Date of Issue: Revised 04/25/2003	
Office of Issuance: AWI-FG- 02-008	
Reference: 
Deobligation of Funds	

FINAL GUIDANCE
DEOBLIGATION AND REALLOCATION OF WORKFORCE INVESTMENT ACT (WIA) FUNDS

OF INTEREST TO:  

Workforce Florida Inc., Regional Workforce Boards (RWBs), and other entities engaged in implementing programs under Title I of the Workforce Investment Act of 1998.

SUBJECT:

The deobligation and reallocation of Workforce Investment Act (WIA) funds.

PURPOSE:

To define and describe the procedures for the deobligation and reallocation of WIA funds for programs serving youth, adults, and dislocated workers under WIA, Sections 128 and 133, and 20 CFR Part 652 et al., Workforce Investment Act; Final Rules, Sections 667.107 and 667.160.

BACKGROUND AND UNDERLYING STATE AND FEDERAL POLICY:

The Florida State Workforce Investment Act Five-Year Plan, Modification Two dated 11/19/99, provides for the development of reallocation procedures relative to WIA funds as required in the cites listed above.  Specifically, the plan states:
		
"The WIA requires local (regional) boards to obligate 80% of their funds annually, providing the Governor the authority to reallocate unobligated balances in excess of 20% in instances where areas fail to meet this requirement.  The state plans to revise its current reallocation policy to reflect WIA requirements in order to continue to provide the Governor the capability to redistribute funds based on need."

Additionally, the WIA, Final Rule at §667.107(b) states:

“Funds allocated by a State to a local area under WIA . . . for any program year are available for expenditure only during that program year and the succeeding program year.  Funds which are not expended by a local area in the two-year period . . . must be returned to the State.  Funds so returned are available for expenditure by State and local recipients and subrecipients only during the third program year of availability.  These funds may:
(1)	Be used for Statewide projects, or
(2)	Be distributed to other local areas which had fully expended their allocation of funds for the same program year within the two-year period."

THE DEOBLIGATION/REALLOCATION PROCESS

The basis for an understanding of the deobligation and reallocation process under the WIA is to realize that each program year's funds will be reviewed four times to determine if there are funds available for deobligation. This four cycle review is due to the availability of WIA funds to the region for two fiscal years. Each program year's funds, with the exception of local administrative funds,  will be subject to deobligation at the following times.

1.	At the mid-point of the first fiscal year
2.	At the end of the first fiscal year
3.	At the mid-point of the second fiscal year
4.	At the end of the  second fiscal year

Administrative funds allocated to the regions as a part of the program year’s funding will be subject to review and potential deobligation only twice, first at the end of  fiscal year one and secondly, at the end of fiscal year two.

The midpoint reviews are  based on unexpended funds, not unobligated funds.  The year end review conducted at the end of fiscal year one is based on both unobligated and unexpended funds, to comply with the 80% obligation criterion identified in the federal act, and the 50% expenditure requirement approved by the state board.  The reviews of the same program year funds that occur at the mid-point and at the end of the subsequent fiscal year are based on unexpended funds.  Note that although WIA funds have a 3 year total life, local formula allocations must be expended within 2 years and the remaining funds must be reallocated and expended in the third year at the state-level or in the regions to which those funds have been reallocated.

Deobligation of WIA Funds

In approving the revised policy, the WFI Board authorized implementation of these provisions beginning as of June 30, 2002. Program funds on hand at that time will be reviewed for compliance as shown in the following table.

		As of	As of	As of	As of	As of	As of	
		6/30/02	12/31/02	6/30/03	12/31/03	6/30/04	12/30/04	
PY 2000 Funds							
	Federal Criteria	100% Exp						
	State Criteria	100% Exp						
PY 2001 Funds							
	Federal Criteria	80% Oblig	N/A	100% Exp				
	State Criteria	50% Exp	75% Exp	100% Exp				
PY 2002 Funds							
	Federal Criteria		N/A	80% Oblig	N/A	100% Exp		
	State Criteria		25% Exp	50% Exp	75% Exp	100% Exp		
PY 2003 Funds							
	Federal Criteria				N/A	80% Oblig	N/A	
	State Criteria				25% Exp	50% Exp	75% Exp	

Obligation (Oblig.) is defined in OMB Circular A-110, Subpart A (t) as “ . . . the amounts of orders placed, contracts and grants awarded, services received and similar transactions during a given period that require payment by the recipient during the same or a future period.”

