Governmentwide Implementation of the President's Welfare-to-Work Initiative for Federal Grant Programs

OFFICE OF MANAGEMENT AND BUDGET

Governmentwide Implementation of the President's Welfare-to-Work

Initiative for Federal Grant Programs

AGENCY: Office of Management and Budget.

ACTION: Notice.

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SUMMARY: This Notice provides information, in the form of nonbinding

questions and answers, to assist the Federal grantmaking agencies,

grantees, and subrecipients in responding to the President's Welfare-

to-Work Initiative. The Office of Management and Budget worked with the

major Federal grantmaking agencies in developing this governmentwide

non-regulatory guidance.

FOR FURTHER INFORMATION CONTACT: Barbara F. Kahlow, Office of Federal

Financial Management, Office of Management and Budget (telephone 202-

395-3053). The text of this Notice is available electronically on the

OMB home page at http://www.whitehouse.gov/WH/EOP/omb.

SUPPLEMENTARY INFORMATION: On March 8, 1997, the President issued a

memorandum to the heads of the executive departments and agencies

entitled ``Government Employment for Welfare Recipients.'' This

memorandum directed all Federal agencies to ``hire people off the

welfare rolls into available job positions in the Government'' and to

submit proposed plans for ``on-the-job training and/or mentoring

programs.''

To supplement this initiative, Federal agencies were asked to

encourage their grantees and their subrecipients to hire welfare

recipients and to provide additional needed training and/or mentoring.

This Notice, which the Office of Management and Budget (OMB) developed

with the major Federal grantmaking agencies, provides nonbinding

questions and answers to assist the Federal grantmaking agencies,

grantees, and subrecipients in responding to the President's Welfare-

to-Work Initiative. The Federal Government recognizes and appreciates

that many grantees and subrecipients have been hiring welfare

recipients in meaningful jobs for some time.

The Federal procurement community has a ``Welfare to Work

Procurement Information'' link on its Acquisition Reform Network home

page (http://www.arnet.gov). Its welfare to work information page links

to the White House welfare reform information page (http://

www.whitehouse.gov/WH/Welfare), the Department of Labor's welfare to

work page (http:/www.doleta.gov/ohrw2w) (which contains welfare

recipient recruiting and hiring information), the Social Security

Administration's welfare reform information page, the Health Care

Financing Administration's welfare reform and Medicaid page, and the

Department of Agriculture's food assistance program page.

Additionally, the National Performance Review will be assembling a

data base with examples of employer success stories, innovative

approaches, and problems encountered by employers which need to be

addressed (http://w2w.fed.gov). Employers are requested to provide such

examples which can be shared with other employers. Please send such

examples to the National Performance Review, 750-17th Street--Suite

200, Washington, DC 20006 or e-mail them to

[email protected].

As part of this welfare-to-work initiative, OMB does not expect to

propose amendments to any Federal laws, governmentwide common rules, or

its grants management circulars.

1. Question--Is the provision of training for hired welfare

recipients an allowable cost under Federal assistance programs?

Answer--Yes. The cost of training provided for employee development

is allowable under OMB's cost principles circulars.

2. Question--Are supportive services, such as transportation and

day care services, for hired welfare recipients allowable costs under

Federal assistance programs?

Answer--Yes, to the extent that an organization's internal and

established policy permits charging of such costs in a consistent

manner. These costs are usually classified as fringe benefit costs and,

like salaries and wages, are distributed to all of the organization's

activities. In any case, fringe benefits in the form of transit

benefits are an allowable cost under Federal grants. Section 132 of the

Internal Revenue Code of 1986 allows up to $65 per month to be provided

to employees tax free in the form of a ``transit pass,'' or cash if a

``transit pass'' is not readily available, for distribution to

employees. This benefit cannot be used in lieu of compensation, but

must be paid in addition to any compensation otherwise payable to the

employee.

3. Question--Are there any available Federal tax credits to

employers for hiring welfare recipients?

Answer--Yes. The Work Opportunity Tax Credit (WOTC), authorized by

the Small Business Job Protection Act of 1996, is a Federal tax credit

that encourages employers to hire certain job seekers and can reduce

employer Federal tax liability by as much as $2,100 for each qualified

new worker. Welfare recipients who have received Aid to Families with

Dependent Children (AFDC) or Temporary Assistance for Needy Families

(TANF) assistance for at least a 9-month period, ending during the 9-

month period which ends on the hiring date, are eligible for the

credit. The existing WOTC expires September 30, 1997, but the

Administration has proposed to extend it for one year. The

Administration has also proposed an enhancement to the WOTC for long-

term welfare recipients that would increase the maximum annual credit

to $5,000 (claimable for two years) and allow the costs of employer-

provided training, health care, and child care to count as wages for

purposes of the credit. The Administration has proposed to authorize

the enhanced credit for three years ending September 30, 2000. For more

information on claiming the present WOTC credit, employers should call

or visit the State employment service office, or call the nearest U.S.

Department of Labor Regional WOTC Coordinator.

4. Question--What are examples of successful private sector

initiatives to hire welfare recipients?

[[Page 27078]]

Answer--Eight successful private sector initiatives are described

below.

Since 1984, a private for-profit placement and support organization

in New York, Indianapolis, Albany and Baltimore has helped more than

12,000 welfare recipients find full-time private sector jobs.

