September 12, 2006


TO:      State Workforce System Administrators      

FROM:   Byron Zuidema
             BYRON ZUIDEMA
             Regional Administrator

SUBJECT:  Salary and Bonus Limitations

1.  Purpose. To advise States of unilateral modifications to State formula grants to include new salary and bonus limitations on compensation.

2.  References. Training and Employment Guidance Letter 5-06, August 15, 2006; Pub.L. 109-234, section 7013; Pub.L. 109-149, section 101; OMB Circular A-133; Workforce Investment Act of 1998, section 173(e).

3.  Links.  This Letter is in the Region 5 website archive at:

4.  Substance. The Grant Officer has issued unilateral modifications to State formula grants which incorporate a special clause on the salary and bonus limitations on compensation made with Federal funds administered by the Employment and Training Administration. This clause applies to:

- Workforce Investment Act Annual Funding Agreements
- Workforce Investment Act National Emergency Grants
- WIA Section 173(e) Grants
- Trade Adjustment Assistance Act Annual Cooperative Financial Agreements
- Unemployment Insurance Annual Funding Agreements
- Wagner-Peyser Act Annual Funding Agreements

The Grant Officer Notice is contained in the Attachment to this Letter.

5.  Action. State Workforce System Administrators are requested to share this Letter with all program administrators. Administrators are advised to insure that their programs are in compliance with this modification.

6.  Contact.  Comments or questions concerning salary and bonus limitations may be directed to your Federal Project Officer in the Chicago Regional Office. Comments or questions about the format of this Letter may be directed to Robert Rainault on 312.596.5416.

7.  Effective Date.  June 15, 2006

8.  Expiration Date. Continuing

9.  Attachment. Grant Officer Notice – Unilateral Grant Modification of All Current Grants to Include Special Provisions on Salary and Bonus Limitations




            STATE GRANTEES

Subject:    Unilateral Grant Modification of All Current Grants to Include Special                             Provision on Salary and Bonus Limitations

This is to provide notice to State grantees of the unilateral grant modification actions recently executed to implement the new Salary and Bonus Limitations under Public Law 109-234.  The new pay requirements were detailed under Training and Employment Guidance Letter (TEGL) 5-06, dated August 15, 2006

Accordingly, the applicable State formula grants managed by the ETA Division of Federal Assistance were recently modified to include the new Salary and Bonus Limitations special provision.  All modifications are made effective June 15, 2006 in accordance with the law.  State grantees will be receiving executed copies of each grant modification for the following State formula grants:

            PY 2004; 2005; and 2006 WIA Annual Funding Agreements

            FY 2004; 2005; and 2006   TAA Annual Cooperative Financial Agreements

            FY 2004; 2005; and 2006   UI Annual Funding Agreements

            PY 2004/FY2005; PY2005/FY2006; and PY2006* W-PA Annual Funding


                                                                                    *Not applicable to any FY 2007 funds at this time

            PY2004 and PY2005 WIA Title V Incentive Grant Agreements, as applicable

Additionally, the applicable “discretionary” WIA National Emergency Grants for PY 2004, 2005 and 2006 were also modified for each applicable Grantee.  Those States who received WIA Section 173 (e) grants will also receive grant modifications for these grants, as applicable.

The grant modification language for all the above grants is as follows:

The Grant is unilaterally modified to incorporate the SALARY & BONUS LIMITATIONS special clause (attached) in accordance with Public Law 109-234.  The new federal requirements pertaining to pay and bonuses were also announced in Training and Employment Guidance Letter (TEGL) 5-06, dated August 15, 2006.

(See Clause “Attachment” below)

Salary and Bonus Limitations:  In compliance with Public Law 109-234, none of the funds appropriated in Public Law 109-149 or prior Acts under the heading ‘Employment and Training’ that are available for expenditure on or after June 15, 2006, shall be used by a recipient or subrecipient of such funds to pay the salary and bonuses of an individual, either as direct costs or indirect costs, at a rate in excess of Executive Level II, except as provided for under section 101 of Public Law 109-149.  This limitation shall not apply to vendors providing goods and services as defined in OMB Circular A-133.  Where States are recipients of such funds, States may establish a lower limit for salaries and bonuses of those receiving salaries and bonuses from subrecipients of such funds, taking into account factors including the relative cost-of-living in the State, the compensation levels for comparable State or local government employees, and the size of the organizations that administer Federal programs involved including Employment and Training Administration programs.  See Training and Employment Guidance Letter number 5-06 for further clarification.

The incurrence of costs and receiving reimbursement for these costs under this award certifies that your organization has read the above special condition and is in compliance.

For questions regarding this action, please email these to

E. Fred Tello's signature.

E. FRED TELLO                                                       Date: September 12, 2006
Grant Officer

Top of Page