Expenditures (Exp.) should represent accrued expenditures and include actual disbursements plus payables as of the end date of the period under review.  Payables are generally limited to legal obligations where goods or services have been received and accepted, but disbursement of funds has not yet occurred.

The deobligation amount will be determined separately for each WIA allocation category (Adult, Youth, Dislocated Worker, and Local Administration) as adjusted for allowable transfer of funds between categories.  WIA incentive grants, National Reserve Account Grants, and 15% projects are not included in the deobligation calculation. 

As determined by the Board, deobligated WIA funds will either be reallocated to those RWBs that have met the state and federal criteria for the period reviewed, or will be used for statewide projects.

In summary, a Notice of Intent to Deobligate WIA funds will be issued to each RWB that has not:

1.	Expended at least 25% of each WIA program year's funds by mid-year (excluding local administrative funds)
2.	Obligated at least 80% and expended at least 50% of each WIA program year's funds (program and administrative) by the end-of-fiscal year one
3.	Expended at least 75% of each WIA program year's funds (excluding local administrative funds) by the mid-point of fiscal year two.
4.	Expended all WIA funds for each WIA program by the end of the second fiscal year

The determination to deobligate will be made based on information contained in the One Stop Management Information System (OSMIS) or successor systems.  Any additional WIA funds awarded to a RWB by the State Board as supplemental funding and made a part of their formula allocation during the periods reviewed , will be included in this calculation.

RWBs will have an opportunity to protest the deobligation.  All protests must be submitted in writing to the Agency for Workforce Innovation and must be received no later than 15 calendar days after the date of the Notice of Intent to Deobligate.

Protests received will be considered and acted upon within 30 calendar days of the Notice of Intent to Deobligate.  The Notices of Fund Availability reflecting the deobligation and subsequent reallocation of the funds will be issued no later than 45 calendar days after the date of the Notice of Intent to Deobligate.

RWBs may request voluntary deobligation of WIA funds at any time.  A written request to voluntarily deobligate funds must be submitted to Workforce Florida, Inc.  WIA funds available due to a voluntary deobligation will either be reallocated to other RWBs based on the approved method used to allocate formula funds or will be used for state level projects.

WFI, in consultation with AWI staff, may initiate a retroactive deobligation/reallocation adjustment action if subsequent events or activities indicate that an overstatement of obligations or expenditures occurred that effected a prior deobligation/reallocation action.

The following is the schedule for the annual Deobligation/Reallocation process:

	CURRENT YEAR FUNDS	PRIOR YEAR and REALLOCATED FUNDS	
			
	FIRST QUARTER INTERIM REVIEW	FIRST QUARTER INTERIM REVIEW	
24-Oct	RWB input deadline into OSMIS @ 9/30	RWB input deadline into OSMIS @ 9/30	
1-Nov	25% Advisory Report published by AWI @ 9/30	75% Advisory Report published by AWI @ 9/30	
15-Nov	Report verification by RWB	Report verification by RWB	
			
	MID YEAR DEOB/REOB PROCESS	MID YEAR DEOB/REOB PROCESS	
24-Jan	RWB input deadline into OSMIS @ 12/31	RWB input deadline into OSMIS @ 12/31	
1-Feb	Notice of Intent to Deobligate issued
 (< 25% expended)	Notice of Intent to Deobligate issued
 (< 75% expended)	
15-Feb	Deadline for appeals by RWB
(< 25% expended)	Deadline for appeals by RWB
(< 75% expended)	
28-Feb	Expenditure shortfall
 deobligated by AWI	Expenditure shortfall deobligated by AWI	
15-Mar	Reallocations initiated by WFI	Reallocations initiated by WFI	
			
	THIRD QUARTER INTERIM REVIEW	THIRD QUARTER INTERIM REVIEW	
24-Apr	RWB input deadline into OSMIS @ 3/31	RWB input deadline into OSMIS @ 3/31	
1-May	80% Advisory Report published by AWI @ 3/31	100% Advisory Report published by AWI @ 3/31	
15-May	Report verification by RWB	Report verification by RWB	
			
	END-OF-YEAR DEOB/REOB PROCESS	END-OF-YEAR DEOB/REOB PROCESS	
24-Jul	RWB input deadline into OSMIS @ 6/30	RWB input deadline into OSMIS @ 6/30	
1-Aug	Notice of Intent to Deobligate issued
 (< 80% obligated, 50% expended)	Notice of Intent to Deobligate issued (< 100% expended)	
15-Aug	Deadline for appeals by RWB
(< 80% obligated, 50% expended	Deadline for appeals by RWB < 100% expended	
31-Aug	Obligation Shortfall deobligated by AWI	Obligation Shortfall deobligated by AWI	
15-Sep	Reallocations initiated by WFI	Reallocations initiated by WFI	

