TEGL 06-23 Change 2.pdf

ETA Advisory File Text

EMPLOYMENT AND TRAINING ADMINISTRATION ADVISORY SYSTEM U.S. DEPARTMENT OF LABOR Washington D.C. 20210 CLASSIFICATION WOTC CORRESPONDENCE SYMBOL OWI DNPTTA DATE May 9 2024 RESCISSIONS None EXPIRATION DATE Continuing ADVISORY TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 06-23 CHANGE 2 TO STATE WORKFORCE AGENCIES STATE WORKFORCE ADMINISTRATORS WORK OPPORTUNITY TAX CREDIT COORDINATORS FROM JOS JAVIER RODR GUEZ Assistant Secretary SUBJECT Change 2 to Training and Employment Guidance Letter No. 06-23 Work Opportunity Tax Credit WOTC Initial Funding Allotments for Fiscal Year 2024 1.Purpose. This Change 2 to Training and Employment Guidance Letter TEGL No. 06-23 conveys the remaining balance for Fiscal Year FY 2024 WOTC funding allotments and explains application requirements for State Workforce Agencies SWAs based on appropriated funding. Additionally this Change 2 TEGL announces 13 states selected to receive additional FY 2024 backlog award funding and provides instructions to those states on how to proceed. The rest of TEGL No. 06-23 remains the same. 2.Action Requested. Grantees must meet the application requirements detailed in section 4 within 30 calendar days from the date of this TEGL issuance. 3. Summary and Background. a.Summary On November 14 2023 the Employment and Training Administration ETA issued TEGL No. 06-23 which announced the initial FY 2024 WOTC funding allotments of 2 423 384 under the Continuing Appropriations Act 2024 and Other Extensions Act Pub. L. 118-15 . The continuing resolution CR allowed for incremental grant funding for states administration of the WOTC pro-rated based on the CR s end date of November 17 2023. On January 5 2024 ETA issued a Change 1 to TEGL 06-23 which announced an additional 3 889 243 available for FY 2024 WOTC funding allotments under a second continuing resolution CR2 through February 2 2024 under the Further Continuing Appropriations and Other Extensions Act 2024 Pub. L. 118-22 . On January 19 2024 the President signed the Further Additional Continuing Appropriations and Other Extensions Act 2024 Pub. L. 118-35 providing a third CR CR3 through March 8 2024 and providing additional WOTC funding in the 2 amount of 1 767 166. On March 1 2024 the Extension of Continuing Appropriations and Other Matters Act 2024 became law Pub. L. 118-40 providing a fourth CR CR4 through March 22 2024 and additional WOTC funding in the amount of 707 976. On March 23 2024 the Further Consolidated Appropriations Act 2024 Pub. L. 118-47 was signed into law authorizing the full-year FY 2024 appropriations. ETA has available grant funds totaling 18 485 000 for normal FY 2024 operations. This Change 2 TEGL announces the full-year appropriation and availability of the remaining balance to the states in the amount of 12 172 373 which includes 2 475 142 in combined CR3 and CR4 funding. The state allotment amounts are listed in Attachment I Work Opportunity Tax Credit Fiscal Year 2024 State Allotments and Balance after Dissemination to States under Continuing Resolution 1 through 2. ETA requests that SWAs submit applications for funding as allotted in Attachment I to this TEGL. The Further Consolidated Appropriations Act 2024 authorized an additional 2 500 000 in funding to support states efforts in adopting and or modernizing information technology for processing certification requests and reduce WOTC processing backlogs. 1 This Change 2 TEGL announces the 13 states selected to receive a FY 2024 backlog award and their respective award amounts as detailed in Section 4. 1 See also S. Rep. No. 118-84 at 19 2023 https www.congress.gov 118 crpt srpt84 CRPT-118srpt84.pdf. b. Background The WOT C is set forth under section 51 of the Internal Revenue Code of 1986 as amended 26 U.S.C. 51 and is effective until December 31 2025 under the Consolidated Appropriations Act 2021 Pub. L. 116-260 Division EE Title 1 Section 113. The U.S. Department of the Treasury through the Internal Revenue Service IRS administers all tax-related provisions and requirements of the tax credit. The U.S. Department of Labor through ETA awards grants to states for administration of WOTC. 4. Details. States must enter their state-spe cific allotment amount from the Balance to States column provided in Attachment I on their SF-424 Form Application for Federal Assistance OMB Control No. 4040-004 as their official request for remaining FY 2024 funding. All states must submit an electronically signed copy of the SF-424 through Grants.gov. States selected for FY 2024 WOTC Backlog Award funding must enter the state-specific award amount listed in Section 4 of this TEGL on a separate SF-424 Form. Allotment Formula. ETA revised the administra tive formula used to calculate states annual allotments for normal WOTC operations effective for FY 2024 allotments. The revised formula changes are detailed below and include an inflation-adjusted increase to minimum state funding allotments as well as revised