Notice2021-22704
Notice Announcing the Methodology To Distribute Outcome Payments to States for the Unemployment Insurance (UI) Reemployment Services and Eligibility Assessments (RESEA) Program in Accordance With Title III, Section 306(f)(2) of the Social Security Act (SSA)
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Published
October 19, 2021
Issuing agencies
Labor DepartmentEmployment and Training Administration
Abstract
The Department is announcing the final methodology to distribute RESEA outcome payments to states each fiscal year (FY) after FY 2020 as required by the SSA. On May 7, 2020, ETA published a notice in the Federal Register requesting public comment concerning the proposed methodology to distribute RESEA outcome payments to states each fiscal year (FY) after FY 2020. The notice presented a description of the proposed methodology and public comments were requested. The comment period closed on June 8, 2020. This notice summarizes and responds to the comments received and publishes the final allocation formula that will be used for FY 2021.
Full Text
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<title>Federal Register, Volume 86 Issue 199 (Tuesday, October 19, 2021)</title>
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[Federal Register Volume 86, Number 199 (Tuesday, October 19, 2021)]
[Notices]
[Pages 57856-57859]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-22704]
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DEPARTMENT OF LABOR
Employment and Training Administration
Notice Announcing the Methodology To Distribute Outcome Payments
to States for the Unemployment Insurance (UI) Reemployment Services and
Eligibility Assessments (RESEA) Program in Accordance With Title III,
Section 306(f)(2) of the Social Security Act (SSA)
AGENCY: Employment and Training Administration (ETA), Department of
Labor.
ACTION: Announcement of the methodology to distribute outcome payments
to States for the UI RESEA program for states meeting or exceeding
program goals.
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SUMMARY: The Department is announcing the final methodology to
distribute RESEA outcome payments to states each fiscal year (FY) after
FY 2020 as required by the SSA. On May 7, 2020, ETA published a notice
in the Federal Register requesting public comment concerning the
proposed methodology to distribute RESEA outcome payments to states
each fiscal year (FY) after FY 2020. The notice presented a description
of the proposed methodology and public comments were requested. The
comment period closed on June 8, 2020. This notice summarizes and
responds to the comments received and publishes the final allocation
formula that will be used for FY 2021.
DATES: The RESEA outcome payments distribution methodology will be used
for FY 2021 and will be based on FY 2020 RESEA program performance.
ADDRESSES: Questions about this notice can be submitted to the U.S.
Department of Labor, Employment and Training Administration, Office of
Unemployment Insurance, 200 Constitution Avenue NW, Room S-4524,
Washington, DC 20210, Attention: Lawrence Burns, or by email at <a href="/cdn-cgi/l/email-protection#ca8e8586e78f9e8be79f83e78c98848aaea5a6e4ada5bc"><span class="__cf_email__" data-cfemail="90d4dfdcbdd5c4d1bdc5d9bdd6c2ded0f4fffcbef7ffe6">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Lawrence Burns, Division of
Legislation, Office of Unemployment Insurance, at 202 693-3141 (this is
not a toll-free number), TTY 1-877-889-5627 (this is not a toll-free
number), or by email at <a href="/cdn-cgi/l/email-protection#e7a592958994c9ab86909582898482a783888bc9808891"><span class="__cf_email__" data-cfemail="5c1e292e322f72103d2b2e39323f391c383330723b332a">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Introduction
The Federal-State UI program is a required partner in the
comprehensive, integrated workforce system. See Workforce Innovation
and Opportunity Investment Act (WIOA) section 121(b)(1)(B)(xi) (29
U.S.C. 3151(b)(1)(B)(xi). Individuals who have lost employment through
no fault of their own and have earned sufficient wage credits, may
receive unemployment compensation (UC) if they meet initial and
continuing eligibility requirements. Beginning in 2005, the Department
and participating state workforce agencies began addressing the
individual reemployment needs of UC claimants and working to prevent
and detect UC improper payments through the voluntary UI Reemployment
and Eligibility Assessment (REA) program. In FY 2015, the voluntary
Reemployment Services and Eligibility Assessment (RESEA) program
replaced the REA program.
