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

CLASSIFICATION

JTPA/Welfare Reform

CORRESPONDENCE SYMBOL

TDCP

ISSUE DATE

July 23, 1997

RESCISSIONS

None

EXPIRATION DATE

Continuing

DIRECTIVE

:

TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 01-97

 

TO

:

STATE JTPA LIAISONS
STATE EMPLOYMENT SECURITY ADMINISTRATORS
STATE WORKER ADJUSTMENT LIAISONS
ONE-STOP CAREER CENTER SYSTEM LEADS

 

FROM

:

ROBERT S. KENYON
Acting Administrator
for Regional Management

 

SUBJECT

:

Impact of Welfare Reform on Employment and Training Activities

  1. Purpose. To provide guidance to the employment and training community regarding the Employment and Training Administration's (ETA's) role in implementing the provisions of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 and to encourage the employment and training community's full participation in this major initiative.

  2. References. 

    1. Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193).

    2. Job Training Partnership Act, as amended.

    3. Small Business Job Protection Act of 1996 (P.L. 104-188).

    4. Employment Service Program Letter (ESPL) No. 5-97 (dated November 25, 1996): "Work Opportunity Tax Credit Administrative and Quarterly Reporting Forms".

    5. Unemployment Insurance Program Letter (UIPL) No. 37-96 (dated September 25, 1996): "The Personal Responsibility and Work Opportunity Reconciliation Act of 1996".

    6. UIPL 37-96, Change 1 (dated July 21, 1997): "The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 - Deduction of Child Support Obligations from Unemployment Compensation through Legal Process".

    7. Training and Employment Guidance Letter No. 5-96 (dated February 7, 1997): "JTPA Allotments for Program Year (PY) and Calendar Year (CY) 1997; Wagner-Peyser Preliminary Planning Estimates for PY 1997; and Annual Program Emphasis."

  3. Overview. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 repealed Aid to Families with Dependent Children (AFDC), the Job Opportunities and Basic Skills (JOBS) program and Emergency Assistance Programs. Each State was required to begin operating a program for needy families funded under the Temporary Assistance for Needy Families (TANF) Block Grant no later than July 1, 1997.

    This legislation provides ETA and its grantees with new and expanded opportunities and challenges to ensure that welfare recipients receive training and employment services to help them make the transition to jobs. On an on-going basis, ETA can assist States and localities develop the systems they need to serve the needs of welfare recipients, share information about innovative and successful approaches, and help States and localities address problems raised in welfare reform implementation. We acknowledge the large degree of flexibility that PRWORA gives States to design their welfare systems, including the choice of systems to deliver work-related services.

    When viewed within the context of the broader employment and training system, the welfare reform effort can benefit from the system's experience in finding employment for the welfare population. JTPA's track record in placing welfare recipients in jobs is positive, and participant data show that local efforts have successfully integrated these individuals into the workforce. In addition, the employment and training programs available through the One-Stop Career Centers have considerable experience in finding employment for the welfare recipient population.

    While welfare recipients may be a specific customer segment, they should not be segregated in accessing or receiving services. Services, such as America's Job Bank and affiliated State Job Banks, and access to labor exchange and training opportunities should be as available to welfare recipients as they are to any other customer at One-Stop Career Centers, the Employment Service, Service Delivery Area (SDA) sites, and other points of service.

    Immediate job placement, or "Work First", is the central focus of the welfare reform legislation. The "Work First" approach stresses labor market participation, with welfare recipients moving into unsubsidized jobs as quickly as possible. In programs which emphasize "Work First", skills are generally acquired after job placement and may be developed on-the-job, rather than in a classroom setting. This approach, however, may not be suitable for welfare recipients who need additional information and guidance to decide their employment direction or who need basic skills. For such individuals, the "Work First" approach should include work coupled with training and related services to form a career path or ladder.

    The employment and training community has other important tools for promoting self-sufficiency. These include the apprenticeship and school-to-work programs, which link learning and earning, work-based contextual learning, training for women in non-traditional jobs, on-the-job training developed in partnership with the private sector, and external supports like child care, transportation, counseling and health care.