metrics used in the formula methodology. Under the revised formula state allotments are based on each state s relative share of total certifications issued from the most recently completed fiscal year each state s relative share of total denials issued for the most recently completed fiscal year and each state s relative share of the Civilian Labor Force averages for the preceding fiscal year. The 3 formula will no longer consider each state s relative share of adult recipients of Temporary Assistance for Needy Families TANF for the 12-month period from the second preceding fiscal year. The revised formula was first published in the Federal Register in February 2023 88 FR 10540 . While under a CR for FY 2024 appropriations incremental allotments to states were based on the prior fiscal year s formula and allotment percentage. ETA determined CR1 and CR2 WOTC state allotment amounts for FY 2024 by calculating each state s relative share of full- year FY 2023 funding and multiplying each state s relative share by the total FY 2024 CR prorated funding amounts through November 17 2023 and February 2 2024 respectively. Once Congress passed the full-year FY 2024 appropriation ETA determined FY 2024 state allotments for normal WOTC operations balance after dissemination to states under CR1 and CR2 according to the following methodology After allocating 36 000 to the U.S. Virgin Islands ETA distributes the remaining funds to the SWAs by administrative formula with a 119 000 minimum allotment and a 95 percent stop-loss 120 percent stop-gain from the previous year allotment percentage for all states. Note In an effort to phase in the increased minimum allotment which also impacts other states allotments ETA used the stop-gain provision to gradually increase the minimum funding allotment amount to reach the 119 000 minimum by FY 2026. The minimum state allotment increased to 79 131 in FY 2024 which represents a 20 percent share increase from the FY 2023 minimum of 66 000 and will continue to increase by 20 percent each fiscal year to reach the 119 000 minimum by FY 2026. ETA calculates the administrative formula as follows a. 40 percent is based on each state s relative share of total WOTC certifications issued from October 1 2022 through September 30 2023 b. 40 percent is bas ed on each state s relative share of total WOTC denials issued from October 1 2022 through September 30 2023 and c. 20 percent is based on each state s relative share of Civilian Labor Force averages for the 12-month period from October 1 2022 through September 30 2023. Applicatio n Requirements for FY 2024 Funding. ETA requires grantees to submit an electronic ally signed copy of the SF-424 Form Application for Federal Assistance OMB Control No. 4040-0004 as their official request for funding within 30 calendar days from the issuance date of this TEGL at https www.grants.gov. For the remaining balances funding the opportunity number is ETA-WOTC-TEGL-06-23-C2 and for backlog awards funding the opportunity number is ETA-WOTC-TEGL-06-23-C2-BACKLOG. The official ele ctronically signed SF-424 Form should be marked as a Continuation application for item 2 and must reflect the state balance amount listed in Attachment I as the state s requested estimated funding total in item 18. Grantees must enter the Catalog of Federal Domestic Assistance Number 17.271 for item 11 and the grantee s 12-character 4 Unique Entity Identifier UEI number should be listed for item 8c. Each applicant must have a UEI number available and it must be registered in the System for Award Management at SAM.gov before submitting an SF-424 application. Grantees previously indicated the estimated amount of Indirect Costs to be claimed by the recipient for FY 2024 expenditures under the SF-424 Form submitted for the CR1 funding distribution announced in TEGL No. 06-23. Therefore grantees should NOT resubmit this information again in item 15 Descriptive Title of Applicant s Project as part of this SF- 424 application request for remaining balances funding. All States must submit an electronically signed copy of the SF-424 through Grants.gov. To submit the required documents applicants must follow the Apply for Grants link on Grants.gov and download the links for the grant application package. For this grant opportunity applicants should not follow the Find Grants link as this is not a competitive funding opportunity. If applicants encounter a problem with Grants.gov and do not find an answer in any of the other available resources they should call 1-800-518-4726 or 1-606- 545-5035 to speak to a Customer Support Representative or send an email to support grants.gov. Award Descriptions. As part of a Federal government-wide effort to describe grant activi ties consistently and accurately ETA uses standard grant award descriptions. States may see the following text in the grant awards or online descriptions of WOTC grants Purpo se The purpose of this grant is to allow SWAs to administer the WOTC program per ETA guidance