WIA funds for workforce and economic development

Accessible letter PDF: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2007/TEGL13-07acc.pdf

CLASSIFICATION

 EMPLOYMENT AND TRAINING ADMINISTRATION               WIA
            ADVISORY SYSTEM                           CORRESPONDENCE SYMBOL
                U.S. DEPARTMENT OF LABOR              OWI
                    Washington, D.C. 20210            DATE
                                                      December 11, 2007

TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 13-07

TO:            ALL STATE WORKFORCE AGENCIES
               ALL STATE WORKFORCE LIAISONS
               ALL STATE RAPID RESPONSE COORDINATORS

FROM:          EMILY STOVER DeROCCO /s/
               Assistant Secretary

SUBJECT:       Use of Workforce Investment Act (WIA) Funds for Workforce
               Development Activities in Support of Economic Development

1. Purpose. The purpose of this Training and Employment Guidance Letter
   (TEGL) is to highlight workforce investment activities allowable under WIA
   in support of talent development strategies that drive state and regional
   economic growth, and to specifically provide guidance on the interpretation
   of sections of the Workforce Investment Act of 1998 that reference allowable
   activities and prohibitions related to economic development.

2. References. Workforce Investment Act of 1998, Public Law 105-220, 29 U.S.C.
   2931, Section 112(b)(4)(c) and Section 181; 20 CFR parts 667.262 and 667.264.

3. Background. The U.S. economy and its labor markets are undergoing
   changes of historic proportion. Globalization has forced change in every
   region in the country and impacted every aspect of our economy. While
   global competition is typically seen as a national challenge, the front lines of
   the battlefield are regional, where businesses create a competitive advantage
   by collaborating with researchers, entrepreneurs, and government entities.
   That advantage stems from the ability to transform new ideas and knowledge
   into advanced, high quality products or services – in other words, to
   innovate. Regions that will be most successful will connect three key
   elements: talent, infrastructure, and investment. In particular, they will
   connect workforce skills and lifelong learning strategies; regional
   infrastructure and economic development strategies; and investment and
   entrepreneurship strategies.

 RESCISSIONS                                   EXPIRATION DATE:

 None                                          Continuing


   Entrepreneurship plays a critical role in fueling innovation, as entrepreneurs
   account for more than half of all technological innovation that powers
   America’s competitiveness.

   Maintaining America’s competitive position in the global economy requires a
   workforce with post-secondary education credentials, a capacity to work in a
   high-technology environment, and the opportunity to engage in lifelong
   learning to keep pace with change. The workforce investment system must
   operate as a talent development system; it is no longer defined only as a job
   training system. A talent development system not only meets the needs of
   industry, but also contributes to economic prosperity by collaborating with
   economic development to identify emerging industries that it can help foster
   and grow. This supports the Department’s goal of an educated and prepared
   workforce.

   The Employment and Training Administration’s (ETA) current policies and
   strategic priorities reflect the new focus on the regional economy as the vortex
   of innovation and economic growth. In February 2006, ETA launched the
   Workforce Innovation in Regional Economic Development (WIRED) Initiative
   focusing on the role of talent development in driving regional economic
   competitiveness, increased job growth, and new opportunities for American
   workers. The WIRED framework brings together all the key players in a
   region to leverage their collective public and private sector assets and
   resources in order to devise strategies that focus on infrastructure,
   investment, and talent development that will optimize innovation and
   successful regional economic transformation.

   Given the fundamental premise that talent development drives economic
   prosperity, the workforce system must fully connect to and align with state
   and regional economic development and growth strategies. The WIRED
   framework envisions full integration of workforce development, economic
   development, and education systems in support of economic
   competitiveness.

