracy measure will only be
considered in the determination of incentives or sanctions if the state
has implemented the measure for two or more years as a minimum of
two years is needed to get valid data for this measure. If the measure
has not been implemented for the necessary period of time, these
outcomes will not be considered in determining a state’s incentive
eligibility or in the application of sanctions.)
Although outcomes against the adult, dislocated worker, and older youth credential
measures; the older youth earnings change measure; the younger youth skill
attainment measure; and the participant and employer customer satisfaction
measures, will no longer be considered in incentive or sanction determinations,
states without a waiver to report on common performance measures only will still be
required to collect and report on these remaining WIA performance measures.
Failure to report against these other measures will result in immediate
disqualification for incentive eligibility or the potential for a larger sanction. States
will continue to be able to request technical assistance if they have failed to meet
their negotiated levels for any of these other measures. The revised incentive policy
is described further in Section 5 of this TEGL.
Similarly, ETA is revising its sanction policy (set forth in TEGL 19-02, Sanctions
Policy for Failure to Meet State Negotiated Performance Levels under Title I of the
Workforce Investment Act (WIA)). Only the outcomes reported against the applicable
performance measures above (which are also contained in the Attachment), will be
analyzed when considering the application of sanctions (with the potential
exception of the literacy/numeracy measure, if it has not been implemented for two
or more years). The revised sanction policy is described further in Section 7 of this
TEGL.
5. Revised Policy for WIA Incentive Grants. Section 503(a) of the WIA requires the
Secretary to award incentive grants to states that exceed the negotiated levels of
performance for WIA title IB programs, the expected levels of performance for WIA
title II Adult Education and Family Literacy Act programs, and the levels of
performance for the Carl D. Perkins Vocational and Technical Education Act
programs.
For the WIA title IB programs, beginning with annual outcomes reported for PY
2006, the following criteria will be applied to determine incentive eligibility based on
performance outcomes:
• Performance is at, or above, 90 percent of the negotiated level for each applicable
WIA performance measure (see Attachment); except for the Literacy and
Numeracy Gains measure, which will only be considered in incentive or sanction
determinations if the state has implemented the measure for two or more years
(and hence has valid data for the measure);
• The score for the average attainment rates for each of the WIA performance
groups (adults, dislocated workers, and youth) is above 100 percent;
• The performance outcomes are reported on time and are accurate, as further
defined in Section 6 of this TEGL;
• The state has reported on the remaining WIA performance measures, including
customer satisfaction, that are not part of the determination of incentive
eligibility. Failure to do so will result in immediate disqualification for incentive
eligibility, unless the state has an approved waiver to report on the common
performance measures only; and
• The state has not requested a revision to lower its negotiated performance levels
for any measure after the end of the third quarter of the program/performance
year (March 31). Note that this requirement is not retroactive; it will be first
applied during incentive eligibility determinations made based on PY 2007
outcomes (spring 2009). This requirement only applies to lowering negotiated
levels of performance; states may request a higher negotiated level of
performance for a measure at any time.
As noted above, a state must now meet 90 percent of the negotiated level for each
applicable WIA performance measure to be eligible for an incentive, rather than 80
percent of the negotiated level that applied under the previous incentive policy.
This level was raised in the interest of continuous improvement; 90 percent of the
negotiated level of performance more accurately reflects a successful outcome, based
on analysis of past national performance results. States now have a history of
negotiating performance levels, as well as good baseline data from previous
program years to base their negotiations upon, and this level is a reasonable
expectation that states should be able to meet.
Incentive grant awards will range from $750,000 to $3,000,000, with a proportionate
reduction in the minimum and maximum, when total available funds are
insufficient.
6. Failure to Report and Data Accuracy. As noted in Section 5 of this TEGL, one of
the criteria for incentive eligibility is that the data used to compute the performance
outcomes must be submitted on time and be accurate. This is consistent with the
WIA program reporting requirements that directs grantees to submit timely and
accurate participation and outcome reports.
Guidance found in TEGL 14-03, Change 1, emphasizes the importance of a timely
report as part of the criteria used by ETA when determining eligibility for WIA
incentive grants. Along with other subsequent guidance, it also established the
deadline for the annual report, which is the official submission that contains the
data upon which incentive and sanction determinations are based.
