Work Opportunity Tax Credit (WOTC) Program, 49231-49234 [2024-12706]
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Federal Register / Vol. 89, No. 113 / Tuesday, June 11, 2024 / Notices
develop these processes within 30 days
after the date the Department publishes
a final exemption in the Federal
Register.
Applicability Date: This exemption
will be in effect for the period beginning
on June 12, 2024 and ending on June 11,
2029.
Signed at Washington, DC, this 5th day of
June 2024.
George Christopher Cosby,
Director, Office of Exemption Determinations,
Employee Benefits Security Administration,
U.S. Department of Labor.
[FR Doc. 2024–12746 Filed 6–10–24; 8:45 am]
BILLING CODE 4510–29–P
DEPARTMENT OF LABOR
Employment and Training
Administration
Work Opportunity Tax Credit (WOTC)
Program
Employment and Training
Administration (ETA), Labor.
ACTION: Notice.
AGENCY:
This Notice announces the
revised administrative formula
methodology that ETA uses to distribute
annual allotment funding to State
grantees (53 State Workforce Agencies
(SWAs)) for the purpose of
administering the Work Opportunity
Tax Credit (WOTC). Additionally, this
Notice formally communicates the
substantial changes to the
administrative formula and announces
the actualized State allotments for fiscal
year (FY) 2024, the revised formula’s
implementation year, based on
Congress’ budgetary appropriations.
DATES: The FY 2024 allotment covers
the period of October 1, 2023–
September 30, 2024.
FOR FURTHER INFORMATION CONTACT:
LaToria Strickland, Office of Workforce
Investment, Employment and Training
Administration, U.S. Department of
Labor, 200 Constitution Avenue NW,
Suite C–4510, Washington, DC 20210,
telephone: (202) 693–3980 (this is not a
toll-free number) or by email:
Ask.WOTC@dol.gov. For persons with a
hearing or speech disability who need
assistance to use the telephone system,
please dial 711 to access
telecommunications relay services.
SUPPLEMENTARY INFORMATION:
Background: WOTC is a Federal tax
credit available to eligible employers
that hire and pay wages to first-time,
qualifying members of WOTC targeted
groups. Section 51 of the Internal
Revenue Code of 1986, as amended,
provides the legislative authority for the
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SUMMARY:
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WOTC. (See https://uscode.house.gov/
view.xhtml?req=
(title:26%20section:51%2
edition:prelim). WOTC is authorized
until December 31, 2025, under division
EE, title I, section 113 of the
Consolidated Appropriations Act, 2021
(Pub. L. 116–260).
This Notice represents the second of
a two-stage process. On February 21,
2023, ETA published a Request for
Comment in which the Department
proposed modifications to WOTC
procedural guidance and the
administrative formula (88 FR 10540),
hereinafter referred to as the initial
Notice. The 60-day public comment
period closed on April 24, 2023. The
initial Notice presented planning
estimates for the modified
administrative formula’s
implementation year, FY 2024, and the
FY 2022 actualized allotments. In the
initial Notice, ETA committed to
publishing modifications to WOTC
procedural guidance in a Change 1 to
Training and Employment Guidance
Letter (TEGL) No. 16–20, ‘‘Updated
Work Opportunity Tax Credit (WOTC)
Procedural Guidance,’’ 1 and publishing
the updated administrative formula in
the Federal Register. Based on the
comments received during the public
comment period and ETA’s
consideration of them, ETA finalized
the WOTC administrative formula with
updated data metrics in the formula
methodology, as originally proposed in
the initial Notice.
In this second stage, the finalized
formula and actual FY 2024 State
allotments are described further in this
subsequent Notice. (The FY 2024 State
allotments are also published in Change
2 to TEGL No. 06–23, ‘‘Work
Opportunity Tax Credit (WOTC) Initial
Fiscal Year (FY) 2024 Funding
Allotments).’’ 2
This subsequent Notice contains five
sections, as follows:
• Section I provides the historical
formula methodology used for WOTC
State allotments, effective FYs 1996–
2023.
• Section II reviews the proposed
administrative formula that was
described in the initial Notice (88 FR
10540), published in the Federal
Register on February 21, 2023.
1 ETA, TEGL No. 16–20, Change 1, ‘‘Updated
Work Opportunity Tax Credit (WOTC) Procedural
Guidance,’’ Nov. 20, 2023, https://www.dol.gov/
agencies/eta/advisories/tegl-16-20-change-1.
2 ETA, TEGL No 06–23, Change 2, ‘‘Change 2 to
Training and Employment Guidance Letter No. 06–
23, Work Opportunity Tax Credit (WOTC) Initial
Funding Allotments for Fiscal Year 2024,’’ May 09
2024, https://www.dol.gov/agencies/eta/advisories/
tegl-06-23-change-2.
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49231
• Section III summarizes the
comments that ETA received in
response to the initial Notice and ETA’s
decisions concerning the allotment
formula modifications, based on those
comments.
• Section IV describes the formula’s
‘‘stop-loss/stop-gain’’ provisions, which
are designed to provide a staged
transition from the old to the new
funding levels for State allotments.
Additionally, section IV describes the
minimum funding provisions for States
under the modified formula. These
provisions were previously discussed in
detail in the initial Notice (88 FR
10540).
• Section V describes the application
of the modified formula (using
congressional budgetary appropriations)
for FY 2024 allotments and subsequent
years. The table appended to this Notice
reflects the actual FY 2024 distribution
resulting from the revised allotment
formula.
