FY 2013 TAA state allocations and reserve requests

Accessible letter PDF: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2013/TEGL_31_12_Acc.pdf

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                 TAA
               ADVISORY SYSTEM                            CORRESPONDENCE SYMBOL
                                                          OTAA
          U.S. DEPARTMENT OF LABOR
                                                          DATE
             Washington, D.C. 20210                       May 22, 2013


ADVISORY:          TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 31-12

TO:                STATE WORKFORCE AGENCIES
                   STATE WORKFORCE LIAISONS
                   AMERICAN JOB CENTER LEADS
                   STATE WORKFORCE ADMINISTRATORS
                   STATE AND LOCAL WORKFORCE BOARD CHAIRS AND DIRECTORS
                   STATE LABOR COMMISSIONERS

FROM:              JANE OATES /s/
                   Assistant Secretary

SUBJECT:           Fiscal Year (FY) 2013 State Initial Allocations and the Process for
                   Requesting Trade Adjustment Assistance (TAA) Program Reserve Funds

1. Purpose. To provide State Workforce Agencies or agencies designated by Governors as
“Cooperative State Agencies” (CSAs) (also jointly referred to as “states”) with the formula
methodology the Department of Labor (Department, or We) used to develop the FY 2013 initial
allocation, and to describe the process by which states may request TAA program reserve funds.
The term “Program Funds,” used below, refers to the funds appropriated for states to provide
Training, Employment and Case Management Services, Job Search Allowances, and Relocation
Allowances, including the State Administration of these benefits and services to trade-affected
workers.

2. References.

        Chapter 2 of Title II of the Trade Act of 1974, as amended (Pub. L. 93-618) (1974 Act
         and, as amended, Trade Act);
        Trade and Globalization Adjustment Assistance Act of 2009, Division B, Title I,
         Subtitle I of the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5)
         (TGAAA);
        Trade Adjustment Assistance Extension Act of 2011 (Pub. L. 112-40) (TAAEA);
        20 CFR part 618;
        Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA or
         Sequestration) (Pub. L. 99-177);
        Budget Control Act of 2011 (BCA) (Pub. L. 112-25);
        American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240);
        Consolidated and Further Continuing Appropriations Act, 2013 (Pub. L. 113-6);


 RESCISSIONS                                             EXPIRATION DATE
 None                                                    Continuing

        Training and Guidance Letter (TEGL) No. 1-10, Promulgation of 20 CFR Part 618
         Trade Adjustment Assistance: Merit Staffing of State Administration and Allocation of
         Training Funds to States; and
        TEGL No. 10-11, Operating Instructions for Implementing the Amendments to the
         Trade Act of 1974 Enacted by the Trade Adjustment Assistance Extension Act of 2011
         (TAAEA).

3. Background. The Trade Adjustment Assistance Extension Act (TAAEA) reauthorized and
substantially changed the TAA program. Specifically, the TAAEA amended section
236(a)(2)(A) of the Trade Act to establish a $575 million annual consolidated cap on TAA
funding for FY 2012 and 2013 Program Funds, and established a $143,750,000 cap for this
funding for the first quarter of FY 2014 (October 1, 2013 through December 31, 2013). The
TAAEA did not amend section 236(a)(2)(B) and (C) of the Trade Act governing the allocation of
funds, which:

   •   Requires 65 percent of the funds to be distributed by formula at the beginning of the FY,
       with 35 percent of the FY funds held in reserve for distribution later in the FY;
   •   Provides a “hold harmless” minimum allocation for the initial distribution to ensure that a
       state receives at least 25 percent of the state’s initial allocation for the previous FY;
   •   Sets a deadline of July 15 of each FY for the distribution of 90 percent of the funds; and
   •   Establishes specific formula factors that the Department must consider in determining the
       apportionment of the initial distribution of funds.

Sequestration’s Impact on the FY 2013 TAA Funding Level:

The Budget Control Act of 2011 (BCA) amended the Balanced Budget and Emergency Deficit
Control Act (BBEDCA) to require reductions in budgetary authority, known as sequestration,
beginning on January 2, 2013, unless Congress passed and the President signed a bill reducing
the deficit by at least $1.2 trillion over 10 years. The American Taxpayer Relief Act of 2012
(ATRA) amended the BBEDCA to delay the sequestration implementation date from January 2,
2013, to March 1, 2013. As required by the BBEDCA, as amended by ATRA, the President
issued a sequestration order on March 1, 2013. The Office of Management and Budget (OMB)
issued its Report to Congress on the sequestration for FY 2013, which provides calculations of
the amounts and percentages by which various budgetary resources are required to be reduced,
and a listing of the reductions required for each non-exempt budget account. The TAA program
is included in the Federal Unemployment Benefits and Allowances (FUBA) Appropriation and is
referred to as a Nondefense Mandatory Appropriation in the report, which can be found at:
http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/fy13ombjcsequestra
tionreport.pdf.