To address the accuracy of the data submitted, ETA implemented its data
validation initiative to identify and address discrepancies in state grantees’
reporting (See TEGL 13-03 and subsequent guidance for further information). Data
validation consists of report validation and data element validation. Report
validation compares the performance results reported by a state to those calculated
by ETA’s validation software to verify the accuracy of the state’s report
calculations. Data element validation compares data contained in a sample of
participant records from the state’s validation extract file to approved source
documentation in order to verify the accuracy of the data elements used in
calculating the reports.
For annual outcomes reported for PY 2006 and subsequent years, ETA will consider
a WIA state grantee as having failed to report year-end results when one or more of
the following conditions exist:
• The grantee fails to submit a complete WIA annual report as defined in TEGL
14-03 and subsequent Training and Employment Notices that provide
timelines for annual performance reporting and data validation submissions;
• The grantee fails to conduct the report validation outlined in TEGL 3-03 and
subsequent guidance;
• The grantee fails to submit the required Report Validation Summary by the
required due date outlined in TEGL 3-03 and subsequent reporting guidance;
• The grantee fails to submit an accurate WIA annual report as determined by
applying a two percent error threshold to program outcomes, including
numerators and denominators, summarized in the Report Validation
Summary 1 ; or
• The grantee fails to submit a required WIA annual program information
report, ETA 9091, within 45 days of the established due date.
Submitting data element validation results will not be a factor in determining
failure to report year-end results.
7. WIA Sanction Policy. If a state fails to meet its negotiated levels of performance for
any of the applicable measures (see Attachment) for one year, the state may request
technical assistance from ETA. If the state fails to achieve 80 percent of the
negotiated level of performance for the same measure for two consecutive years, the
state may be subject to financial sanctions in the form of a reduction in the annual
allotment for the program area, up to a maximum of five percent.
The application of a financial sanction must be made to the allotment for the
program year following the year of poor performance. Any funds recovered from
the application of financial sanctions will be made available for performance
incentive grants.
1 One or more reported items included in the results of the calculation of performance outcomes on the program’s
performance measures as reported in the program’s annual submission that exceed the two percent tolerance level
will result in a failed to report finding. Discrepancy rates are determined by comparing the state’s figures on the
Report Validation Summary to the reported counts on the program year summary (i.e., ETA 9091 for WIA programs).
In addition to the statutory provisions in WIA section 136, guidance to the
workforce system on the subject of sanctions has been provided previously in the
regulations at 20 CFR 666.240 and in TEGL’s 8-99 and 19-02.
The effective use of sanction authority related to performance will include a range of
actions, with the ultimate goal of improving services to customers. Further, the use
of sanctions will reinforce the management philosophy underlying WIA and the
Administration--the importance of performance outcomes and results. Financial
sanctions will be considered when it is clear that a state has not taken reasonable
steps to address its poor performance, but levying a financial penalty will not be the
sole purpose or result of a sanction.
a. Any state that has failed to perform at 80 percent of the negotiated level for a
specific performance measure for a second consecutive year, or has failed to
submit an accurate and complete annual report within 45 days of the due
date, will be required to modify its Five-Year Strategic Plan to incorporate an
agreed upon performance improvement plan.
At a minimum, if a state has failed to achieve the negotiated level of performance for
two years in a row, the state will work with the appropriate ETA Regional Office to
develop a performance improvement plan. Such a plan will include: changes to
program goals, as appropriate, as well as design, management or administration
remedies that address any deficiencies in program design or service strategy that
have inhibited performance, including reporting problems; appropriate technical
assistance to improve program services; and continued monitoring by the ETA
Regional Office. The plan modification requirement is supported by 20 CFR
661.230(b)(3), which requires plan modifications in such circumstances.
b. The amount of a financial sanction for poor performance within a program
area will be directly related to the number of negotiated performance levels
the state failed to meet for measures within that program area for two
consecutive years, but will not be more than five percent of the annual
allotment for the program area.
In addition to the required performance improvement plan, financial sanctions will
be applied to the program area in which the state failed to achieve the negotiated
level of performance, i.e., adults, youth, and/or dislocated workers.
c. When determining the amount of a financial sanction, failure to submit an
accurate and timely annual report will increase the financial sanction by an
additional one percent of the annual allotment in the program area that is
being sanctioned.