I. Historical Formula Methodology
The WOTC administrative formula
was developed by ETA in 1996 for the
purpose of distributing Federal funds to
52 State grantees (50 United States,
District of Columbia, and U.S. Virgin
Islands) to administer the WOTC and
the Welfare-to-Work (WtW), enacted in
1997, tax credit programs. ETA
published the original formula
methodology in a Federal Register
Notice (68 FR 15745) on April 1, 2003,
announcing the FY 2003 WOTC and
WtW program grants to States:
‘‘After reserving $584,200 for postage
and $20,000 for the Virgin Islands,
funds are distributed to states by
administrative formula with a $64,000
minimum allotment and a 95 percent
stop-loss/120 percent stop-gain from the
prior year allotment share percentage.
The allocation formula is as follows:
(1) 50 percent based on each state’s
relative share of total FY 2002 (the prior
FY) certifications issued for the WOTC/
WtW Tax Credit program;
(2) 30 percent based on each state’s
relative share of the civilian labor force
(CLF) for calendar year 2001 (the
preceding calendar year); and
(3) 20 percent based on each state’s
relative share of the adult recipients of
Temporary Assistance for Needy
Families (TANF) for FY 2001’’ (FY 2001
was the second preceding FY for which
complete annual TANF data was
available).
The WtW program, which focused on
TANF recipients, was folded into
WOTC in 2006 by division A, title I,
section 105 of the Tax Relief and Health
Care Act of 2006 (Pub. L. 109–432).
While ETA has made incremental
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modifications over time, including
removing the set-aside for postage,
increasing the minimum allotment from
$64,000 to $66,000 (3% increase), and
adding the Commonwealth of Puerto
Rico as a State grantee, the WOTC
administrative formula methodology has
remained largely unchanged. ETA used
this administrative formula recently for
the FY 2023 allotments, as provided in
TEGL No. 06–22, ‘‘Work Opportunity
Tax Credit (WOTC) Initial Funding
Allotments for Fiscal Year 2023,’’ 3:
‘‘After allocating $20,000 to the Virgin
Islands, ETA distributes the remaining
funds to the SWAs by administrative
formula with a $66,000 minimum
allotment and a 95 percent stop-loss/120
percent stop-gain from the previous year
allotment percentage. The
administrative formula is calculated as
follows:
(1) 50 percent is based on each state’s
relative share of total WOTC
certifications issued from October 1,
2021 through September 30, 2022 (the
prior fiscal year);
(2) 30 percent is based on each state’s
relative share of the CLF averages for the
12-month period from October 1, 2021
through September 30, 2022 (the prior
fiscal year); and
(3) 20 percent is based on each state’s
relative share of adult recipients of
TANF averages from October 1, 2020,
through September 30, 2021 (the 12month period from the second
preceding fiscal year).’’
II. Formula Updates and Modifications
The WOTC administrative formula
bases 50 percent of States’ annual
allotments on each State’s relative share
of total WOTC certifications issued in
the most recently completed FY’s
available data (October 1–September
30). Thirty percent is based on each
State’s relative share of CLF averages for
the most recently completed FY’s
available data, and 20 percent is based
on each State’s relative share of adult
recipients of TANF averages from the
second preceding FY. The same three
data metrics (certifications issued, CLF
averages, and TANF averages) have been
the basis of the administrative formula
used to determine State allotments since
1996.
In the initial Notice (Feb 2023), ETA
proposed modifications to its
administrative formula to factor in the
SWAs’ output workload to include
denials issued and to adjust for
inflation. The proposed allotment
formula includes two formula factors:
(1) total number of determinations
3 TEGL
06–22, available at https://www.dol.gov/
agencies/eta/advisories/tegl-06-22.
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Jkt 262001
issued by the SWA (certifications and
denials) for the most recently completed
FY’s available data, based on SWAs’
certified performance data; and (2) each
State’s relative share of CLF averages for
the most recently completed FY’s
available data. States report their annual
certification performance data on ETA
Form 9058, Certification Workload and
Characteristics of Certified Individuals,
through an existing information
collection under the ‘‘Work Opportunity
Tax Credit’’ ICR, approved under OMB
Control Number 1205–0371.4 A
description of how the data is used to
calculate the State allotments using the
proposed modified formula is provided
below:
(1) 40 percent based on each State’s
relative share of certifications issued for
the most recently completed fiscal
year’s available data (October 1–
September 30),
(2) 40 percent based on each State’s
relative share of denials issued for the
most recently completed fiscal year’s
available data (October 1–September
30), and
(3) 20 percent based on each State’s
relative share of CLF averages for the
most recently completed fiscal year’s
available data (October 1–September
30).
In addition to populating the
administrative formula with updated
metrics, ETA proposed modifications
that would raise the minimum allotment
to the States and improve the formula’s
accuracy in terms of estimating the true
administrative workload of the SWAs.
The proposed modifications were a
result of ETA’s review of SWAs’
quarterly performance data, WOTC
State/regional coordinators’ feedback,
and inquiries received from program
stakeholders.
A summary of changes under the
proposed modified formula (as detailed
in Section IV of the initial Notice) are
provided below:
• The formula will no longer factor in
States’ share of adult TANF recipient
averages. With this formula
modification, the administrative
workload of the SWA (annual
certifications and denials issued) is the
primary indicator used to determine
fiscal year funding.
• To align the funding formula more
closely with the SWAs’ workload, ETA
will lessen the formula weight of the
CLF averages used in the allotment
formula. States with larger population
sizes (i.e., California, Florida, New York,
and Texas) have a larger number of
Although not required by Federal
statute or regulations, ETA sought
public comment on the proposed
administrative formula modifications in
the initial Federal Register Notice (88
FR 10540; Feb. 21, 2023). As with all
grant formulas, changing calculation
metrics will result in changes to each
State’s relative share of Federal funding.
