ADVISORY:  Farmworker Program Bulletin No. 2002-02

TO:                 All National Farmworker Jobs Program Grantees        

FROM:           Shirley M. Smith, Administrator, Office of Adult Services

SUBJECT:     ADMINISTRATIVE COSTS LIMITATIONS UNDER THE WORKFORCE

                        INVESTMENT ACT (WIA)

1.  PURPOSE.  To reissue the Employment and Training Administration (ETA) policy on the administrative costs limitations that apply to the National Farmworker Jobs Program (NFJP) grants funded under Section 167 of the Workforce Investment Act (WIA).

2.   BACKGROUND.  On December 10, 1999, the Office of National Programs (ONP) issued ONP Bulletin No. 99-003 on this same subject.  The ONP Bulletin series has been discontinued. This is a reissuance of that bulletin under the farmworker program bulletin series.

The rules governing the NFJP have historically permitted the program grantees to claim up to 20 percent of total budget towards program administration costs.  Under JTPA, the 20 percent limitation was interpreted to apply to the total available funds each year, consisting of the sum of carry-over funds plus the year's formula allocation amount. Under WIA, the administrative cost limitation is calculated on each year's formula allocation amount only.

The customer focus principles under the WIA providing for empowering individuals and increased operator accountability require the workforce investment system's partners to increase their capacity for serving customers by performing more effectively and operating more efficiently. The focus on increasing the capacity for serving customers has resulted in a reduction to administrative costs. The baseline administrative cost limitation under WIA is 10 percent. Compliance is facilitated by the adjustment to the definition of administrative costs under WIA. The WIA regulation at 20 CFR 667.220 defines the functions and activities subject to the administrative cost limitation under WIA.

3.   POLICY.  The unique operational circumstances that national grantees face impose a burden that is more acutely administrative than may be encountered by the state program partners under Subtitle B. In recognition of these conditions, the administrative costs limitations applicable to the NFJP grants under Section 167 of WIA are to be determined as follows:

A.)   The base-line administrative cost limitation for NFJP is 15 percent of the grant formula allocation amount for each program year (exclusive of any carryover funds).

B.)    ETA may approve administrative cost limitations up to 20 percent of the formula allocation when the grantee submits acceptable justification for the amount in excess of 15 percent.  Acceptable justification shall consist of declarations, as follows:

Grantees must submit a brief written justification showing the percentage of grant funds that the grantee requires for covering all its necessary administrative costs and indicating the conditions that will exist during the program year which contribute to administrative costs in excess of 15 percent.  Examples of need may include:

·        The amount and nature of on-going direct and indirect administrative costs.

·        The amount and nature of any uncontrollable increases in its existing essential administrative costs that are unusual one-time expenses--including significant increases to basic administrative cost components such as rent or staff salaries (Supporting documentation is required).

·        Any new and additional administrative costs which the grantee must incur under WIA, such as the cost of negotiating Memoranda of Understanding (MOUs) with the Local Workforce Investment Boards (LWIBs) concerning One-Stop services. The costs of negotiating MOUs and participating as a mandatory partner on over 50 percent of the LWIBs serving rural communities in the state is a recognized ongoing additional administrative cost under WIA.

·        A statement of how the grantee already supplements the funds it receives from the Department of Labor for administrative expenditures with funds from other sources in order to meet its necessary administrative costs.

·        Significant state-wide activities--extensive geographic area actively serviced under the grant necessitating substantial transportation or One-Stop co-location costs.  Membership on the State Workforce Investment Board is a recognized state-wide activity.

·        Other reasons specific to the grantee (reasons must be fully explained and acceptable to the Grant Officer).

C.)   The intent of this policy is to ensure ETA has provided the flexibility and authorized the resources necessary for NFJP grantees to fully participate in the workforce investment system and maximize direct services to Migrant and Seasonal Farmworker customers.