If a state has failed to submit an accurate and timely annual report, but has met all of
its negotiated levels of performance, then a financial sanction will not be imposed.
A financial sanction may be appropriate for any state that failed one or more
measures of performance for workforce investment programs. The following
describes the maximum amount of a financial sanction, subject to adjustment upon
further review. Since there are three measures that will be considered for the WIA
Adult and Dislocated Worker programs, the amount of the financial sanction will be
based on the number of measures failed in each program area:
Adult/Dislocated Worker Maximum
No. of Measures Failed Amount of Sanction
1 1 percent
2 2 percent
3 3 percent
* 4 percent
* Failure to submit an accurate and timely annual report will increase the level of
financial sanction applied to a program by an additional one percent if it is
otherwise subject to financial sanction.
For the WIA Youth program, since there are four indicators of performance under
consideration (three for common measures waiver states), the amount of the
financial sanction would be calculated as follows:
Youth Maximum
No. of Measures Failed Amount of Sanction
1 1 percent
2 2 percent
3-4 3 percent
* 4 percent
* Failure to submit an accurate and timely annual report will increase the level of
financial sanction applied to a program by an additional one percent if it is
otherwise subject to financial sanction.
There are several general factors to consider in relation to sanctions for performance
that will be taken into consideration in determining the actual amount of the
sanction (up to the maximum percentages as discussed above), such as performance
on other indicators, economic conditions, and the progress of performance on the
failed measure between the two program years. The ETA Regional Offices will
work with the state(s) to address the seven mitigating factors articulated in the
regulations at 20 CFR 666.240(c):
1. The state’s performance relative to other states;
2. Improvement efforts underway;
3. Incremental improvement on the performance measures;
4. Technical assistance previously provided;
5. Changes in economic conditions and program design;
6. The characteristics of participants served compared to the participant
characteristics described in the State Plan; and
7. Performance on other core indicators of performance and customer satisfaction
indicators for that program (WIA section 136(g)), if applicable.
It is important to understand that ETA’s primary interest is in ensuring effective and
efficient service delivery and successful outcomes for participants served by WIA
programs. In addressing the mitigating factors, the state should acknowledge areas
where performance is failing and provide documentation that either substantiates
actions taken by the state to improve performance throughout the period of
performance or that provides sufficient context around the state’s actual
performance results.
ETA Regional Offices will provide a final recommendation for a financial sanction
based on their analysis of the information received from the state(s), including
responses on the seven factors discussed above. The amount of the sanction for each
performance measure missed could be reduced if the state provides relevant and
sufficient information to explain the performance failure.
8. Appeals. States may request a review of a decision to impose a sanction. In
accordance with 20 CFR 667.800(a), such an appeal must be submitted in writing to
the Department of Labor’s Office of Administrative Law Judges within 21 days of
receipt of the final determination imposing the sanction.
9. Action Requested. State Workforce Agency Administrators and State Workforce
Liaisons are asked to distribute this guidance to the appropriate officials at the state
and local levels.
10. Inquiries. Please direct any questions to the appropriate ETA Regional Office.
11. Attachment. Applicable Performance Measures for WIA Incentive and Sanction
Policy
Attachment 1 PDF: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2007/TEGL09-07a1.pdf
ATTACHMENT
APPLICABLE PERFORMANCE MEASURES FOR WIA INCENTIVE AND
SANCTION POLICY
WIA Measures (Non-Waiver States) Common Measures (Waiver States)
Dislocated Dislocated
Adult Youth Adult Youth
Worker Worker
Older Youth
Entered Entered Entered Entered Placement in
Entered
Employment Employment Employment Employment Employment or
Employment
Rate Rate Rate Rate Education
Rate
Older Youth
Employment Employment Employment Employment Attainment of a
Employment
Retention Retention Retention Retention Degree or
Retention
Rate Rate Rate Rate Certificate
Rate
Younger
Average Six Average Six Youth Average Six Average Six Literacy and
Months Months Diploma or Months Months Numeracy
Earnings Earnings Equivalent Earnings Earnings Gains *
Rate
Younger
Youth
Retention
Rate
* The outcomes for the Literacy and Numeracy Gains measure will only be considered in incentive or sanction
determinations if the state has implemented the measure for two or more years (and hence has valid data for the
measure.)
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