Two commenters [SWAs] concurred
with the modified formula as
announced in the initial Notice, two
commenters [SWAs] proposed adjusting
the weight of formula calculation
metrics (i.e., lessening the weight for
denials issued), and one commenter
[SWA] raised concern for States that
may receive up to a five percent
decrease in allotment during the
implementation year (FY 2024). ETA
considered these comments and
proceeded with updating the WOTC
administrative formula for State
allotments as originally proposed in the
initial Notice. SWAs expend resources
to process a growing number of
employer certification requests,
regardless of the application’s outcome
(certification or denial). In FY 2023,
SWAs issued 3,708,081 denials,
representing 48 percent of the national
total workload, compared to 1,918,901
certifications, representing 25 percent of
the total workload.5 ETA recognizes this
impact and, in the initial Notice,
adjusted the administrative formula to
better align State funding with SWA
workloads by including ‘denials issued’
at the same weight as ‘certifications
issued’ in the new formula.
4 ETA Form 9058, Certification Workload and
Characteristics of Certified Individuals—ETA Form
9058 (dol.gov).
5 National Tax Credit Certification Reporting by
Fiscal Year, available at https://www.dol.gov/
agencies/eta/wotc/performance.
PO 00000
Frm 00088
Fmt 4703
Sfmt 4703
eligible employers participating in
WOTC. These States process a higher
volume of certification requests leading
to a larger volume of the determinations
issued, and consequently receive a
larger relative share of the Federal
funding allocation.
ETA believes that focusing on the
SWAs’ workload outcomes
(certifications and denials issued) is the
most appropriate metric on which to
base WOTC State allotments. To
gradually phase in State funding
allotment changes due to the updated
formula, ETA will continue to use the
95 percent stop-loss/120 percent stop
gain funding provisions which are
currently used in WOTC allotment
formula calculations. This provision is
described further in Section V of this
subsequent Notice.
III. Summary of Public Comments
Received
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Federal Register / Vol. 89, No. 113 / Tuesday, June 11, 2024 / Notices
IV. Description of Stop-Loss/Stop-Gain
and Minimum Funding Provisions
ETA mitigates large changes in State
allotments (which may be caused by
changes to formula methodology) by
using the ‘‘Stop-Loss/Stop-Gain’’
provision, which gradually phases in
State funding allotment changes due to
updated formula metrics. ETA will
continue to use the 95 percent stop-loss/
120 percent stop-gain funding
provisions in the WOTC allotment
formula calculations. This approach is
based on a State’s previous year
allotment percentage, which is its
relative share of the total formula
allotments. The stop-gain provision
provides that no State grantee will
receive an amount that is more than 120
percent of their previous year’s
allotment percentage. The stop-loss
provision provides that no State grantee
will receive an amount less than 95
percent of their previous year’s
allotment percentage. The prior (pre-FY
2024) administrative formula was
calculated with 95 percent stop-loss/120
percent stop-gain provisions, and this
did not change in the modified formula
for FY 2024 and subsequent years.
Under the proposed new formula, the
new State allotment minimum would be
raised to $119,000 ($36,000 for U.S.
Virgin Islands), adjusted for inflation.
As previously mentioned, the stop-gain
provision provides that no State grantee
will receive an amount that is more than
120 percent of their previous year’s
allotment percentage, and using the
proposed new formula, some State
grantees would require over a 20
percent increase of their FY 2023
allotment percentage to reach the FY
2024 allotment minimum. To phase in
the increased minimum allotment,
which also impacts other States’
allotments, ETA will use the stop-gain
provision to gradually increase the
minimum funding allotment amount to
reach the new $119,000 minimum by
FY 2026. The minimum State allotment
increased to $79,131 in FY 2024, which
represents a 20 percent share increase
from the prior minimum of $66,000 in
FY 2023, and it will increase by 20
percent each fiscal year, to reach the
new $119,000 minimum by FY 2026. A
State grantee that would receive less
than $119,000 by application of the FY
2024 formula will, at the option of ETA,
continue to receive an allotment that is
proportional to the SWA’s current fiscal
year allotment and anticipated
administrative workload.
V. Revised WOTC Administrative
Formula, Effective FY 2024 State
Allotments
ETA will determine State allotments
for normal WOTC operations according
to the following methodology, effective
with the FY 2024 State allotments:
After allocating $36,000 to the U.S.
Virgin Islands, ETA distributes the
remaining funds to the SWAs by
administrative formula with a $119,000
minimum allotment and a 95 percent
stop-loss/120 percent stop-gain from the
previous year allotment percentage. The
administrative formula is calculated as
follows:
(1) 40 percent based on each State’s
relative share of certifications issued for
the most recently completed fiscal
year’s available data (October 1–
September 30);
(2) 40 percent based on each State’s
relative share of denials issued for the
most recently completed fiscal year’s
available data (October 1–September
30); and
(3) 20 percent based on each State’s
relative share of CLF averages for the 12month period of the most recently
completed fiscal year’s available data
(October 1–September 30).
The State allotments set forth in the
table appended to this subsequent
Notice reflect the distribution resulting
from the revised allotment formula
described above. In FY 2023 and FY
2024, Congress appropriated
$18,485,000 in funding for State
grantees (SWAs) to administer WOTC.
The figures in column 1 show the actual
FY 2023 formula allotments to State
grantees. Column 2 shows the
percentage of each States’ allotment in
proportion to the total funding
appropriated. Column 3 shows the
actual FY 2024 formula allotments with
the application of the 95 percent stoploss/120 percent stop-gain, and
$119,000 minimum funding provisions.
Column 4 shows each State’s relative
share of total FY 2024 allotments and
column 5 shows the percentage share
difference between FY 2024 and FY
2023 State allotments. Additional
information on FY 2024 funding
allocations may be referenced in TEGL
No 06–23, Work Opportunity Tax Credit
(WOTC) Initial Funding Allotments for
Fiscal Year 2024, available at https://
www.dol.gov/agencies/eta/advisories/
tegl-06-23.
José Javier Rodrı́guez,
Assistant Secretary for Employment and
Training Administration, Labor.