The Bipartisan Budget Act of 2018 (Pub. L. 115-123) (BBA), enacted
on February 9, 2018, amended the SSA to create a permanent
authorization for the RESEA program. A total of 49 states and
jurisdictions operated a RESEA program in FY 2020. The primary goals
for the RESEA program are: To improve employment outcomes for
individuals that receive unemployment compensation and to reduce
average duration of receipt of UC through employment; to strengthen
program integrity and reduce improper payments of UC by states through
the detection and prevention of such payments to individuals who are
not eligible for such compensation; to promote alignment with WIOA's
broad vision of increased program integration and service delivery for
job seekers, including claimants for UC; and to establish RESEAs as an
entry point into other workforce system partner programs for
individuals receiving UC.
II. Background
The RESEA provisions are contained in Section 306 of the Social
Security Act (SSA) (42 U.S.C. 506). In addition to program
requirements, Section 306, SSA, contains provisions for the funding of
the RESEA program. The law specifies three uses for the funding and
designates the proportion of annual appropriations to be assigned to
these uses: (1) Base funding for states to operate the RESEA program
(89 percent for fiscal years 2021 through 2026, and 84 percent for
fiscal years after 2026); (2) outcome payments designed to reward
states meeting or exceeding certain criteria (10 percent for fiscal
years 2021 through 2026, and 15 percent for fiscal years after 2026);
and (3) up to one percent for the Secretary of Labor to conduct
research and provide technical assistance to states. Additionally, the
law requires the Department to develop a methodology to allocate and
distribute base funding and outcome payments to states beginning in FY
2021. On August 8, 2019 the Department published a notice announcing
the methodology for distribution of base funding at 84 FR 39018.
Section 306(f)(2)(A), SSA, requires ETA to make ``outcome
payments'' to states that meet or exceed the outcome goals for reducing
the average duration of receipt of UC by improving employment outcomes.
The law specifically states:
IN GENERAL.--Of the amounts made available for grants under this
section for each fiscal year after 2020, the Secretary shall reserve
a percentage equal to the outcome reservation percentage for such
fiscal year for outcome payments to increase the amount otherwise
awarded to a State [for base funding under paragraph (f)(1)]. Such
outcome payments shall be paid to States conducting reemployment
services and eligibility assessments under this section that, during
the previous fiscal year, met or exceeded the outcome goals provided
in subsection (b)(1) related to reducing the average duration of
receipt of unemployment compensation by improving employment
outcomes.
As described further in Section IV, ETA will be using several data
sources to identify states eligible for RESEA outcome payments. These
data sources include the ETA 5159 ``Claims and Payment Activities''
Report (OMB No. 1205-0010, expires April 30, 2022), which will be used
to determine changes in UC duration, and RESEA data reported by the
Wagner-Peyser Act-funded Employment Service program (ES program). The
Wagner-Peyser data is transmitted to ETA via the Workforce Integrated
Performance System (WIPS), and the specific data elements and reporting
format are specified by the Participant Individual Record Layout
(PIRL), (ETA Form 9172 (OMB No. 1205-0521, expires June 30, 2024)).
RESEA-specific data reported under Wagner-Peyser Employment Service
reports will be used to identify states with improved employment
outcome for RESEA participants.
[[Page 57857]]
III. Response to Public Comments
ETA received a total of six comments from four commenters
concerning the RESEA outcome payment distribution methodology. These
comments include: Three comments expressing concerns regarding the
unknown impact of the COVID-19 pandemic on RESEA program performance
and requesting that ETA either delay implementation of RESEA outcome
payments or develop a temporary alternative methodology; one comment
expressing concerns about ensuring that states have sufficient time to
prepare reporting and other process changes that may be necessary to
implement performance outcome payments; one comment requesting ETA
consider excluding exhaustion rates in its proposed regression formula
that will be used to determine RESEA targets because variations in
states' UI adjudication processes may impact performance calculations;
and one comment requesting that ETA consider assessing UI duration
using RESEA participant data only. The following is a summary of these
comments and ETA's responses.
A. Delayed Implementation or Alternative Allocation Methodology
Three commenters expressed general concern regarding implementation
of performance based outcome payments during a time when the total
impact of the COVID-19 pandemic on RESEA program performance is
unknown. One of the commenters requested ETA to provide broad
considerations to states negatively impacted by COVID-19 pandemic. Two
commenters recommended that ETA delay implementation of performance
based payments or consider alternatives such as allocating outcome
payments across all states or modifying the award methodology to expand
potential eligibility to more states.
ETA Response
As described in Section II above, the timeline for implementing
performance based outcome payments is established in the SSA. ETA does
not have authority to delay implementation of RESEA outcome payments.
