Governmentwide Implementation of the President's Welfare-to-Work Initiative for Federal Grant Programs
OF MANAGEMENT AND BUDGET
Implementation of the President's Welfare-to-Work Initiative for
Federal Grant Programs
Office of Management and Budget
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
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 /OMB.
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."
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.
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 (/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.
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@example.com.
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.
Question -- Is the provision of training for hired welfare recipients
an allowable cost under Federal assistance programs?
-- Yes. The cost of training provided for employee development is
allowable under OMB's cost principles circulars.
Question -- Are supportive services, such as transportation and
day care services, for hired welfare recipients allowable costs
under Federal assistance programs?
-- 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.
Question -- Are there any available Federal tax credits to employers
for hiring welfare recipients?
-- 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 $2100 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 $5000
(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.
Question -- What are examples of successful private sector initiatives
to hire welfare recipients?
-- Eight successful private sector initiatives are described below.
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.
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.
1986, a private non-profit organization in Cleveland, funded by
public grants, foundations, and private money, has placed more than
3000 welfare recipients in full-time jobs, enabling 7000 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.
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 1500 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.
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.
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.
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.
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.
Question -- What are examples of appropriate jobs, requiring minimum
on-the-job training, for which welfare recipients could be hired?
-- 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.