U.S. DEPARTMENT OF LABOR EMPLOYMENT AND TRAINING ADMINISTRATION WORK OPPORTUNITY TAX CREDIT (WOTC)
STATE ALLOTMENT GRANTS IMPACT OF FORMULA CHANGES ON FY 2024 ALLOTMENTS TO STATES
FY 2023 (actual)
Allotment
Percentage
share
Allotment
Percentage
share
Percentage
share difference
(FY 2024 vs.
FY 2023)
(1)
(2)
(3)
(4)
(5)
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State
Total ...................................................................................
Alabama .............................................................................
Alaska ................................................................................
Arizona ...............................................................................
Arkansas ............................................................................
California ............................................................................
Colorado .............................................................................
Connecticut ........................................................................
Delaware ............................................................................
District of Columbia ............................................................
Florida ................................................................................
Georgia ..............................................................................
Hawaii ................................................................................
Idaho ..................................................................................
Illinois .................................................................................
Indiana ...............................................................................
Iowa ....................................................................................
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PO 00000
$18,485,000
275,882
66,000
344,353
129,340
2,463,406
299,388
170,021
80,968
66,000
996,142
481,902
83,407
74,748
706,132
273,250
218,776
Frm 00089
Fmt 4703
Sfmt 4703
FY 2024 (actual)
100
1.5
0.4
1.9
0.7
13.3
1.6
0.9
0.4
0.4
5.4
2.6
0.5
0.4
3.8
1.5
1.2
$18,485,000
284,832
79,131
326,852
155,074
2,338,208
284,172
161,380
97,077
79,131
945,515
483,737
100,002
89,620
693,500
259,363
207,657
E:\FR\FM\11JNN1.SGM
11JNN1
100
1.5
0.4
1.8
0.8
12.7
1.5
0.9
0.5
0.4
5.1
2.6
0.5
0.5
3.8
1.4
1.1
+/¥
3.3
20.0
¥5.0
20.0
¥5.0
¥5.0
¥5.0
20.0
20.0
¥5.0
0.5
20.0
20.0
¥1.7
¥5.0
¥5.0
49234
Federal Register / Vol. 89, No. 113 / Tuesday, June 11, 2024 / Notices
U.S. DEPARTMENT OF LABOR EMPLOYMENT AND TRAINING ADMINISTRATION WORK OPPORTUNITY TAX CREDIT (WOTC)
STATE ALLOTMENT GRANTS IMPACT OF FORMULA CHANGES ON FY 2024 ALLOTMENTS TO STATES—Continued
FY 2023 (actual)
Allotment
Percentage
share
Allotment
Percentage
share
Percentage
share difference
(FY 2024 vs.
FY 2023)
(1)
(2)
(3)
(4)
(5)
State
Kansas ...............................................................................
Kentucky ............................................................................
Louisiana ............................................................................
Maine .................................................................................
Maryland ............................................................................
Massachusetts ...................................................................
Michigan .............................................................................
Minnesota ...........................................................................
Mississippi ..........................................................................
Missouri ..............................................................................
Montana .............................................................................
Nebraska ............................................................................
Nevada ...............................................................................
New Hampshire .................................................................
New Jersey ........................................................................
New Mexico .......................................................................
New York ...........................................................................
North Carolina ....................................................................
North Dakota ......................................................................
Ohio ....................................................................................
Oklahoma ...........................................................................
Oregon ...............................................................................
Pennsylvania ......................................................................
Puerto Rico ........................................................................
Rhode Island ......................................................................
South Carolina ...................................................................
South Dakota .....................................................................
Tennessee .........................................................................
Texas .................................................................................
Utah ....................................................................................
Vermont ..............................................................................
Virginia ...............................................................................
Washington ........................................................................
W. Virginia ..........................................................................
Wisconsin ...........................................................................
Wyoming ............................................................................
146,904
353,854
288,003
66,000
398,705
380,504
574,630
288,016
207,390
378,621
66,000
133,374
166,333
66,000
326,817
169,874
1,253,665
510,810
66,000
720,311
260,321
260,465
710,605
81,519
71,478
250,468
66,000
653,761
1,310,072
108,459
66,000
414,000
415,914
118,367
320,045
66,000
0.8
1.9
1.6
0.4
2.2
2.1
3.1
1.6
1.1
2.1
0.4
0.7
0.9
0.4
1.8
0.9
6.8
2.8
0.4
3.9
1.4
1.4
3.8
0.4
0.4
1.4
0.4
3.5
7.1
0.6
0.4
2.2
2.3
0.6
1.7
0.4
139,438
335,870
294,826
79,131
378,442
361,166
545,425
273,378
196,850
359,378
79,131
126,596
162,766
79,131
354,620
161,240
1,189,950
522,119
79,131
825,339
247,091
247,227
674,490
97,738
85,699
267,444
79,131
620,535
1,507,945
119,000
79,131
392,959
394,776
119,000
308,525
79,131
0.8
1.8
1.6
0.4
2.1
2.0
3.0
1.5
1.1
1.9
0.4
0.7
0.9
0.4
1.9
0.9
6.4
2.8
0.4
4.5
1.3
1.3
3.7
0.5
0.5
1.4
0.4
3.4
8.2
0.6
0.4
2.1
2.1
0.6
1.7
0.4
¥5.0
¥5.0
2.5
20.0
¥5.0
¥5.0
¥5.0
¥5.0
¥5.0
¥5.0
20.0
¥5.0
¥2.1
20.0
8.6
¥5.0
¥5.0
2.3
20.0
14.7
¥5.0
¥5.0
¥5.0
20.0
20.0
6.9
20.0
¥5.0
15.2
9.8
20.0
¥5.0
¥5.0
0.6
¥3.5
20.0
Total ............................................................................
Virgin Islands (non-formula) ...............................................