    Locally, the existing partnerships between the public and private sectors can make a significant contribution to increasing both the long and short-term employment opportunities for welfare recipients. It is through strengthening and expanding these partnerships that we will be able to move individuals from welfare to work. Local, business-led Private Industry Councils (PICs) or "employment councils" direct and oversee training and placement of low-income adults and youth, including welfare recipients and dislocated workers, participating in the JTPA program. They also play a significant role with States and localities engaged in building One-Stop Career Centers and School-to-Work systems.

    Even as we ask a great deal from the private sector, we also must supply them with tools and incentives to encourage the hiring of welfare recipients. The Work Opportunity Tax Credit (WOTC), administered by the State Employment Security Agencies, offers such an incentive. This program allows employers to reduce the federal income tax liability for their businesses (up to $2,100 per worker), if they hire individuals, including welfare recipients, from groups who consistently have the most difficulty in finding employment.

  4. Principles. ETA's key role in welfare reform implementation is to help States and localities integrate and coordinate systems to successfully move welfare recipients into unsubsidized employment so that they may become self-sufficient. These systems should bring together ETA's program resources, including JTPA, Job Corps (JC), One-Stop, the Employment Service (ES) and the Unemployment Insurance Service (UIS) with the welfare system.

    The following principles form the framework for ETA's involvement in the implementation of welfare reform:

  5. Role of JTPA Programs. As the primary provider of employment and training services to the disadvantaged, JTPA is in a unique position to make a significant contribution in the implementation of welfare reform. States and SDAs have the opportunity to expand and strengthen existing coordinated working relationships with the welfare agencies to provide training and services. Many States and SDAs already have good cooperative relationships with the agencies which administered the JOBS programs. Such relationships include referral and joint JTPA/JOBS participation as well as JTPA training contracts for JOBS participants. Where the States and SDAs do not have these established relationships, welfare reform provides the incentive and opportunity to build them.

    Over 40 percent of the total participants terminating from the Title II-A program are welfare recipients. (Statistics from PY 1994 show that 35 percent of the Title II-A participants received AFDC and another 8 percent received some other type of cash welfare.) In addition, about 31 percent of low-income youth who left the Title II-C program were welfare recipients or lived in families receiving welfare. These data suggest that many States and SDAs have identified welfare recipients as a target group for JTPA services. With the implementation of welfare reform and the greater pressure to move welfare recipients into unsubsidized employment, we anticipate that the welfare system will be looking to the JTPA program, especially Title II-A and the Title IV-A, Sections 401 and 402 programs, to provide more training and employment services to additional welfare recipients. In addition, the welfare system will also be focusing on job placements which will lead to self-sufficiency, such as those developed through the training programs for women in non-traditional jobs.

    It is important that State JTPA offices and SDAs help welfare agencies shape and then participate in the "work-related" portion of welfare reform. Where this process has not already begun, States and SDAs are encouraged to approach the welfare agencies to explore how they can assist them in their role of providing local training and employment services, including career assessment and counseling, better labor market information, job search assistance, job training, and placement services through emerging, integrated workforce development systems. Recognizing that States are in various stages of decision-making with respect to the implementation of welfare reform, State JTPA offices and SDAs need to be proactive.

    As they proceed in working with the welfare agencies to serve welfare recipients, States and SDAs should make sure that this support of welfare recipients does not drain the training system of its resources. While they should be supportive in addressing the needs of welfare recipients, States and SDAs should continue to provide other eligible individuals under JTPA, including dislocated workers, low-income non-welfare adults, unemployed individuals without dependents and UI claimants with their appropriate share of training and employment services.

  6. Role of State Employment Security Agencies (SESAs). Like the JTPA grantees, the State Employment Security Agencies (SESAs) are key players in the implementation of the new TANF block grants.

    1. Basic Wagner-Peyser Labor Exchange Services. The purpose of the public Employment Service (ES) system is to improve the functioning of the nation's labor market by bringing together individuals who are seeking employment and employers who are seeking workers. Within the group of low-income job seekers, many who seek basic labor exchange services may be receiving assistance under TANF. As with other efforts, States must assure that support for welfare recipients through the public labor exchange is balanced with the needs of other job seekers.