ETA is using a modified implementation strategy as discussed more fully
below. This modified strategy includes a transition period that
leverages RESEA data already collected by the ES program and previously
negotiated performance targets for the ES program to inform outcome
payments. ETA will continue to use available RESEA-subset information
from the ES program data to build regression models based solely on
RESEA data that take into account state-specific variables from other
UI performance reports as applicable. These RESEA regression models
will be used to set RESEA specific targets for future outcome payments.
B. Ensuring Sufficient Time for State Reporting and Program
Modifications
One commenter indicated that states will need adequate time to
prepare for the reporting and process changes to accurately report if
the Reemployment rate in the 2nd quarter after program exit targets
were met or exceeded.
ETA Response
ETA is using this notice to provide final notification of the
outcome payment methodology. As described further in Section IV, the
final outcome payment methodology uses data that is already being
collected and does not introduce any new reporting requirements. States
have a preexisting responsibility to maintain adequate processes and
procedures to ensure the accurate and timely reporting of the data
being used to determine the outcome payments.
C. Excluding Exhaustion Rates From Regression Analysis
One commenter requested ETA to consider excluding exhaustion rates
in its proposed regression formula that will be used to determine RESEA
targets because variations in states' UI adjudication processes may
impact performance calculations.
ETA Response
ETA recognizes that there are variations across states in UI
program requirements, processes, benefit levels, eligibility
requirements, and state labor market conditions and that some of these
variations may have an impact on RESEA performance. Recognizing the
existence of these variations across states, ETA has selected a
regression-model approach to setting state-specific RESEA targets
because the regression model will reflect state specific variables that
may be affected by economic conditions and state laws and policies.
D. Limiting Duration Data
One commenter requested that ETA consider assessing UI duration
using RESEA participant data only.
ETA Response
UI duration is a statutorily required factor in determining
eligibility for RESEA outcome factors. Given that improvements in UI
duration resulting from reemployment interventions, such as RESEA, are
small and typically range from a few days to a couple weeks, it is
necessary to assess UI durations using a large sample size of data.
Therefore, the measurement of improvements in duration currently uses
data for all UI claimants. This approach may be reassessed if the
number of claimants served by RESEA grows substantially in future
years.
IV. Methodology To Determine States Eligible For Outcome Payments
ETA developed a three-step approach to determine whether a state is
eligible for RESEA Outcome Payments. The approach reflects RESEA's
statutory purpose, as defined in Section 306(b)(1), SSA, to improve
employment outcomes of individuals who receive UC and to reduce the
average duration of receipt of UC through employment. The three-step
approach includes:
1. Evaluation of state reemployment performance using RESEA-subset
data collected by the ES program and reported to ETA via WIPS using
parameters identified in the PIRL to determine if a state met or
exceeded the state-specific reemployment target. As an interim measure,
ETA will use each state's Wagner-Peyser program negotiated target for
the Reemployment Rate in the 2nd Quarter After Program Exit Quarter as
the RESEA reemployment target. As more RESEA data is collected in the
coming years and regression models are refined, ETA will develop RESEA-
specific targets and discontinue the use of the Wagner-Peyser
negotiated target for Reemployment Rate in the 2nd Quarter after
Program Exit Quarter (see Step 1 of this notice (below) for additional
details).
2. Evaluation of the state's Average UI duration to determine if
the state met or exceeded the state-specific targets that have been
established for UI Duration based on a regression model that is
adjusted to reflect state-level variations that may impact performance,
such as differing state UI processes and requirements and economic
conditions (see Step 2 of this notice (below) for additional details).
3. Award Allocation. ETA will base the assessment on the previous
fiscal year (typically the full period of October 1 through September
30). While this proposed assessment period for the outcome payments
differs from the RESEA program performance year (January to December),
it aligns with the assessment period described in Section 306(f)(2),
SSA, and provides for the necessary time for data collection,
reporting, analysis, and award within the authorized time period for
federal
[[Page 57858]]
obligation of RESEA funds. For example, FY 2021 RESEA funds must be
obligated to states by December 31, 2021. See Consolidated
Appropriations Act, Public Law 116-260, Division H, Title I, State
Unemployment Insurance and Employment Service Operations (SUIESO)
paragraph (1).
Step 1: RESEA Reemployment Measure
To be considered eligible to receive an outcome payment, a state
must first meet or exceed its state-specific reemployment target for
the Reemployment Rate in the 2nd Quarter After Program Exit.