18,465,000
20,000
100
n/a
18,449,000
36,000
100
n/a
..........................
..........................
[FR Doc. 2024–12706 Filed 6–10–24; 8:45 am]
BILLING CODE 4510–FN–P
DEPARTMENT OF LABOR
Employment and Training
Administration
khammond on DSKJM1Z7X2PROD with NOTICES
FY 2024 (actual)
Employment and Training
Administration Program Year 2024
Workforce Innovation and Opportunity
Act Section 167, National Farmworker
Jobs Program Preliminary State
Allotments
Employment and Training
Administration, Labor.
ACTION: Notice; request for comments.
AGENCY:
This Notice announces
preliminary planning estimates for the
National Farmworker Jobs Program
SUMMARY:
VerDate Sep<11>2014
17:09 Jun 10, 2024
Jkt 262001
(NFJP) Career Services and Training
grants for Program Year (PY) 2024. This
Notice also explains the allotment
process that ETA will follow in the
event that it does not award funds to
any grantee in a particular state in the
PY 2024 competition.
DATES: The PY 2024 NFJP allotments
become effective for the grant period
that begins July 1, 2024. Written
comments on this notice are invited and
must be received on June 25, 2024.
ADDRESSES: Comments are accepted via
email to NFJP@dol.gov. Please enter
‘‘PY24 National Farmworker Jobs
Program State Allotments Public
Comment’’ in the subject line of the
email.
Comments: The Department will
retain all comments on this notice and
will release them upon request via email
PO 00000
Frm 00090
Fmt 4703
Sfmt 4703
to any member of the public. The
Department will make copies of this
notice available, upon request, in large
print, Braille, and electronic file. The
Department also will consider providing
the notice in other formats upon
request. To obtain the notice in an
alternative format, contact the
Department using the information
provided above. The Department will
retain all comments received without
making any changes to the comments,
including any personal information
provided. The Department therefore
cautions commenters not to include
their personal information such as
Social Security Numbers, personal
addresses, telephone numbers, and
email addresses in their comments; this
information would be released with the
comment if the comments are requested.
E:\FR\FM\11JNN1.SGM
11JNN1
]]>Agencies
[Federal Register Volume 89, Number 113 (Tuesday, June 11, 2024)]
[Notices]
[Pages 49231-49234]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-12706]
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DEPARTMENT OF LABOR
Employment and Training Administration
Work Opportunity Tax Credit (WOTC) Program
AGENCY: Employment and Training Administration (ETA), Labor.
ACTION: Notice.
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SUMMARY: This Notice announces the revised administrative formula
methodology that ETA uses to distribute annual allotment funding to
State grantees (53 State Workforce Agencies (SWAs)) for the purpose of
administering the Work Opportunity Tax Credit (WOTC). Additionally,
this Notice formally communicates the substantial changes to the
administrative formula and announces the actualized State allotments
for fiscal year (FY) 2024, the revised formula's implementation year,
based on Congress' budgetary appropriations.
DATES: The FY 2024 allotment covers the period of October 1, 2023-
September 30, 2024.
FOR FURTHER INFORMATION CONTACT: LaToria Strickland, Office of
Workforce Investment, Employment and Training Administration, U.S.
Department of Labor, 200 Constitution Avenue NW, Suite C-4510,
Washington, DC 20210, telephone: (202) 693-3980 (this is not a toll-
free number) or by email: dol.gov">Ask.WOTC@dol.gov. For persons with a hearing
or speech disability who need assistance to use the telephone system,
please dial 711 to access telecommunications relay services.
SUPPLEMENTARY INFORMATION:
Background: WOTC is a Federal tax credit available to eligible
employers that hire and pay wages to first-time, qualifying members of
WOTC targeted groups. Section 51 of the Internal Revenue Code of 1986,
as amended, provides the legislative authority for the WOTC. (See
https://uscode.house.gov/view.xhtml?req=(title:26%20section:51%2edition:prelim). WOTC is
authorized until December 31, 2025, under division EE, title I, section
113 of the Consolidated Appropriations Act, 2021 (Pub. L. 116-260).
This Notice represents the second of a two-stage process. On
February 21, 2023, ETA published a Request for Comment in which the
Department proposed modifications to WOTC procedural guidance and the
administrative formula (88 FR 10540), hereinafter referred to as the
initial Notice. The 60-day public comment period closed on April 24,
2023. The initial Notice presented planning estimates for the modified
administrative formula's implementation year, FY 2024, and the FY 2022
actualized allotments. In the initial Notice, ETA committed to
publishing modifications to WOTC procedural guidance in a Change 1 to
Training and Employment Guidance Letter (TEGL) No. 16-20, ``Updated
Work Opportunity Tax Credit (WOTC) Procedural Guidance,'' \1\ and
publishing the updated administrative formula in the Federal Register.
Based on the comments received during the public comment period and
ETA's consideration of them, ETA finalized the WOTC administrative
formula with updated data metrics in the formula methodology, as
originally proposed in the initial Notice.
---------------------------------------------------------------------------
\1\ ETA, TEGL No. 16-20, Change 1, ``Updated Work Opportunity
Tax Credit (WOTC) Procedural Guidance,'' Nov. 20, 2023, https://www.dol.gov/agencies/eta/advisories/tegl-16-20-change-1.
---------------------------------------------------------------------------
In this second stage, the finalized formula and actual FY 2024
State allotments are described further in this subsequent Notice. (The
FY 2024 State allotments are also published in Change 2 to TEGL No. 06-
23, ``Work Opportunity Tax Credit (WOTC) Initial Fiscal Year (FY) 2024
Funding Allotments).'' \2\
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\2\ ETA, TEGL No 06-23, Change 2, ``Change 2 to Training and
Employment Guidance Letter No. 06-23, Work Opportunity Tax Credit
(WOTC) Initial Funding Allotments for Fiscal Year 2024,'' May 09
2024, https://www.dol.gov/agencies/eta/advisories/tegl-06-23-change-
2.