      The role of ES in serving welfare recipients is two-fold:

        1)  To assist welfare job seekers in finding employment and employers in filling job openings with qualified applicants, including welfare recipients. States should take necessary steps to insure that State ES programs consider the potential increase and needs of welfare customers in their State plans of service. Within the One-Stop service setting or local ES office, the State should ensure that the mediated and unmediated services are designed to adequately meet the placement and information requirements of welfare customers.

        2)  To coordinate with State and local welfare agencies. State ES programs should cooperate with appropriate State and local welfare agencies to achieve the goals of TANF.

      Such cooperation may result in adjustments to current operational plans to serve new welfare customers.

    2. Work Opportunity Tax Credit (WOTC) Program.  The Small Business Job Protection Act (P.L. 104-188) created the Work Opportunity Tax Credit program. This program replaces the Targeted Jobs Tax Credit (TJTC) program which had been in operation since 1978. WOTC is authorized through September 1997. Like its predecessor, the WOTC is designed to provide employers with a tax incentive to hire individuals with significant barriers to employment.

      The WOTC applies to new employees hired by private for profit employers after September 30, 1996, and before October 1, 1997, if they belong to one of seven target groups below and are employed for a minimum of 180 days or 400 hours (except for summer youth):

        - A member of a family that is receiving or recently received Aid to Families with Dependent Children (AFDC) or its successor program Temporary Assistance for Needy Families (TANF);

        - An 18-24 year-old member of a family that is receiving or recently received food stamps;

        - A 16-17 year-old Empowerment Zone o Enterprise Community resident hired between May 1 and September 15, 1997, as a Summer Youth Employee;

        - An 18-24 year-old resident ("High-Risk Youth") of one of the 105 federally designated urban or rural Empowerment Zones (EZ) or Enterprise Communities (EC);

        - A veteran who is a member of a family that is receiving or recently received AFDC or TANF or food stamps;

        - A disabled person who has completed, or is completing, rehabilitative services from a State or the Veterans Administration; and

        - An ex-felon who is a member of a low-income family.

      The SESAs are responsible for administration of the WOTC eligibility determination and certification provisions. While only SESAs are authorized to certify workers and determine employers as qualifying for the WOTC tax credit, they have the authority to delegate conditional certification of workers as a WOTC target group member (ETA Form 9062) to other agencies, e.g., the Job Corps, SDAs, State welfare agencies, and Senior Community Service Employment grantees.

      Specific guidance and instructions on the administrative and quarterly reporting forms for WOTC are contained in ESPL No. 5-97, dated November 25, 1996, which is attached for your reference.

    3. Role of the Unemployment Compensation (UC) Program.  The enactment of PRWORA made several amendments which affect the UC program. These changes:

        - require a New Hire Directory to be maintained at the National level and the State level by a State agency, which may be the UC agency;

        - require that certain UC information be provided to State/National New Hire Directories;

        - require that States collect quarterly wage reports from State and local governmental entities and "labor organizations";

        - authorize State and local child support enforcement agencies to disclose UC data to an agent;

        - require that State and local child supportagencies obtain access to UC information for establishing paternity and other purposes;

        - affect the eligibility of aliens; and

        - address the intercept of food stamp over-issuances.

      Specific information and guidance to the States concerning these amendments is contained in UIPL No. 37-96 and UIPL No. 37-96, Change 1 which are attached for your reference.

      States are in the process of determining what statutory amendments, if any, to State laws are needed to meet the requirements of PRWORA.

  7. Action Required. 

    1. State JTPA and Worker Adjustment Liaisons are requested to provide the contents of this TEGL to their SDAs/SSAs and to work with them to take advantage of opportunities to serve welfare recipients in their communities.

    2. State Employment Security Administrators and One-Stop Career Center Leads are requested to provide the contents of this TEGL to their local offices and centers for necessary action.

  8. Inquiries. Questions should be directed to your Regional Office.

  9. Attachments. 

    1. Employment Service Program Letter No. 5-97

    2. Unemployment Insurance Program Letter No. 37-96

    3. Unemployment Insurance Program Letter No. 37-96, Change 1