and provisions of the IRS Code of 1986 Section 51 as amended. Law designates the SWAs as the only agencies that can issue a Certification 26 U.S.C. 51 d 12 . The statute refers to SWAs as state employment security agencies established in accordance with the Wagner-Peyser Act 29 U.S.C. 49 et seq. Activities to be performed SWAs must use funds to implement the requirements set forth in the WOTC Statement of Work including to Designate a state coordinator who oversees the administration of WOTC for each state grant Determine eligibility of individuals as members of targeted groups on a timely basis and issue employer certifications denials or notices of invalidation for tax credits on a timely basis and in accordance with the policies and procedures set forth by ETA and Establish and maintain appropriate forms quality review processes record keeping and reporting capability related to the orderly management of WOTC certification requests. Expected Outcomes For WOTC grants SWAs will issue determinations certifications or denials for employers certification requests which facilitate tax credits determined by the U.S. Department of the Treasury. SWAs will increase efficiency in processing employers certification requests and develop plans that include an estimated timeline to eliminate existing backlogs of certification requests. Intended Beneficiaries Job seekers who have access to a higher number of employment opportunities and employers who seek to increase hiring of qualified job applicants. Other beneficiaries include state and local partner agencies in the American Job Center network that coordinate efforts to promote WOTC to 5 employers job seekers and other Workforce Innovation and Opportunity Act WIOA partners. Subrecipient Activities SWAs as WOTC grant recipients do not typically subaward funds. States that wish to subaward funds should seek approval from their ETA Grant Officer. General Administration. With their FY 2024 grant award SWAs are responsible for conducting the WOTC activities outlined in the WOTC Statement of Work. See Attachment II of TEGL 06-23 Work Opportunity Tax Credit WOTC Initial Funding Allotments for Fiscal Year 2024 available here https www.dol.gov agencies eta advisories tegl-06-23 . FY 2024 WOTC Backlog Awards. ETA intends to distribute WOTC backlog awards to 13 states w ith the most critical needs for adopting or modernizing information technology for processing of certification requests and or assistance in alleviating processing backlogs. To inform the selection process ETA analyzed the following data a. FY 2023 ba ckl og total and percentage ratio it represents of the state s total workload b. FY 2023 and FY 2022 financial reports and c. Qualitative data based on states and or regional coordinators narratives which explain how the states would use this award to make improvements to their existing systems or procedures and reduce their backlog and or how states have used prior backlog awards to make improvements to their systems reduce processing backlog. ETA carefully reviewed these three sources of data to gain an understanding of the states needs and any contributing factors that led to the states existing backlog. Note ETA did not consider states that received backlog awards in FY 2023 nor FY 2022 backlog award grantees who received a no-cost period of performance extension to their grant project due to the overlapping modified grant end date 09 30 2024 . ETA analyzed FY 2022 and FY 2023 financial reports to determine a state s ability to use additional funding and did not select states with extraordinarily low expenditure rates to receive additional backlog funds. Finally ETA reviewed the narratives that states submitted which confirmed states backlogs and information technology modernization needs. The selected states expressed interest in additional backlog funding to help them attain staff support enhance replace their current partially automated systems and or develop automated systems to more efficiently process certification requests. Based on these factors ETA identified 13 states with the most critical need to address system modernization issues and or existing backlog to receive additional funding. Based on the availability of 2 500 000 in funds ETA established three funding tiers to distribute these awards Tier 1 100 000 Tier 2 200 000 Tier 3 300 000 6 The selected states and corresponding funding amounts for these awards are as follows 100 000 200 000 300 000 Massachusetts Arizona Georgia Maryland Arkansas New Mexico South Carolina Louisiana Oklahoma U.S. Virgin Islands Michigan South Dakota Utah Note If a state fails to submit the required application materials timely or decides to refuse the award ETA reserves the right to either redistribute such funds to the other selected states and or consider additional state s for an award as appropriate. Reporting Requirements. a Quarterly Financial Report SWAs must report fiscal expenditures quarterly using ETA Form 9130. Financial reports are due no later than 45 days following the end of each quarter. Timely submission of these reports is important to ensure proper accounting of funds. b Quarterly Performance Report SWAs must use the web-based Enterprise Business Support System EBSS Tax Credit Reporting System to report quarterly activities and outcomes using ETA Form 9058. Performance reports are due no later than 45 days following the end of each quarter. Timely submission of these reports is important for administration purposes. 