The BBEDCA, as amended, exempts some programs, projects, activities (PPAs) and accounts,
and requires separate percentage reductions to be applied to non-exempt discretionary and
mandatory PPAs. The TAA Program is part of a mandatory PPA to which the sequestration
order applies. However, nothing relating to sequestration, or any subsequent guidance changed
the methodology or formula for calculating the distribution of available Program Funds. Further,


the process by which states may request reserve funds was unchanged. Therefore, we continue to
apply the regulations codified at 20 CFR 618.900- 618.940 to implement section 236(a)(2)(B)
and (C) of the Trade Act, to the distribution of FY 2013 Program Funds.

4. FY 2013 Distribution of Initial Allocation of TAA Funds and the Process for Requesting
Reserve Funds. The Consolidated and Further Continuing Appropriations Act, 2013
appropriated a total of $575 million for FY 2013 Program Funds, as well as funds for
Alternative/Reemployment Trade Adjustment Assistance (A/RTAA) and Trade Readjustment
Allowances (TRA), all of which were subject to a 5.1 percent reduction under the BBEDCA, as
amended. However, the Department was allowed to apply the full reduction only to TAA
Program Funds, and therefore did not apply the reduction to funds appropriated for A/RTAA and
TRA benefits. Our financial analysis indicated that states currently have sufficient funds
available for training, employment and case management services, and job search and relocation
allowances. Accordingly, $534,353,000 in appropriated TAA Program Funds is available for
distribution to states for FY 2013.

The Department announces the amount of each state’s initial allocation of funds in the
Attachment to this TEGL. Due to the delay in the FY 2013 appropriation and the need to
determine the amount of those funds available under the sequestration order, the Department will
make a single allocation of 90 percent of the full year appropriation of TAA Program Funds in
accordance with the regulations found at 20 CFR 618.910 and 618.930. If a state needs further
funds, it may request such funds by following the process for requesting reserve funds described
below.

We determined the initial allocation for each state on the basis of the amount appropriated for
TAA Program Funds as reduced by the sequestration amount for all TAA benefits and the
amount distributed to the state of Hawaii in response to its reserve fund request. Hawaii has
submitted the only reserve request for FY 2013 TAA Program funds. This request, in the amount
of $300,000, reduces the amount of TAA Program Funds available for distribution to states to
$534,053,000.

       A. Formula for Calculating State Initial Allocation Amounts. The state initial
          allocation amounts listed in the Attachment were derived using the formula factors
          described in 20 CFR 618.910, and apply to 90 percent of the total $534,053,000 of
          TAA Program Funds available for FY 2013. The Department will consider the
          remaining 10 percent to be held in “reserve” for distribution to the states later in FY
          2013. These funds will be distributed on an as-needed basis in response to reserve
          fund requests by the states. This will provide needed funds to states that: 1)
          experience large, unexpected layoffs; 2) did not receive an initial allocation (District
          of Columbia, Hawaii, and Wyoming); and 3) demonstrate need for funds to provide
          training, employment and case management services, job search or relocation
          allowances, and administration of these benefits that were not met by the initial
          allocation.


The Initial Allocation of 90 percent of TAA Program funds among the states follows
the four factors set forth in section 236(a)(2)(C)(ii) of the Trade Act, and explained in
20 CFR 618.910(f), which are:

    1. Trend in number of workers covered by certifications during the most recent
    four consecutive calendar quarters for which data are available;

    2. Trend in number of workers participating in training during the most recent
    four consecutive calendar quarters for which data are available;

    3. Number of workers estimated to be participating in training during the FY; and

    4. Estimated amount of funding needed to provide approved training to such
    workers during the FY.

Factor 1 was established using the most recent four quarters (FY 2012 Quarter 2
through FY 2013 Quarter 1) of data for the estimated number of certified workers by
state, then weighting this quarterly data by 40 percent, 30 percent, 20 percent, and 10
percent, respectively, from the most recent quarter to the earliest quarter. This
approach established a trend giving the most recent quarters a greater impact on each
factor than an earlier quarter.