4. Foundational Statutory and Regulatory Principles Guiding Use of WIA
   Funds Associated with Economic Development. Below are key foundational
   principles to guide the workforce investment system in using WIA funds in
   support of economic development activities based on the WIA statute and
   regulations:

   a. The WIA statute and regulations recognize that workforce development is
      key to driving the economic health and growth of states and regions.
      In the development of the Five Year WIA and Wagner-Peyser Strategic


   State Plan, one of the first WIA requirements is for states to “identify the
   skills and economic development needs of the state” as a guide for
   strategic investments of training dollars (WIA Section 112(b)(4)(C)).

b. WIA funds may be used for employment generating activities, economic
   development activities, investment in revolving loan funds, capitalization
   of businesses, and similar activities if they are directly related to training
   for eligible individuals (20 CFR 667.262). The WIA regulations identify
   several examples of employer outreach and job development activities
   that are considered “directly related to training for eligible individuals,”
   such as WIA staff participation on economic development boards and
   commissions; work with economic development agencies; and other
   allowable WIA activities in the private sector (20 CFR 667.262). An
   example of “other private sector activities” authorized under this section is
   direct employer/business service delivery to new or expanded businesses
   that result from economic development efforts. Services routinely
   provided to employers by the workforce system, such as workforce and
   economic information, identification of available training resources for
   eligible individuals who are, or will be, employed by a business, or
   support in recruitment and hiring are also permissible when provided to a
   new or expanding business that is also being supported by economic
   development efforts.

c. WIA funds may be used for strategic investments in education and
   training for the skills required in regionally defined high growth, high-
   demand occupations that are critical to the health and growth of the state
   or regional economy. Activities may include training for eligible job
   applicants, newly hired workers, or incumbent workers of new or existing
   businesses. However, there are restrictions on the use of WIA funding in
   the case of a business relocation that resulted in loss of employment for
   any employee at the original location. In that circumstance, training may
   be offered only after 120 days from the date of relocation (WIA Section
   181(d)(2)). “Eligible individuals” for high growth are determined by the
   eligibility rules of each of the WIA funding streams. Use of waiver
   authority to expand flexibility as it relates to use of funding streams is
   discussed later in the TEGL.

d. Rapid Response Activities may be used for layoff aversion activities to
   avoid a plant closure; incumbent worker training for skill upgrades; and
   linkages with economic development activities at all levels, including U.S.
   Department of Commerce programs and available state and local business
   retention and recruitment activities (20 CFR 665.320(d)).


   e. WIA funds may not be used for the following activities:

      1. Employment generating activities, economic development activities,
         investment in revolving loan funds, and capitalization of businesses,
         and similar activities not directly related to training for eligible
         individuals (20 CFR 667.262).

      2. Foreign travel, regardless of whether it is associated with economic
         development (WIA Section 181(e)).

      3. Wages of incumbent employees during their participation in economic
         development activities provided through a statewide workforce
         investment system (20 CFR 667.264(a)(1)). This provision is designed
         to prohibit the use of WIA funds for job creation and wage subsidies
         for incumbent workers. However, please note that the prohibition at
         20 CFR 667.264(a)(1) does not preclude the workforce system from
         providing on-the-job training (OJT) as an allowable activity for eligible
         employed workers (as described in 20 CFR 663.700 – 663.710). Per 20
         CFR 663.710(a), OJT payments to employers are deemed to be
         compensation for the extraordinary costs associated with training
         participants and the costs associated with the lower productivity of
         participants in training, rather than wage subsidies to employers.

      4. Activities to encourage or induce a business, or part of a business, to
         relocate from any location in the United States, if the relocation results
         in any employee losing his or her job at the original location (WIA
         Section 181(d)(1)).

      5. Customized training, skill training, or OJT of job applicants or
         employees of relocated companies for 120 days if the relocation
         resulted in loss of employment for any employee at the original
         location. States must develop review criteria and a documentation
         process for use at the local level to ensure this requirement is met
         (WIA Section 181(d)(2)).

5. Further Guidance on Allowable Activities. ETA has actively encouraged the
   workforce system to integrate their activities with both education and
   economic development in the context of regional economies pursuant to the
   WIRED framework. This framework calls for the alignment of all talent
   development resources in a region with a region’s economic growth and
   development strategies to promote prosperity for the region’s workers and to
   support a competitive economy. This framework was recently articulated in
   ETA’s TEGL No. 13-06 providing direction to states on WIA State Strategic


Plan development.