5. Inquiries. Please direct inquiries to the appropriate Regional WOTC Coordinator listed on th e WOTC website at https www.dol.gov agencies eta wotc contact regional-offi ces. 6. References. Section 51 of the Internal Revenue Code of 1986 as amended 26 U.S.C. 51 https uscode.house.gov view.xhtml path prelim title26 subtitleA chapter1 subchapt erA part4 subpartF edition prelim Chapter 4B of Title 29 of the United States Code Labor https uscode.house.gov view.xhtml path prelim title29 chapter4B edition prelim Pub. L. 116-260 Consolidated Appropriations Act 2021 which authorizes WOTC https www.congress.gov 116 plaws publ260 PLAW-116publ260.pdf Pub. L. 118-15 Continuing Appropriations Act 2024 and Other Extensions Act https www.congress.gov 118 plaws publ15 PLAW-118publ15.pdf Pub. L. 118-22 Further Continuing Appropriations and Other Extensions Act 2024 https www.congress.gov 118 plaws publ22 PLAW-118publ22.pdf Pub. L. 118-35 Further Additional Continuing Appropriations and Other Extensions Act 2024 https www.congress.gov 118 plaws publ35 PLAW-118publ35.pdf Pub. L. 118-40 Extension of Continuing Appropriations and Other Matters Act 2024 https www.congress.gov 118 plaws publ40 PLAW-118publ40.pdf 7 Pub. L. 118-47 Further Consolidated Appropriations Act 2024 https www.congress.gov 118 bills hr2882 BILLS-118hr2882enr.pdf Senate Report 118-84 https www.congress.gov 118 crpt srpt84 CRPT-118srpt84.pdf Training and Employment Guidance Letter No. 06-23 Work Opportunity Tax Credit WOTC Initial Funding Allotments for Fiscal Year 2024 and Attachments https www.dol.gov agencies eta advisories tegl-06-23 and Federal Register 88 FR 10540 Work Opportunity Tax Credit Request for Comments Regarding Proposed Modifications to Procedural Guidance and Administrative Formula. 7. Attachment s . Attachment I Work Opportunity Tax Credit Fiscal Year 2024 State Allotments and Balance after Dissemination to States under Continuing Resolution CR 1 through 2 Attachment I U. S. Department of Labor Employment and Training Administration Work Opportunity T ax Credit FY 2024 State Allotments and Balance after Dissemination to States under Continuing Resolutions CR 1 through 2 State FY 2024 Full Year Allotment Amount Obligated under CR 1 10 1 23 through 11 17 23 Obligated under CR 2 11 18 23 through 2 2 24 Balance to States T otal 18 485 000 2 423 384 3 889 243 12 172 373 Alabama 284 832 36 168 58 046 190 618 Alaska 79 131 8 653 13 886 56 592 Arizona 326 852 45 145 72 452 209 255 Arkansas 155 074 16 956 27 214 110 904 California 2 338 208 322 953 518 300 1 496 955 Colorado 284 172 39 250 62 991 181 931 Connecticut 161 380 22 290 35 772 103 318 Delaware 97 077 10 615 17 036 69 426 District of Columbia 79 131 8 653 13 886 56 592 Florida 945 515 130 594 209 588 605 333 Georgia 483 737 63 177 101 392 319 168 Hawaii 100 002 10 935 17 548 71 519 Idaho 89 620 9 799 15 727 64 094 Illinois 693 500 92 574 148 570 452 356 Indiana 259 363 35 823 57 492 166 048 Iowa 207 657 28 682 46 030 132 945 Kansas 139 438 19 259 30 909 89 270 Kentucky 335 870 46 390 74 451 215 029 Louisiana 294 826 37 757 60 596 196 473 Maine 79 131 8 653 13 886 56 592 Maryland 378 442 52 270 83 888 242 284 Massachusetts 361 166 49 884 80 058 231 224 Michigan 545 425 75 334 120 902 349 189 Minnesota 273 378 37 759 60 598 175 021 Mississippi 196 850 27 189 43 635 126 026 Missouri 359 378 49 637 79 662 230 079 Montana 79 131 8 653 13 886 56 592 Nebraska 126 596 17 485 28 062 81 049 Nevada 162 766 21 806 34 997 105 963 New Hampshire 79 131 8 653 13 886 56 592 New Jersey 354 620 42 846 68 762 243 012 New Mexico 161 240 22 270 35 742 103 228 New York 1 189 950 164 355 263 771 761 824 North Carolina 522 119 66 967 107 475 347 677 North Dakota 79 131 8 653 13 886 56 592 Ohio 825 339 94 433 151 553 579 353 Oklahoma 247 091 34 128 54 772 158 191 Oregon 247 227 34 147 54 802 158 278 Pennsylvania 674 490 93 160 149 512 431 818 Puerto Rico 97 738 10 687 17 152 69 899 Rhode Island 85 699 9 371 15 039 61 289 South Carolina 267 444 32 836 52 699 181 909 South Dakota 79 131 8 653 13 886 56 592 T ennessee 620 535 85 708 137 551 397 276 T exas 1 507 945 171 750 275 639 1 060 556 Utah 119 000 14 219 22 820 81 961 Vermont 79 131 8 653 13 886 56 592 Virginia 392 959 54 275 87 106 251 578 Washington 394 776 54 526 87 509 252 741 West Virginia 119 000 15 518 24 904 78 578 Wisconsin 308 525 41 958 67 337 199 230 Wyoming 79 131 8 653 13 886 56 592 State T otal 18 449 000 2 420 762 3 885 035 12 143 203 Virgin Islands 36 000 2 622 4 208 29 170 I - 1