Further details on the UI and RESEA performance measures, including
the 2nd Quarter after Program Exit Quarter for RESEA Program
Participants discussed above, are outlined in Unemployment Insurance
Program Letter (UIPL) No. 7-21 at the following link: <a href="https://wdr.doleta.gov/directives/attach/UIPL/UIPL_7-21.pdf">https://wdr.doleta.gov/directives/attach/UIPL/UIPL_7-21.pdf</a>.
Data used to assess RESEA reemployment performance is collected by
the ES program and transmitted to ETA via WIPS. The PIRL (ETA Form 9172
(OMB No. 1205-0521, expires June 30, 2024)) identifies specific data
elements and the required reporting format for WIPS. The PIRL includes
specific elements that enable ETA to excerpt RESEA-specific data from
the Wagner-Peyser reports. RESEA operating guidance requires all RESEA
participants to be co-enrolled in the ES program. Therefore, all
individuals receiving services through the RESEA program should be
represented in the ES data set. Additional information on the PIRL
elements can be found in the ``DOL-only PIRL'' at the following link:
<a href="https://www.dol.gov/agencies/eta/performance/reporting">https://www.dol.gov/agencies/eta/performance/reporting</a>.
As discussed in Section IV.i. of this notice, ETA will initially
measure RESEA reemployment performance by using each state's negotiated
levels of performance for ES program participants. These performance
targets are generated by the WIOA Statistical Adjustment Model required
under Section 116(b)(3)(viii), WIOA (29 U.S.C. 3141(b)(3)(viii)). The
Department established this Statistical Adjustment Model as an
objective statistical regression model to adjust individual state-
negotiated levels of performance using actual economic conditions and
the characteristics of participants served at the end of the
performance period. The model will be updated and refined with ongoing
use and application as additional quarters of WIOA outcome data become
available. More detailed information on the Statistical Adjustment
Model is available at the Department website: <a href="https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=3430">https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=3430</a>.
ETA will announce the negotiated targets applicable to the
performance period thorough separate guidance to be issued as a joint
Unemployment Insurance Program Letter and a Training and Employment
Guidance Letter. States that do not meet or exceed the criteria for
this measure will be eliminated from the outcome payment pool and will
not proceed to the next step of performance outcome analysis.
Also as discussed in Section IV.i. of this notice, as more RESEA
data is collected and regression models are refined, ETA will develop
RESEA-specific targets. These performance targets that are more
tailored to the RESEA program will then be used in place of the
established Wagner-Peyser program targets prospectively.
Step 2: UI Duration
States that meet or exceed their targets established for the RESEA
Reemployment Measure (Step 1) must also demonstrate reduced average UI
duration to be considered for outcome payments. Average UI duration is
defined as ``The number of weeks compensated for the year divided by
the number of first payments in the year.'' \1\ The performance period
used to evaluate UI duration will be the same four-quarter period
ending September 30 as the reemployment measure, and will be computed
using data reported by states on the ETA 5159 Report (OMB No. 1205-
0010, expires April 30, 2022).
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\1\ <a href="https://oui.doleta.gov/unemploy/content/data_stats/datasum99/4thqtr/gloss.asp">https://oui.doleta.gov/unemploy/content/data_stats/datasum99/4thqtr/gloss.asp</a>.
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Because UI duration can be impacted by factors such as changes in
the economy or variations in state UI laws and processes, it is
necessary to use a regression model to achieve consistency across
states in setting state-specific targets. Therefore, ETA has developed
a regression model to estimate a state's average duration that
incorporates state-specific explanatory variables. The following
variables allow the model to develop state estimates for UI duration
that are unique to a state based on its localized economic conditions:
<bullet> Total Unemployment Rate--the number of unemployed people
as a percentage of the labor force; \2\
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\2\ <a href="https://www.bls.gov/cps/cps_htgm.htm#definitions">https://www.bls.gov/cps/cps_htgm.htm#definitions</a>.
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<bullet> Potential Duration of UC--the number of full weeks of
benefits for which a claimant is eligible within a benefit year; \3\
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\3\ <a href="https://wdr.doleta.gov/directives/attach/ETAH/ETHand401_5th.pdf">https://wdr.doleta.gov/directives/attach/ETAH/ETHand401_5th.pdf</a>, page I-2-24, Section 2(B)(a).