---------------------------------------------------------------------------
This subsequent Notice contains five sections, as follows:
Section I provides the historical formula methodology used
for WOTC State allotments, effective FYs 1996-2023.
Section II reviews the proposed administrative formula
that was described in the initial Notice (88 FR 10540), published in
the Federal Register on February 21, 2023.
Section III summarizes the comments that ETA received in
response to the initial Notice and ETA's decisions concerning the
allotment formula modifications, based on those comments.
Section IV describes the formula's ``stop-loss/stop-gain''
provisions, which are designed to provide a staged transition from the
old to the new funding levels for State allotments. Additionally,
section IV describes the minimum funding provisions for States under
the modified formula. These provisions were previously discussed in
detail in the initial Notice (88 FR 10540).
Section V describes the application of the modified
formula (using congressional budgetary appropriations) for FY 2024
allotments and subsequent years. The table appended to this Notice
reflects the actual FY 2024 distribution resulting from the revised
allotment formula.
I. Historical Formula Methodology
The WOTC administrative formula was developed by ETA in 1996 for
the purpose of distributing Federal funds to 52 State grantees (50
United States, District of Columbia, and U.S. Virgin Islands) to
administer the WOTC and the Welfare-to-Work (WtW), enacted in 1997, tax
credit programs. ETA published the original formula methodology in a
Federal Register Notice (68 FR 15745) on April 1, 2003, announcing the
FY 2003 WOTC and WtW program grants to States:
``After reserving $584,200 for postage and $20,000 for the Virgin
Islands, funds are distributed to states by administrative formula with
a $64,000 minimum allotment and a 95 percent stop-loss/120 percent
stop-gain from the prior year allotment share percentage.
The allocation formula is as follows:
(1) 50 percent based on each state's relative share of total FY
2002 (the prior FY) certifications issued for the WOTC/WtW Tax Credit
program;
(2) 30 percent based on each state's relative share of the civilian
labor force (CLF) for calendar year 2001 (the preceding calendar year);
and
(3) 20 percent based on each state's relative share of the adult
recipients of Temporary Assistance for Needy Families (TANF) for FY
2001'' (FY 2001 was the second preceding FY for which complete annual
TANF data was available).
The WtW program, which focused on TANF recipients, was folded into
WOTC in 2006 by division A, title I, section 105 of the Tax Relief and
Health Care Act of 2006 (Pub. L. 109-432). While ETA has made
incremental
[[Page 49232]]
modifications over time, including removing the set-aside for postage,
increasing the minimum allotment from $64,000 to $66,000 (3% increase),
and adding the Commonwealth of Puerto Rico as a State grantee, the WOTC
administrative formula methodology has remained largely unchanged. ETA
used this administrative formula recently for the FY 2023 allotments,
as provided in TEGL No. 06-22, ``Work Opportunity Tax Credit (WOTC)
Initial Funding Allotments for Fiscal Year 2023,'' \3\:
---------------------------------------------------------------------------
\3\ TEGL 06-22, available at https://www.dol.gov/agencies/eta/advisories/tegl-06-22.
---------------------------------------------------------------------------
``After allocating $20,000 to the Virgin Islands, ETA distributes
the remaining funds to the SWAs by administrative formula with a
$66,000 minimum allotment and a 95 percent stop-loss/120 percent stop-
gain from the previous year allotment percentage. The administrative
formula is calculated as follows:
(1) 50 percent is based on each state's relative share of total
WOTC certifications issued from October 1, 2021 through September 30,
2022 (the prior fiscal year);
(2) 30 percent is based on each state's relative share of the CLF
averages for the 12-month period from October 1, 2021 through September
30, 2022 (the prior fiscal year); and
(3) 20 percent is based on each state's relative share of adult
recipients of TANF averages from October 1, 2020, through September 30,
2021 (the 12-month period from the second preceding fiscal year).''
II. Formula Updates and Modifications
The WOTC administrative formula bases 50 percent of States' annual
allotments on each State's relative share of total WOTC certifications
issued in the most recently completed FY's available data (October 1-
September 30). Thirty percent is based on each State's relative share
of CLF averages for the most recently completed FY's available data,
and 20 percent is based on each State's relative share of adult
recipients of TANF averages from the second preceding FY. The same
three data metrics (certifications issued, CLF averages, and TANF
averages) have been the basis of the administrative formula used to
determine State allotments since 1996.
In the initial Notice (Feb 2023), ETA proposed modifications to its
administrative formula to factor in the SWAs' output workload to
include denials issued and to adjust for inflation. The proposed
allotment formula includes two formula factors: (1) total number of
determinations issued by the SWA (certifications and denials) for the
most recently completed FY's available data, based on SWAs' certified
performance data; and (2) each State's relative share of CLF averages
for the most recently completed FY's available data. States report
their annual certification performance data on ETA Form 9058,
Certification Workload and Characteristics of Certified Individuals,
through an existing information collection under the ``Work Opportunity
Tax Credit'' ICR, approved under OMB Control Number 1205-0371.\4\ A
description of how the data is used to calculate the State allotments
using the proposed modified formula is provided below:
---------------------------------------------------------------------------
\4\ ETA Form 9058, Certification Workload and Characteristics of
Certified Individuals--ETA Form 9058 (dol.gov).
---------------------------------------------------------------------------
(1) 40 percent based on each State's relative share of
certifications issued for the most recently completed fiscal year's
available data (October 1-September 30),
(2) 40 percent based on each State's relative share of denials
issued for the most recently completed fiscal year's available data
(October 1-September 30), and
(3) 20 percent based on each State's relative share of CLF averages
for the most recently completed fiscal year's available data (October
1-September 30).