Because the WIRED framework calls for systemic integration of workforce
and economic development, below are workforce development activities that
may be carried out utilizing WIA funds in support of economic development
efforts:

a. Working collaboratively to conduct an economic and labor market
   analysis to identify the state or region’s economic assets and gaps as it
   relates to talent development, which may include:

   •   Bringing together a wide array of data sources, including in-person
       interviews with business and industry;
   •   Analyzing the data to evaluate strengths and weaknesses and areas of
       opportunity in a state or regional economy;
   •   Assessing the skills of the available labor pool;
   •   Conducting industry-cluster analysis to inform the need for talent and
       skills; and
   •   Tracking economic data to measure the outcomes of talent
       development strategies and interventions.

b. Participation in the development and implementation of workforce and
   talent strategies as part of a broader state or regional economic
   development strategic plan. Activities may include:

   •   Participation in actual economic development planning sessions for
       the purpose of developing strategies for workforce/talent
       development.
   •   Working collaboratively with economic developers to educate
       businesses that are expanding or locating (provided that the business
       is not relocating so as to cause layoffs in another area of the country) to
       the state or region for the purpose of providing information on
       available resources to support workforce education and training
       activities; to support hiring activities; and to provide information on
       the local economy and labor market.
   •   Working collaboratively with a wide array of strategic partners that
       may include community leaders, business and industry, educators,
       economic developers, and others to develop and implement solutions
       to the workforce challenges faced by the community that are impeding
       economic growth. Examples may include strategies to address the
       high school dropout rate, or to develop Limited English Proficiency
       (LEP) strategies for a large immigrant population, or providing
       entrepreneurial training to encourage new business start-ups.


      •   Developing workforce strategies that build the skills of incumbent
          workers to meet the changing skill needs of business and industry,
          enhance productivity, and increase the viability of existing businesses
          in order to avoid business failure or plant closures that result in
          layoffs.

   c. Providing individual training accounts, customized training, and OJT
      training for eligible individuals to support careers in high growth, high-
      demand, and economically critical industries within a regional economy.

   d. Development and dissemination of career information and available
      education pathways to support the skill needs of a regional economy.

   e. Talent strategies that support the education and training of individuals
      who want to start a new business or that support the growth of an existing
      small business. Activities could include entrepreneurship training at a
      local community college or providing customized training to a small
      business to support their growth and expansion. Additional guidance
      will be provided regarding the use of WIA funds for entrepreneurship
      training in a separate TEGL.

6. Funding Flexibility. WIA provides significant flexibility in the use of funds
   by state and local workforce areas to implement innovative and creative
   talent development strategies in the context of a state or regional economic
   growth strategy. Waiver authority may provide additional flexibility where
   available. ETA is committed to working with states and regions to identify
   the flexibility they need in framing their workforce investment strategies in
   alignment with their regional economic development strategies. Workforce
   system professionals may find additional information on funding flexibility
   utilizing waiver authority on ETA’s Web site at www.doleta.gov/waivers/;
   or ETA’s interactive knowledge portal, Workforce3One
   (www.workforce3one.org), which contains archived Webinars on the use of
   waivers and examples of how WIA funds have been used creatively; or by
   making their need for assistance known to the appropriate ETA Regional
   Office.

   In framing talent development strategies that support economic growth in the
   current economy, it is critical to address the workforce education and training
   needs of the incumbent workforce. Funding flexibility that supports
   incumbent worker training may be found in TEGL No. 18-05 on ETA’s Web
   site at wdr.doleta.gov/directives/.


7. Action Required. States should distribute this guidance to all officials within
   the state workforce investment system who need such information, including
   state workforce agency staff, state workforce board members and staff, local
   workforce board members and staff, and One-Stop Career Center staff to
   ensure they are aware of and prepared to act upon the clarifications
   presented in this guidance.

8. Inquiries. Questions concerning this issuance may be directed to the
   appropriate ETA Regional Office.