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<bullet> UI Exhaustion Rate-- the average monthly exhaustions
divided by the average monthly first payments; \4\
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\4\ <a href="https://oui.doleta.gov/unemploy/content/data_stats/datasum99/4thqtr/gloss.asp">https://oui.doleta.gov/unemploy/content/data_stats/datasum99/4thqtr/gloss.asp</a>.
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<bullet> Average state weekly benefit amount payment--the total
amount of benefits paid divided by the total number of weeks
compensated; \5\ and
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\5\ <a href="https://wdr.doleta.gov/directives/attach/ETAH/ETHand401_5th.pdf">https://wdr.doleta.gov/directives/attach/ETAH/ETHand401_5th.pdf</a>, page I-6-59, Section 2(B)(a)(1).
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<bullet> Year-to-year change in payroll employment (nonfarm
payroll)--the total number of persons on establishment payrolls
employed full- or part-time who received pay for any part of the pay
period which includes the 12th day of the month.\6\
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\6\ <a href="https://www.bls.gov/bls/glossary.htm#P">https://www.bls.gov/bls/glossary.htm#P</a>.
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The regression model generates the projected average UI duration
for each state and compares it to each state's actual average UI
duration. If a state's actual average UI duration is lower than the
state's projected average UI duration provided by the regression model,
the state will have demonstrated a reduction in UI duration. A state
that does not demonstrate a reduction in UI duration as described above
will be eliminated from the outcome payment pool. The regression model
will be updated each year to incorporate changing state conditions.
Step 3: Award Allocation
Once the pool of eligible states is identified after completing
Steps 1 and 2, ETA will distribute the funds reserved for outcome
payments. Recognizing that the intent of the outcome payments is to
both award performance and serve as an incentive to states to improve
service delivery, ETA will apply an award methodology that allocates
funding in amounts that reflect the size of the RESEA programs
operating in each state. Specifically, ETA will allocate outcome
payments using a modified version of the RESEA base funding allocation
methodology described in section IV of 84 FR 39018, the Federal
Register Notice announcing the RESEA base allocation formula. This
modified methodology will use the combined Insured Unemployment Rate
(IUR)-Civilian Labor Force (CLF) weighting factor described in section
IV of the Notice. However, the base funding provisions described in
sections V-VII of the Notice (hold-harmless, minimum funding, and
carry-over threshold) will not be applied because outcome payments are
based on performance and will vary from year to year.
ETA's approach of allocating outcome payments using a modified
version of
[[Page 57859]]
the base funding formula is intended to ensure awards are large enough
to act as an incentive to states to improve RESEA performance but also
prevent inundating small state programs with excessively large awards
that cannot be expended within the period of performance or providing a
large state program with a small award for which any potential benefit
would be outweighed by the administrative burden of implementation.
Outcome Payments Distribution Timeline
Section 306(f)(2)(A), SSA, requires the Department to make outcome
payments based on RESEA outcomes reported for the previous fiscal year
starting in FY 2021. There are several timing issues associated with
calculation of the performance to enable the outcome payments. First,
the period of performance for RESEA is January 1 through December 31.
The reemployment outcomes data has a four-quarter lag (three quarters
for reemployment outcomes to be available, and one quarter for state
reporting). In order to allow time for necessary data collection and
analysis, the distribution of outcome payments will occur in December
of the FY following the year in which the RESEA grant funds are
awarded. For example, the outcome payments for FY 2021 will be made to
states by December 31, 2021.
Due to the impact of COVID-19 on state RESEA program operations,
the performance period was modified from the complete FY 2020 to
October 2019 through March 2020 to capture state performance under
normal pre-pandemic conditions. The following schedule applies solely
to the award of FY 2021 outcome payments:
<bullet> Data for performance period October 2019 through March
2020, which became available for ETA review in May 2021;
<bullet> The pool of eligible states will be determined using the
methodology outlined in Steps 1 and 2 above; and
<bullet> Outcome payments will be distributed no later than
December 31, 2021.
V. Conclusion
The RESEA outcome payments distribution methodology articulated in
this notice will be utilized with respect to FY 2021 for distribution
in December 2021.
Signed in Washington, DC.
Angela Hanks,
Acting Assistant Secretary for Employment and Training.
[FR Doc. 2021-22704 Filed 10-18-21; 8:45 am]
BILLING CODE 4510-FW-P
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