In addition to populating the administrative formula with updated
metrics, ETA proposed modifications that would raise the minimum
allotment to the States and improve the formula's accuracy in terms of
estimating the true administrative workload of the SWAs. The proposed
modifications were a result of ETA's review of SWAs' quarterly
performance data, WOTC State/regional coordinators' feedback, and
inquiries received from program stakeholders.
A summary of changes under the proposed modified formula (as
detailed in Section IV of the initial Notice) are provided below:
The formula will no longer factor in States' share of
adult TANF recipient averages. With this formula modification, the
administrative workload of the SWA (annual certifications and denials
issued) is the primary indicator used to determine fiscal year funding.
To align the funding formula more closely with the SWAs'
workload, ETA will lessen the formula weight of the CLF averages used
in the allotment formula. States with larger population sizes (i.e.,
California, Florida, New York, and Texas) have a larger number of
eligible employers participating in WOTC. These States process a higher
volume of certification requests leading to a larger volume of the
determinations issued, and consequently receive a larger relative share
of the Federal funding allocation.
ETA believes that focusing on the SWAs' workload outcomes
(certifications and denials issued) is the most appropriate metric on
which to base WOTC State allotments. To gradually phase in State
funding allotment changes due to the updated formula, ETA will continue
to use the 95 percent stop-loss/120 percent stop gain funding
provisions which are currently used in WOTC allotment formula
calculations. This provision is described further in Section V of this
subsequent Notice.
III. Summary of Public Comments Received
Although not required by Federal statute or regulations, ETA sought
public comment on the proposed administrative formula modifications in
the initial Federal Register Notice (88 FR 10540; Feb. 21, 2023). As
with all grant formulas, changing calculation metrics will result in
changes to each State's relative share of Federal funding. Two
commenters [SWAs] concurred with the modified formula as announced in
the initial Notice, two commenters [SWAs] proposed adjusting the weight
of formula calculation metrics (i.e., lessening the weight for denials
issued), and one commenter [SWA] raised concern for States that may
receive up to a five percent decrease in allotment during the
implementation year (FY 2024). ETA considered these comments and
proceeded with updating the WOTC administrative formula for State
allotments as originally proposed in the initial Notice. SWAs expend
resources to process a growing number of employer certification
requests, regardless of the application's outcome (certification or
denial). In FY 2023, SWAs issued 3,708,081 denials, representing 48
percent of the national total workload, compared to 1,918,901
certifications, representing 25 percent of the total workload.\5\ ETA
recognizes this impact and, in the initial Notice, adjusted the
administrative formula to better align State funding with SWA workloads
by including `denials issued' at the same weight as `certifications
issued' in the new formula.
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\5\ National Tax Credit Certification Reporting by Fiscal Year,
available at https://www.dol.gov/agencies/eta/wotc/performance.
---------------------------------------------------------------------------
[[Page 49233]]
IV. Description of Stop-Loss/Stop-Gain and Minimum Funding Provisions
ETA mitigates large changes in State allotments (which may be
caused by changes to formula methodology) by using the ``Stop-Loss/
Stop-Gain'' provision, which gradually phases in State funding
allotment changes due to updated formula metrics. ETA will continue to
use the 95 percent stop-loss/120 percent stop-gain funding provisions
in the WOTC allotment formula calculations. This approach is based on a
State's previous year allotment percentage, which is its relative share
of the total formula allotments. The stop-gain provision provides that
no State grantee will receive an amount that is more than 120 percent
of their previous year's allotment percentage. The stop-loss provision
provides that no State grantee will receive an amount less than 95
percent of their previous year's allotment percentage. The prior (pre-
FY 2024) administrative formula was calculated with 95 percent stop-
loss/120 percent stop-gain provisions, and this did not change in the
modified formula for FY 2024 and subsequent years.
Under the proposed new formula, the new State allotment minimum
would be raised to $119,000 ($36,000 for U.S. Virgin Islands), adjusted
for inflation. As previously mentioned, the stop-gain provision
provides that no State grantee will receive an amount that is more than
120 percent of their previous year's allotment percentage, and using
the proposed new formula, some State grantees would require over a 20
percent increase of their FY 2023 allotment percentage to reach the FY
2024 allotment minimum. To phase in the increased minimum allotment,
which also impacts other States' allotments, ETA will use the stop-gain
provision to gradually increase the minimum funding allotment amount to
reach the new $119,000 minimum by FY 2026. The minimum State allotment
increased to $79,131 in FY 2024, which represents a 20 percent share
increase from the prior minimum of $66,000 in FY 2023, and it will
increase by 20 percent each fiscal year, to reach the new $119,000
minimum by FY 2026. A State grantee that would receive less than
$119,000 by application of the FY 2024 formula will, at the option of
ETA, continue to receive an allotment that is proportional to the SWA's
current fiscal year allotment and anticipated administrative workload.
V. Revised WOTC Administrative Formula, Effective FY 2024 State
Allotments
ETA will determine State allotments for normal WOTC operations
according to the following methodology, effective with the FY 2024
State allotments:
After allocating $36,000 to the U.S. Virgin Islands, ETA
distributes the remaining funds to the SWAs by administrative formula
with a $119,000 minimum allotment and a 95 percent stop-loss/120
percent stop-gain from the previous year allotment percentage. The
administrative formula is calculated as follows:
(1) 40 percent based on each State's relative share of
certifications issued for the most recently completed fiscal year's
available data (October 1-September 30);
(2) 40 percent based on each State's relative share of denials
issued for the most recently completed fiscal year's available data
(October 1-September 30); and
(3) 20 percent based on each State's relative share of CLF averages
for the 12-month period of the most recently completed fiscal year's
available data (October 1-September 30).