Factor 2 was established using the most recent four quarters (FY 2012 Quarter 2
through FY 2013 Quarter 1) of data for workers participating in training by state, and
weighting these quarters by 40 percent, 30 percent, 20 percent, and 10 percent,
respectively, from the most recent quarter to the earliest quarter. As with Factor 1,
this approach established a trend, giving the most recent quarters a greater impact on
each factor than an earlier quarter.

Factor 3 was calculated by dividing the weighted average number of training
participants for the state determined in Factor 2 by the sum of the weighted averages
for all states and multiplying the resulting ratio by the projected national average of
training participants for the fiscal year, using the estimates underlying the
Department’s most recent budget submission or update.

Factor 4 was calculated by multiplying the estimated number of participants in Factor
3 by the average training cost for the state. The average training cost was calculated
by dividing total training expenditures for the most recent four quarters (FY 2012
Quarter 2 through FY 2013 Quarter 1) by the average number of training participants
for the same time period.

Once all of the four factors were determined for each state, all four factors were
assigned an equal weight, in accordance with 20 CFR 618.910(f)(3). For FY 2013,
the weight assigned will be 25 percent of the total for each factor. The “hold
harmless” provision, 20 CFR 618.910(c), requires that a state’s initial allocation be


           equal to at least 25 percent of the amount of that state’s initial allocation in the most
           recent previous fiscal year.

           The Department determined the national total and each state’s percentage of the
           national total for each factor. Using each state’s percentage of each of these weighted
           factors, the Department determined the unadjusted percentage that the state would
           receive of the amount available for initial allocations. As provided in 20 CFR
           618.910 (c) - (e), the Department removed allocations under $100,000 and applied the
           25 percent “hold harmless” minimum amount to the state’s allocation, resulting in an
           adjusted FY 2013 allocation for the remaining states.

           In those instances where application of the formula resulted in a state receiving less
           than $100,000, 20 CFR 918.910(e)(2)(i) provides that that state will not receive any
           initial allocation, but may request TAA reserve funds in accordance with the
           procedures described below in Section B, where needed.. For the FY 2013 initial
           allocation listed on Attachment A, only the District of Columbia, Hawaii, and
           Wyoming do not receive an initial allocation.

       B. TAA Reserve Funds. States may request reserve funds to cover the costs of
          Training, Job Search Allowances and Relocation Allowances, Employment and Case
          Management Services and State Administration of these benefits. Reserve funds will
          be distributed to states in accordance with 20 CFR 618.920. These funds must be
          requested using the Form Employment and Training Administration (ETA)-9117
          (OMB No. 1205-0275).

           In order to be eligible to receive TAA reserve funds, a state must demonstrate one of
           the following: that 1) at least 50 percent of its total available Program Funds have
           been expended; 2) it needs more funds to meet unusual or unexpected events; or 3) it
           did not receive funds under the distribution of the initial allocation and needs funds to
           meet program needs. A state requesting reserve funds also must provide a
           documented estimate of expected funding needs through the end of the fiscal year.
           That estimate must be based on an analysis that addresses at least the following data:
               • The average cost of training in the state;
               • The expected number of participants in training through the end of the FY;
                   and
               • The remaining funds that the state has available for training.

5. Use of Funds. A state’s allocation of FY 2013 Program Funds, like the allocation of FY 2012
Program Funds, will be provided in a single grant which may be used to pay the costs for the
provision of Training, Job Search Allowances, Relocation Allowances, and Employment and
Case Management Services, including State Administration of these benefits. Use of the FY
2013 funds is subject to the following restrictions:

       •   State Administration. As provided by section 235A(1) of the Trade Act, not more
           than 10 percent of a state’s allocation may be used for administration of the TAA


           program. The definition of State Administration has not changed, and continues to
           include costs that would previously have been charged to the administration grant.
           This includes the necessary and reasonable costs of administering TAA Training, Job
           Search Allowances, Relocation Allowances, and Employment and Case Management
           Services, and may include the administrative costs associated with processing waivers
           of the training requirement, collecting, validating and reporting data, and providing
           Reemployment Trade Adjustment Assistance or Alternative Trade Adjustment
           Assistance.