Reallocation of WIA

RWBs that have expended at least 25% of their WIA program funds by mid-year and obligated at least 80% and expended at least 50% of their funds by the end-of-fiscal year one will be eligible for the reallocation of any available deobligated funds.  Additionally, RWBs that have expended all the previous program year's WIA funds by the end of fiscal year two will be eligible for the reallocation of available deobligated youth, adult, and dislocated worker funds.  A RWB’s eligibility to receive a reallocation must be separately determined for each workforce program and each WIA funding stream.

Unexpended WIA funds that are reallocated at the end of the second program year are available for expenditure only during the third and final year of the life of the program year's funds.  Available WIA deobligated funds will be reallocated to eligible RWBs based on the approved method used to allocate their regular formula funds or will be used for state level projects.

RWBs that do not wish to receive reallocated funds must notify Workforce Florida Inc. within 15 calendar days after the date of the notice of intent to reallocate WIA funds.  Reallocated funds that are not accepted by a RWB will either be reallocated to other eligible RWBs or held at the State level for special projects.

Deobligation – Sample Calculations

EXAMPLE #1: The following is an example of how the amount of funds eligible for deobligation is computed when a RWB does not expend at least 25% of a program year's WIA program funds by the mid-point of the first fiscal year:

STEP 1: Program Year XX-X1 allocation
 (including any additional funds awarded)	$500,000

STEP 2: Computed Target Expenditures
 (25% of allocation)	$125,000

STEP 3: Actual Expenditures 
 (from OSMIS @ 12/31/XX) 	$105,000

STEP 4: Expenditure Shortfall
 (Target minus Actual Expenditures)                                            $20,000

EXAMPLE #2: The following is an example of how the amount of funds eligible for deobligation is computed when the same RWB does not obligate at least 80% but expends at least 50% of a program year's WIA funds by the end of the first fiscal year:

STEP 1: Revised PY XX-X1 allocation
 ($500,000 less $20,000 mid year deobligation)	$480,000

STEP 2: Computed Target Expenditures
 (50% of revised allocation)	$240,000

STEP 3: Actual Expenditures 
(from OSMIS @ 6/30/X1)	$250,000

STEP 4: Computed Target Obligations
 (80% of revised allocation)	$384,000

STEP 5: Actual Obligations 
(from OSMIS @ 6/30/X1)	$374,000

STEP 6: Obligation Shortfall 
(Target minus Actual Obligations)                                                $10,000

EXAMPLE #3: The following is an example of how the amount of funds eligible for deobligation is computed when the same RWB does not expend 100% of a program year’s WIA funds by end of the  second fiscal year:

Step 1: Remaining PY XX-X1 allocation ($500,000 minus
 $20,000 mid year and $10,000 year end deobligations)	$470,000

Step 2: Actual Expenditures (from OSMIS @ 6/30/X2)	$450,000

Step 3: Expenditure Shortfall
 (Remaining Allocation minus Actual Expenditures)	 $20,000

EXAMPLE #4: The following is an example of how the amount of funds eligible for deobligation is computed when a RWB does not obligate at least 80% AND does not expend at least 50% of a program year's WIA funds by the end of the first fiscal year:

STEP 1: Program Year XX-X1 allocation
 (including any additional funds awarded)	$500,000

STEP 2: Computed Target Obligations
 (80% of allocation)	$400,000

STEP 3: Actual Obligations  
(from OSMIS @ 6/30/X1)	$380,000

STEP 4: Obligation Shortfall 
  (Target minus Actual Obligations)                                                $20,000
STEP 5: Computed Target Expenditures
 (50% of allocation)	$250,000

STEP 6: Actual Expenditures 
(from OSMIS @ 6/30/X1)	$240,000

STEP 7: Expenditure Shortfall 
  (Target minus Actual Expenditures)                                             $10,000

STEP 8: The Deobligation amount is the greater 
of the Obligation Shortfall or the Expenditure Shortfall                  $20,000   

SUPERSESSION

This Guidance Paper supersedes Guidance Paper AWI-FG- 02-008  issued June 6, 2002.

AUTHORITY

Workforce Investment Act, §128(b) and (c), §133(b) and (c)
20 CFR Part 652 et al., §667.107 and §667.160
Temporary Assistance for Needy Families Regulations, appendix D-Section 2

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