The State allotments set forth in the table appended to this
subsequent Notice reflect the distribution resulting from the revised
allotment formula described above. In FY 2023 and FY 2024, Congress
appropriated $18,485,000 in funding for State grantees (SWAs) to
administer WOTC. The figures in column 1 show the actual FY 2023
formula allotments to State grantees. Column 2 shows the percentage of
each States' allotment in proportion to the total funding appropriated.
Column 3 shows the actual FY 2024 formula allotments with the
application of the 95 percent stop-loss/120 percent stop-gain, and
$119,000 minimum funding provisions. Column 4 shows each State's
relative share of total FY 2024 allotments and column 5 shows the
percentage share difference between FY 2024 and FY 2023 State
allotments. Additional information on FY 2024 funding allocations may
be referenced in TEGL No 06-23, Work Opportunity Tax Credit (WOTC)
Initial Funding Allotments for Fiscal Year 2024, available at https://www.dol.gov/agencies/eta/advisories/tegl-06-23.
Jos[eacute] Javier Rodr[iacute]guez,
Assistant Secretary for Employment and Training Administration, Labor.
U.S. Department of Labor Employment and Training Administration Work Opportunity Tax Credit (WOTC) State
Allotment Grants Impact of Formula Changes on FY 2024 Allotments to States
----------------------------------------------------------------------------------------------------------------
FY 2023 (actual) FY 2024 (actual) Percentage
---------------------------------------------------------------- share
State difference (FY
Allotment Percentage Allotment Percentage 2024 vs. FY
share share 2023)
(1) (2) (3) (4) (5)
----------------------------------------------------------------------------------------------------------------
Total.......................... $18,485,000 100 $18,485,000 100 +/-
Alabama........................ 275,882 1.5 284,832 1.5 3.3
Alaska......................... 66,000 0.4 79,131 0.4 20.0
Arizona........................ 344,353 1.9 326,852 1.8 -5.0
Arkansas....................... 129,340 0.7 155,074 0.8 20.0
California..................... 2,463,406 13.3 2,338,208 12.7 -5.0
Colorado....................... 299,388 1.6 284,172 1.5 -5.0
Connecticut.................... 170,021 0.9 161,380 0.9 -5.0
Delaware....................... 80,968 0.4 97,077 0.5 20.0
District of Columbia........... 66,000 0.4 79,131 0.4 20.0
Florida........................ 996,142 5.4 945,515 5.1 -5.0
Georgia........................ 481,902 2.6 483,737 2.6 0.5
Hawaii......................... 83,407 0.5 100,002 0.5 20.0
Idaho.......................... 74,748 0.4 89,620 0.5 20.0
Illinois....................... 706,132 3.8 693,500 3.8 -1.7
Indiana........................ 273,250 1.5 259,363 1.4 -5.0
Iowa........................... 218,776 1.2 207,657 1.1 -5.0
[[Page 49234]]
Kansas......................... 146,904 0.8 139,438 0.8 -5.0
Kentucky....................... 353,854 1.9 335,870 1.8 -5.0
Louisiana...................... 288,003 1.6 294,826 1.6 2.5
Maine.......................... 66,000 0.4 79,131 0.4 20.0
Maryland....................... 398,705 2.2 378,442 2.1 -5.0
Massachusetts.................. 380,504 2.1 361,166 2.0 -5.0
Michigan....................... 574,630 3.1 545,425 3.0 -5.0
Minnesota...................... 288,016 1.6 273,378 1.5 -5.0
Mississippi.................... 207,390 1.1 196,850 1.1 -5.0
Missouri....................... 378,621 2.1 359,378 1.9 -5.0
Montana........................ 66,000 0.4 79,131 0.4 20.0
Nebraska....................... 133,374 0.7 126,596 0.7 -5.0
Nevada......................... 166,333 0.9 162,766 0.9 -2.1
New Hampshire.................. 66,000 0.4 79,131 0.4 20.0
New Jersey..................... 326,817 1.8 354,620 1.9 8.6
New Mexico..................... 169,874 0.9 161,240 0.9 -5.0
New York....................... 1,253,665 6.8 1,189,950 6.4 -5.0
North Carolina................. 510,810 2.8 522,119 2.8 2.3
North Dakota................... 66,000 0.4 79,131 0.4 20.0
Ohio........................... 720,311 3.9 825,339 4.5 14.7
Oklahoma....................... 260,321 1.4 247,091 1.3 -5.0
Oregon......................... 260,465 1.4 247,227 1.3 -5.0
Pennsylvania................... 710,605 3.8 674,490 3.7 -5.0
Puerto Rico.................... 81,519 0.4 97,738 0.5 20.0
Rhode Island................... 71,478 0.4 85,699 0.5 20.0
South Carolina................. 250,468 1.4 267,444 1.4 6.9
South Dakota................... 66,000 0.4 79,131 0.4 20.0
Tennessee...................... 653,761 3.5 620,535 3.4 -5.0
Texas.......................... 1,310,072 7.1 1,507,945 8.2 15.2
Utah........................... 108,459 0.6 119,000 0.6 9.8
Vermont........................ 66,000 0.4 79,131 0.4 20.0
Virginia....................... 414,000 2.2 392,959 2.1 -5.0
Washington..................... 415,914 2.3 394,776 2.1 -5.0
W. Virginia.................... 118,367 0.6 119,000 0.6 0.6
Wisconsin...................... 320,045 1.7 308,525 1.7 -3.5
Wyoming........................ 66,000 0.4 79,131 0.4 20.0
--------------------------------------------------------------------------------
Total...................... 18,465,000 100 18,449,000 100 ...............
Virgin Islands (non-formula)... 20,000 n/a 36,000 n/a ...............
----------------------------------------------------------------------------------------------------------------
[FR Doc. 2024-12706 Filed 6-10-24; 8:45 am]
BILLING CODE 4510-FN-P