       •   Employment and Case Management Services. Under section 235A(2) of the Trade
           Act, at least 5 percent of the funds received must be used to provide Employment and
           Case Management Services. Therefore, a state may use more than 5 percent of its
           allocation to provide Employment and Case Management Services if it determines
           that greater funds are needed to provide such services to trade-affected workers in its
           state.

6. Reallotment of TAA Funds. The TAAEA amended section 245 of the Trade Act to add
paragraph (c), “Reallotment of Funds,” which provides authority for the ETA to reallot
unobligated TAA funds from states that have not obligated their funding fully in the second and
third FY (after the FY in which we provided the funds to them) to states with a demonstrated
need for the funds to carry out the TAA Program. Consistent with the Trade Act and the TAA
FY 2013 Annual Cooperative Financial Agreement, funds provided in the distribution of the
initial allocation or any later distribution (including funds distributed to states in response to
reserve fund requests) may be deobligated in the event of underutilization. Underutilized funds
will be deobligated and realloted only after consultation with, and subsequent notification to, the
affected states. The Department will provide further guidance on the reallotment of funds before
exercising this authority.

7. Action Requested. States will inform all appropriate staff of the contents of these
instructions.

8. Inquiries. States should direct all inquiries to the appropriate ETA Regional Office.

9. Attachment. Distribution of Initial Allocation of FY 2013 TAA Program Funds to States

Attachment 1: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2013/TEGL_31_12_Att1.pdf

Attachment
             Distribution of Initial Allocation of FY 2013 TAA Program Funds to States

                                            State            Initial Allocation Amount*
                                 Alabama                 $            7,983,411.00
                                 Alaska                  $               175,790.00
                                 Arizona                 $            2,574,742.00
                                 Arkansas                $           10,787,225.00
                                 California              $           16,432,717.00
                                 Colorado                $            5,110,372.00
                                 Connecticut             $            9,106,661.00
                                 Delaware                $               259,428.00
                                 District Of Columbia    $                        -
                                 Florida                 $            8,578,248.00
                                 Georgia                 $            7,800,759.00
                                 Hawaii                  $                        -
                                 Idaho                   $            2,164,139.00
                                 Illinois                $           14,102,161.00
                                 Indiana                 $            9,039,457.00
                                 Iowa                    $            4,211,235.00
                                 Kansas                  $            3,927,295.00
                                 Kentucky                $           11,058,553.00
                                 Louisiana               $            4,744,169.00
                                 Maine                   $            4,913,878.00
                                 Maryland                $            3,738,798.00
                                 Massachusetts           $           13,199,469.00
                                 Michigan                $           46,926,342.00
                                 Minnesota               $           14,268,130.00
                                 Mississippi             $            1,423,473.00
                                 Missouri                $            6,866,953.00
                                 Montana                 $               967,258.00
                                 Nebraska                $            1,038,927.00
                                 Nevada                  $               733,681.00
                                 New Hampshire           $            1,632,331.00
                                 New Jersey              $           10,508,110.00
                                 New Mexico              $            3,722,975.00
                                 New York                $           18,539,482.00
                                 North Carolina          $           26,440,222.00
                                 North Dakota            $               383,787.00
                                 Ohio                    $           28,817,286.00
                                 Oklahoma                $            3,637,321.00
                                 Oregon                  $           14,067,326.00
                                 Pennsylvania            $           29,716,635.00
                                 Puerto Rico             $               279,900.00
                                 Rhode Island            $            2,752,713.00
                                 South Carolina          $           11,316,255.00
                                 South Dakota            $               730,101.00
                                 Tennessee               $           13,177,101.00
                                 Texas                   $           43,555,786.00
                                 Utah                    $            3,702,177.00
                                 Vermont                 $               469,596.00
                                 Virginia                $           10,370,372.00
                                 Washington              $           15,190,365.00
                                 West Virginia           $            4,586,833.00
                                 Wisconsin               $           24,917,755.00
                                 Wyoming                 $                        -
                                 TOTAL                   $          480,647,700.00


*
   The state Initial Allocation amounts listed are in dollars, and were derived using the formula factors described in
20 CFR 618.910, and apply to 90 percent of the total $534,353,000 authorized to be available for FY 2013 less a
reserve funding request provided to the state of HI in the amount of $300,000 prior to the distribution of the funds.
The Department will consider the remaining 10 percent to be held in “reserve” for distribution to the states later in
the fiscal year.