U.S. DEPARTMENT OF LABOR
Employment and Training Administration
Washington, D. C. 20210

CLASSIFICATION

WIA/Administrative Costs

CORRESPONDENCE SYMBOL

One-Stop

ISSUE DATE

July 10, 2000

RESCISSIONS

 

EXPIRATION DATE

Continuing

DIRECTIVE

:

TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 01-00

 

TO

:

ALL STATE WORKFORCE LIAISONS
ALL STATE EMPLOYMENT SECURITY AGENCIES
ALL STATE WORKER ADJUSTMENT LIAISONS
ALL ONE-STOP CAREER CENTER SYSTEM LEADS

 

FROM

:

Wendy L. McConnell for:
LENITA JACOBS-SIMMONS
Deputy Assistant Secretary

 

SUBJECT

:

Summary of Anticipated Changes to the Administrative Costs Section of the Proposed Final Regulations for the Workforce Investment Act of 1998

  1. Purpose. To transmit the proposed change to the Interim Final Rule on the Workforce Investment Act (WIA) of 1998 relative to the classification of Administrative Costs. This language has been reviewed by the Office of Management and Budget and it mirrors what will be published in the Final Rule late in July. Due to the full implementation date of July 1, 2000, OMB has cleared this language prior to the publication of the Final Rule, to assist the system with further implementation. This definition of Administrative Cost classification goes into effect on July 1, 2000.

  2. References. Workforce Investment Act of 1998 (Public Law 105-220); and Interim Final Rules and Regulations (20 CFR Part 652, et al).

  3. Background. Under the Job Training Partnership Act, as amended, the Administrative percentage allowed ranged from 15% to 20%. Provisions governing Title I B of the WIA of 1998 reduced the allowable percentage of allocated funds which could be spent on the local administrative costs of operating the WIA program to 10% of the local allocation for each of the three funding streams, i.e., adult, dislocated worker, and youth.

    After extensive consultation with State and local partners in the system, the Department conducted an independent study sampling ten areas to determine whether the One-Stop service delivery model could be supported with a 10% administrative ceiling, using the WIA interim final rule definition of administrative costs. Based on the consultations and the study, the Department has redefined how to classify costs under WIA, and this will be reflected in the WIA Final Rule.

    This issuance is to transmit the language expected to be incorporated in the Final Rule, and provide guidance that has been used to illustrate how to classify costs under WIA during recent training sessions.

  4. Information. The proposed Final Rule provides an all inclusive list of the functions that are to be classified as administration and subject to the cost limitation. The list follows:

    1.  Performing the following overall general administrative functions and coordination of those functions under WIA title I:

    (i)  accounting, budgeting, financial and cash management functions;

    (ii)  procurement and purchasing functions;

    (iii)  property management functions;

    (iv)  personnel management functions;

    (v)  payroll functions;

    (vi)  coordinating the resolution of findings arising from audits, reviews, investigations and incident reports;

    (vii)  audit functions;

    (viii)  general legal services functions; and

    (ix)  developing systems and procedures, including information systems, required for these administrative functions;

    2.  Performing oversight and monitoring responsibilities related to WIA administrative functions;

    3.  Costs of goods and services required for administrative functions of the program, including goods and services such as rental or purchase of equipment, utilities, office supplies, postage, and rental and maintenance of office space;

    4.  Travel costs incurred for official business in carrying out administrative activities or the overall management of the WIA system; and

    5.  Costs of information systems related to administrative functions (for example, personnel, procurement, purchasing, property management, accounting and payroll systems) including the purchase, systems development and operating costs of such systems

    The WIA Final Rule will clarify that only the following Title IB entities will incur costs that are to be reported as administrative costs:

      a.  The State as the grant recipient;

      • The State Workforce Investment Board;

      • The Local Workforce Investment Board;

      • The local grant recipient - the local chief elected official(s) and the local government entity represented by that official;

      • A local grant subrecipient and/or fiscal agent designated by the chief elected official to assist in the administration of the grant funds [akin to a JTPA administrative entity]; and

      • The local one-stop operator.

    All costs of vendors and subrecipients, other than local grant subrecipients, are program costs with the single exception of awards to such vendors and subrecipients which are solely for the purpose of performing functions enumerated in Section 4 above. Thus, incidental administrative costs incurred by a contractor whose contract's intended purpose is to provide identifiable program services do not have to be identified, broken out from other costs incurred under the contract, and tracked against the administrative cost limitation. Costs incurred under contracts whose intended purpose is administrative have to be charged to the administrative cost category.

    This guidance pertains to all WIA Youth costs after April 1, 2000, and WIA Title IB costs for Adults and Dislocated Worker services posted after July 1, 2000.

  5. Action. This information should be immediately provided to appropriate staff of State and local entities, including all of the entities identified in item 4. Information, (see above), who will be responsible for the recording of costs incurred for the delivery of services under the Workforce Investment Act of 1998.

  6. Inquiries. Questions or comments on this guidance should be directed to the appropriate Regional Office.

  7. Attachment. Proposed language for the definition of administrative costs at 20 CFR 667.220 excerpted from the Final Rule for the Workforce Investment Act, of 1998, to be published in late July 2000.