CHAPTER 1

CLOSEOUT PLANS

To assist their subrecipients and contractors to comply with the closeout instructions, States should establish policy and set timelines that will enable entities to submit the necessary closeout documents in a timely manner. States must comply with the timelines established by the Department of Labor/Employment and Training Administration (DOL/ETA).

At a minimum, each State should convey instructions to its subrecipients regarding the closeout of Job Training Partnership Act (JTPA) program activities. Notification should be provided as soon as possible, but no later than May 31, 2000. The notification should be sent "Return Receipt Requested" to the chief elected official and director of the service delivery area (SDA) administrative entity as well as to heads of other direct subrecipients with specific closeout instructions. The State's legal counsel should review the notice to ensure that it meets legal requirements, and the written instructions should include:

• Official notice that all program activities under JTPA are to end no later than June 30, 2000, or sooner for those States with early implementation plans;

• Copies of all closeout documents that subrecipients are required to submit to the State by an established date; and

• The State's policy on key closeout and transition issues.

The notification should be issued with sufficient lead time to organize and implement the instructions.

LOCAL PLANS

States are responsible for ensuring that all subrecipient awards are closed out. To accomplish this, each State should consider obtaining from its subrecipients a plan for the closeout of all JTPA activities that should be reviewed and approved by the State. Items to be considered in developing the plan should include:

• Review of closeout documents submitted by subrecipients;

• Date for completion and submission of closeout documents to the State;

• Staff issues;

• Participant issues;

• Procurement issues;

• Property issues;

• Legal and record retention issues;

• Audits;

• Resolution of complaints, grievances, audits, monitoring findings; and

• General fiscal and related issues.

At a minimum, the local plan(s) should include:

• Planned program closeout time schedule;

• Planned transfer of participants to new local workforce investment board-administered programs, where applicable, including how participant documentation (case management files, eligibility information, etc.) will be transferred to new deliverers of service;

• Estimated costs for closeout activities. These costs may include late claims, unfunded liabilities, termination costs associated with subrecipient agreements, penalties for breaking leases, uncharged accrued leave, possible severance pay and unemployment insurance (UI) payments, records retention and storage costs, audit costs and costs associated with audit resolution, appeal and debt collection activities, and other costs incurred during the closeout process. These costs should be itemized by category, i.e., accrued leave, severance pay, estimated UI payments, and estimated storage costs;

• Planned estimate(s) of the portion of unobligated Program Year 1998 (PY 98) and PY 99 allocations (obligational authority) that will be needed to pay for these costs. The local areas should retain this estimated amount on their books of account to pay for such costs during the 180-day closeout period following the full implementation of the Workforce Investment Act (WIA). Cash needed to support the closeout costs will be drawn down as needed for immediate disbursement needs; and

• Estimated preliminary transfer of PY 98 and PY 99 JTPA obligational authority to WIA.

Particular attention needs to be given to the transition from private industry councils to local workforce investment boards, especially where there are geographic changes involved.

Example: If the existing geographic area of the JTPA SDA is divided to form one or more new local workforce investment areas and their boards, the State should ensure that its closeout plan addresses an orderly separation of the entity and formation of new entities. Concerns would include the allocation of carryforward JTPA funds for the newly formed agency or agencies, continuation of services to existing participants, distribution of useable property, and decisions regarding the identification of responsible parties for the retention or transfer of records and the resolution of any outstanding issues.

It is especially important in the situation described above that the estimated amount of funds retained by the existing JTPA service delivery area is sufficient for closeout activities. Carryforward funds will be distributed to a new entity or entities, and it may not be possible to recoup the funds if closeout costs have been underestimated.

ESTIMATING CLOSEOUT COSTS

The estimate of closeout costs should include all potential expenditures involved in the process. No additional funds will be provided to conduct this activity, which will be in addition to the conduct of normal operations for which program performance is expected. Estimated costs should encompass all costs that are expected to accrue to the closeout activity. Accrued expenditures, as defined in the JTPA Regulations at 20 Code of Federal Regulations (CFR) 626.5, are "charges made to the JTPA program. Expenditures are the sum of actual cash disbursements, the amount of indirect expense incurred, and the net increase (or decrease) in the amounts owed by the recipient for the goods and other property received; for services performed by employees, contractors, subgrantees, subcontractors, and other payees; and other amounts becoming owed under programs for which no current services or performance are required, such as annuities, insurance claims, and other benefit payments."

Various factors should be considered in determining the amount of funds to be retained for closeout. Staff wages and fringe benefit costs involved in closeout activity will probably be the largest amount of funds to be set aside. Another significant amount of funds that should be included for closeout may be severance pay, which must be only for necessary and reasonable costs and must follow the local personnel policies of the organization in effect on August 7, 1998, the date of enactment of WIA.

In addition to necessary transition activities, other types of activities in which staff will be involved will be determined by whatever outstanding issues still remain at the time of closeout of the entity. These issues can include, but are not limited to, debt collection, incident report resolution, grievances, and audit appeals. As discussed further in Chapter 5 of this guide, States and subrecipients are required to maintain a JTPA grievance procedure system for one year from the last day of the JTPA program. Therefore, costs associated with resolution and settlement of complaints and grievances filed in accordance with Section 144 of the JTPA may be charged to JTPA closeout and then to WIA as a program cost until the end of this period. Costs associated with the complaints system incurred after this period may not be charged to WIA, and would have to be paid for with the organization's non-Federal funds. Assuming that the last date for filing a complaint is June 30, 2001, this will allow for charges to be made for these specific activities until August 31, 2001, since costs are allowable for the timely resolution of these complaints and grievances. Timely means that a hearing is held within 30 days of the filing of a complaint or grievance, and a decision is rendered within 60 days of filing, as required in Section 144(a) of the JTPA. Costs not included in this activity are complaint and grievance outcomes such as the payment of back wages and funds withheld in contract disputes. The entity should ensure that all allowable costs associated with these activities are identified and included as closeout costs.

March 17, 2000