Recipients are hired permanently at an average wage of $16,000 per

year, including benefits. This organization works under contract with

State and local governments and is reimbursed only for successful

outcomes, typically defined as a job retained at least six months. The

state of New York found that 81 percent of those placed by this

organization are still off welfare after one year.

Since 1985, a private non-profit organization in Chicago has

followed an incremental ladders-of-work approach, encouraging its

participants to begin with work at their level of ability, including,

if necessary, volunteer or part-time work. Clients move one step up the

ladder of work at a time, with the ultimate goal being full-time,

unsubsidized work. The program also provides retention, replacement and

advancement services. Since inception, over 850 clients have

participated in the program. While 54 percent lose their first job

within six months and 75 percent lose their first job within a year, at

the end of a 5-year period, 54 percent have worked at least all 12

months of the year either full-time or part-time.

Since 1986, a private non-profit organization in Cleveland, funded

by public grants, foundations, and private money, has placed more than

3,000 welfare recipients in full-time jobs, enabling 7,000 men, women,

and children to no longer receive welfare benefits. Over 80 percent of

the families have not returned to the welfare rolls and have stayed in

the workforce, a remarkable result considering that the typical family

had been on and off welfare for ten years. The organization provides

its clients with 8-10 weeks of general job readiness training and in

some cases with basic education and occupation-specific courses. It

then matches clients with jobs offered by some 650 local employers,

including employer-paid health benefits. Once hired, clients receive

transitional services and support from corporate counselors to ensure

that they stay employed.

Since 1987, a private non-profit organization in Sarasota, Florida

and Lafayette, Louisiana has offered job placement and support services

to chronically unemployed members of the surrounding community. In

1996, the organization placed and kept over 500 people in unsubsidized

private sector employment; since the program's inception, it has placed

a total of more than 1,500 people in jobs. The organization works hard

to build relationships with local employers and, after providing its

clients with basic job readiness and on-the-job work skills, places

people permanently into unsubsidized jobs and offers follow-up support

to make sure they stay in jobs.

In 1988, a small private non-profit organization in the Nation's

capital was organized for the purposes of preparing and distributing

meals to local homeless shelters and transitional homes from surplus

food from hotels, restaurants, and catered events. Since 1990, the

kitchen has provided a training center for jobless individuals to learn

food preparation for employment in the food service industry, while

they help prepare over 3000 meals a day. Its 12-weeks training program

for 12 participants at a time has graduated 150 participants, with a 60

percent 180-day job retention rate overall and a 75 percent job

retention rate in the last year.

In 1990, a major for-profit organization began a pre-employment

training program which provides six weeks of training (180 total hours,

composed of 60 classroom hours and 120 occupational skills hours,

including job shadowing and hands-on practice) for 12-18 participants

at a time for employment in the hospitality industry. Over the last six

years, the program has had 600 graduates, with a 90 percent graduation

rate, a 90 percent retention rate after 90 days, and a 77 percent

retention rate after 360 days. After graduates are placed into full-

time jobs, the program provides six months of follow-up services to

promote job retention. The training program not only teaches skills

necessary to obtain a job but also addresses life management factors

associated with being able to retain a job, such as maintaining a

positive attitude, being dependable and reliable, building confidence

and self-esteem, communicating effectively, completing job applications

and resumes, grooming and hygiene, and personal issues, such as

transportation and day care. A keystone of the program is that trainees

do not displace current employees of the organization or cause a

reduction in their work hours.

Since mid 1994, a private non-profit organization in Milwaukee has

stressed job placement. Clients go through eight weeks of job search.

Those who do not find private sector jobs are offered minimum wage

community service positions at non-profit organizations for a maximum

of one year. When necessary, the organization subsidizes its clients'

wages to bring them up to at least the poverty line. It also provides

health and child care benefits based on income and helps clients

receive the Earned Income Tax Credit (EITC). Preliminary results are

very encouraging; 57 percent are currently employed in private or

public sector jobs.

In early 1995, a private non-profit organization in Columbus began

providing intensive human capital development. Its per person job

placement costs are about $2300. Services include six weeks of full-

time daily job readiness and skills, academic skills including GED

preparation, job development, placement, and follow-up, a $6-$8 per day

transportation allowance, and in-house legal counsel. To date, 193

participants have completed the program. Also, to date, 91 recipients

were placed in full-time jobs that currently average wages of $6.84 an

hour and a 90-day retention rate around 60 percent.

5. Question--What are examples of appropriate jobs, requiring

minimum on-the-job training, for which welfare recipients could be

hired?

Answer--A welfare recipient's job placement should be commensurate

with his or her education, skills, and abilities. Thus, a person with

the required education, experience or skills for a specific position

may be placed in such a position; however, persons without such needed

education, experience or skills may be placed in an entry-level

position. Several Federal departments have identified appropriate

entry-level job positions, including: File clerk, mail and file clerk,

office automation clerk, office automation trainee, computer clerk/

assistant, claims processing clerk, custodial worker, printing plant

worker, laborer, and motor vehicle operator. Generally, employees hired

into these positions will be expected to perform such duties as the

following: photocopy, receive and deliver mail, file, answer

telephones, operate fax machines, maintain and distribute supplies, and

clean laboratory equipment in research facilities.

G. Edward DeSeve,

Controller.

[FR Doc. 97-12930 Filed 5-15-97; 8:45 am]

BILLING CODE 3110-01-P