Background: Since 1966, the Employment and Training Administration (ETA) has administered, through contract, the Federal Bonding Program. Initiated as a small demonstration project, this innovative activity delivers a unique helping service that is not duplicated by any other program in the U.S. to secure the job placement of ex-offenders and other high-risk job applicants. The FBP functions as a job placement tool by providing employers with a special incentive to hire the hardest-to-place jobseekers. Program Redirection: This year, ETA is undertaking a major redirection of the FBP to a Federal-State partnership. This decision is based on several considerations: o The FBP has been administered for many years as a demonstration effort at the national level. It has a proven track record and needs to move forward to sustainability; o The declining availability of national JTPA program resources compels ETA to undertake some very stringent cost-cutting measures and to manage available funds more creatively; o The administration of the FBP as a Federal-State partnership will allow ETA to continue to maintain a Federal presence and retain the Federal character of the program while, at the same time, permitting States to play an active role in determining how this very worthwhile activity can best fit into their overall workforce development plans; and o The redirection of the FBP from a demonstration initiative to a Federal-State partnership will eliminate the program's reliance on a small national contract and will allow States and localities to tie fidelity bonding services more closely into allied efforts to assist the hardest-to-place jobseekers. Funding: During Program Year (PY) 1997, ETA utilized resources from the previous program year to support the FBP at a slightly expanded level to aid in the move to the Federal-State partnership. ETA is providing funding at a fixed reduced level to the FBP in PY 1998. Under the existing contractual arrangement, a limited bond allocation has been issued to each of the States to assure that a small Federally-financed floor is available to provide continuity in the program. States can use their own resources to supplement Federal funding to provide fidelity bonding to ex-offenders and other hard-to-place applicants. The project staff has been engaging in activities designed to facilitate the transition to partial State and local funding for bond issuance. Instructions as to how to proceed were issued to State Employment Service Directors and State Bonding Coordinators. Action Required: States are encouraged to carefully examine resources that might be available for this purpose.

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References: a. Job Training Partnership Act (JTPA) 29 USC 1501, et seq, as amended. b. JTPA Regulations, 20 CFR 626-629 and 631, published in the Federal Register on September 2, 1994. c. Training and Employment Guidance Letter (TEGL) No. 12-97 dated June 30, 1998. d. TEGL No. 2-95, dated August 10, 1995. e. Training and Employment Information Notice (TEIN) No. 26-96, dated April 22, 1997. f. TEIN No. 5-93, Change 1, dated June 23, 1994, and Change 2, dated January 24, 1997. Background: This Guidance Letter provides additional information needed to implement the Secretary's recommended adjustment methodology for deriving performance standards specific to Title II service delivery areas (SDAs) and Title III substate areas (SSAs). Sec. 106 of JTPA, as amended, provides that each Governor shall prescribe, within parameters established by the Secretary, adjustments to national performance standards to take into account local economic factors and the characteristics of the population to be served, demonstrated difficulties in serving the population, and the types of services to be provided. The PY 1998 and 1999 national departure points for governors to use in setting SDA/SSA-specific performance standards for the Secretary's six core measures, the Title III measures, and the Section 204(d) measures were transmitted in TEGL 12-97, dated June 30, 1998. This Guidance Letter provides the additional information and structured worksheets to implement the Secretary's model adjustments for local area performance standards. Many States have requested and received formal waivers to established JTPA regulations granted under the FY 1997 and 1998 Department of Labor Appropriations Acts. These waivers may take precedence over certain performance policy provisions. Specifically, States which have been authorized to use wage record information from the Unemployment Insurance program in lieu of follow-up surveys to benchmark post-termination program outcomes will not be using the attached worksheets to compute performance standards for follow-up measures. Worksheets for wage record-based measures will be transmitted separately. The performance indicators and adjustment models for PYs 1998 and 1999 provided here were reviewed by a Performance Standards Work Group convened in March 1998. Current performance policy, including departure points for national standards, reflects the recommendations of this group. Changes from PYs 1996 and 1997: The following policy innovations apply to performance standards for Program Years 1998 and 1999: States are encouraged to reflect the JTPA long-term goals established pursuant to the Government Performance and Results Act (GPRA) in their performance incentive and sanctions policies. Performance incentive awards should take into account factors such as sustained high performance, innovations, and performance improvement. States should differentiate between minimally acceptable performance and performance worthy of reward. Youth Positive Termination rate may be used instead of both the Youth Entered Employment Rate and the Youth Employability Enhancement Rate. Worksheets are provided to calculate each of these measures. Worksheets are provided to calculate three optional Title III measures in addition to the Entered Employment Rate; the optional measures are: Follow-up Employment Rate, Average Wage Replacement Rate at Termination, and Average Wage Replacement Rate at Follow-up. Use of these measures is also consistent with the JTPA GPRA long-term goals. Four new adult post-program measures using wage record data collected by the Unemployment Insurance program have been introduced. Some States have received authorization to use this information in place of follow-up data collected through telephone surveys. The methodology to use measures based on wage record information is not addressed in this Guidance Letter. Rationale for Adjustment Worksheets: The Secretary's optional adjustment methodology provides governors with a systematic approach for setting performance standards for individual SDAs and SSAs which conforms to the recommended parameters. This adjustment approach is periodically revised to reflect recent program experience and updated economic data. The optional adjustment models determine the relationship between an outcome (the followup employment rate) and certain explanatory factors such as client characteristics and economic conditions. This analysis estimates how much outcomes will vary among service delivery areas (SDAs) with variations in these local factors and will adjust local-level performance standards accordingly. These adjustments are intended to "level the playing field" so that service delivery organizations serving hard-to-serve individuals, or operating in areas with difficult economic conditions, are evaluated with reference to these factors. How the Worksheets Were Developed: The worksheets were set up using multiple regression analysis, a statistical technique that estimates the influence of each local factor on a performance measure while accounting for the influence of other factors. This method estimates the factor weights included on the worksheets. The weights represent the simultaneous influences of various participant characteristics and local economic conditions on local-level program performance. The models shown in the worksheets were reviewed by the Performance Standards Work Group composed of representatives from State and local JTPA programs, federal stakeholders, and public interest groups. When deciding which factors to include in the adjustment models, the following considerations were taken into account: The level of statistical significance associated with a given variable within the context of the model; Inclusion of factors to account for the proportion of hard-to-serve participants in a given local program; Face validity of adjustment factors so that the model makes intuitive sense to program operators; Consistency among models which address similar outcomes; and Consistency of the models over time. Use of the Worksheets: The performance standards worksheets are included in Appendix A along with information on the use of the worksheets. General instructions for completing performance standards worksheets can be found in the Guide to JTPA Performance Standards for Program Years 1996 and 1997, Appendix A, Attachment 1, transmitted by TEIN 26-96. (The revised Guide for PYs 1998 and 1999 will be distributed in the Fall of 1998.) The information with the worksheets, "Computation of Local Factors for PY 98/99 Adjustment Models", provides some advance information about proposed changes to the Standardized Program Information Report (SPIR) instructions that may affect calculation of local factors. The revised SPIR instructions are currently under review at the Office of Management and Budget, and will be disseminated to the field as soon as approved. Economic Factors: Economic factors to be used with the worksheets are included in Appendix B. Action Required: States are to distribute this Guidance Letter Change to all officials within the State who need such information to implement performance standards policies and requirements for PYs 1998 and 1999. It is especially critical that States, State Councils, Private Industry Councils and local-level operational staff are familiar with the policy innovations and options pertaining to the establishment and implementation of performance standards addressed in this issuance.

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