Tegl 6 -03

EMPLOYMENT AND TRAINING ADMINISTRATION
ADVISORY SYSTEM
U.S. DEPARTMENT OF LABOR
Washington, D.C. 20210

CLASSIFICATION
TAA
CORRESPONDENCE SYMBOL
ONR
DATE
October 1, 2003

TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 6-03
TO:
FROM:

ALL STATE WORKFORCE AGENCIES
ALL STATE WORKFORCE LIAISONS
/s/
EMILY STOVER DeROCCO
Assistant Secretary

SUBJECT: Fiscal Year (FY) 2004 State Planning Estimates and Process
for
Requesting Additional Trade Adjustment
Assistance (TAA) Funds for
Training and Administration
1. Purpose. To provide states with the underlying formula for the
TAA funds disbursement process and FY 2004 planning estimates and
to describe the process for requesting additional TAA funds for training
and administration.
2. References. The Trade Act of 1974, as amended; the GovernorSecretary Agreement; OMB Circular A-87; 20 CFR Part 617, as
amended; 29 CFR Parts 96, 97, 98, and 99; General Administration
Letter No. 4-89, Change 1, dated June 15, 1989, Training and
Employment Guidance Letter No. 17-00, Change 1, dated July 3, 2003.
3. Background. The Employment and Training Administration (ETA)
has historically used a grant request process for disbursing TAA
training funds. This process has proved to be inefficient, lengthy and
cumbersome, making it difficult for states to plan and manage
resources for training trade affected workers. As a result, ETA
undertook a comprehensive review of its funds disbursement process
for TAA. The review indicated that many states did not have a full
understanding of the process. This often made it difficult for states to
prepare funding requests in a timely manner that approximated the
true needs of their trade impacted workforce. Furthermore, it may
have contributed to a less than optimum distribution of resources to
meet these needs. The new process will facilitate a fair and equitable
distribution of trade training funds under a capped entitlement
program.
Developing a formalized funding process for trade program funds is
critical to ETA’s overall vision of providing opportunity to the maximum

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number of trade affected workers so they can reconnect to the
workforce quickly and making training funds available to workers who
require training to obtain timely employment. To this end, the revised
fund disbursement process will support the overall TAA goal to secure
rapid, suitable, and long-term employment for adversely affected
workers served by the trade program.
________________________________________________________
________________
RESCISSIONS

EXPIRATION DATE:

None

Continuing

4. Overview of Funding Process. ETA is adopting an annual
allocation process for disbursing TAA funds for training and associated
administrative costs. The annual allocation process will utilize a set
formula for distributing 75 percent of available TAA training funds.
The remaining 25 percent will be reserved for distribution to states
experiencing large, unexpected layoffs. The reserve funds will be
distributed after states submit a grant request and demonstrate that
50 percent of allocated formula funds have been accrued as
expenditures. The factors that will be used in determining each state’s
share of the formula funds include prior year allocations of trade
training funds and participant levels. Additional criteria in preparing
requests for reserve funds will reflect the historical request process.
In addition, as is currently the case, states will receive an additional 15
percent of their formula allocation for administration of the program as
well as an additional 15 percent for administration for any reserve
funding that is allocated. The specific application of this funding
process is described below.
5. FY 2004 Funds Disbursement Process. For FY 2004, ETA will
implement an annual allocation process for disbursing TAA training
funds. The planning estimates and associated administrative funds for
each state are included in Attachment A. The detailed information
used to calculate the funding levels is shown in Attachment B. As
reflected in the attachments, a planning estimate is not provided to
any state that would receive less than $100,000. The process is as
follows:
TAA Formula Funds: 75 percent of the $220 million available for
TAA training—or $165 million—will be distributed to states using the
following formula:
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80 percent of TAA formula funds, or $132 million, will be
distributed based on the average amount of funds allocated to
states for TAA training in the previous three fiscal years.

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20 percent of TAA formula funds, or $33 million, will be
distributed to states based on the average number of program
participants for the previous three years for which complete data
are available. Participant data will reflect information reported
by states on the ETA-563/OMB approval number 1205-0016
(Quarterly Determinations, Allowance Activities and
Employability Services, Under the Trade Act).
To minimize significant fluctuations in state funding from prior
years, the formula will contain a “hold harmless” feature. The
“hold harmless” factor will ensure that each state’s planning
estimate is at least 85 percent of the amount the state would
have received last fiscal year had the new formula been in place
(i.e., 85 percent of three-quarters of the TAA training funds
received by the state in the previous year).

TAA Reserve Funds: 25 percent of the $220 million available for
TAA training—or $55 million—will be designated for reserve
funding. Reserve funds will be distributed to states on an asneeded basis and are designed to provide funding to those states
that experience large, unexpected lay-offs. In order to be eligible
for TAA reserve funds, states must demonstrate that at least 50
percent of their FY 2004 formula funds have been expended on an
accrual basis. This expenditure requirement does not apply to prior
year funds. Initially, the process for applying for TAA reserve funds
will be similar to the existing fund request process. States
requesting reserve funds must complete and submit an ETA
9023/OMB approval number 1205-0275 (Trade Adjustment
Assistance/NAFTA-TAA Financial Status Report/Request for Funds)
to:
Division of Trade Adjustment Assistance
Room C5311
200 Constitution Avenue N.W.
Washington, D.C., 20210
States should indicate on the form that the application is for a
Supplemental Request under section 5, Type of Report, and should
follow instructions contained in GAL 7-98, dated September 15,
1998, for completing the ETA 9023. States must include the
number of current TAA participants and the conditions that have
made the request for reserve funds necessary. Some factors which
will be taken into consideration during the review of these funding
requests will include expenditure of TAA formula funds, number of
people currently enrolled in training, number of people expected to
apply and be approved for training, average cost of training, and
conditions underlying the request. Further, the request should

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contain a list of active certifications including petition numbers,
company names and locations.
Job Search and Relocation Allowances: States may also request
Job Search and Relocation allowances for trade impacted workers
who are unable to find employment within their local commuting
area. These funds should be requested using the ETA 9023 and can
be submitted at any time.
TAA Program Administration Funds: States will continue
receiving an additional 15 percent of all formula, reserve, and job
search/relocation allowances for program administration. The
administrative funds will be included each time funds are obligated
to states by ETA.
The use of the ETA 9023 for requesting reserve funds and job
search/relocation allowances will be temporary. Another mechanism
for requesting these funds is being considered and is expected to be
implemented during November 2003. Once that process is finalized,
additional guidance will be provided to states.
Finally, consistent with the TAA Annual Cooperative Financial
Agreement, ETA may recapture any funds that states are unable to
utilize within a reasonable period of time, but only after consultation
with and appropriate notification to the state.
6. FY 2005 Funds Disbursement Process. In FY 2005, and future
years, 75 percent of available TAA training funds will continue to be
made available to states by formula, and 25 percent will be held in
reserve. However, the following modifications will occur:
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50 percent of the formula funds will be distributed to states
based on average accrued expenditures in the previous three
years as reported on the SF 269/OMB approval number 03480039 (Financial Status Report). If accrued expenditures are not
available for the three years, allocated levels will be substituted
for the years in which accrued expenditures are not available for
all states.
The remaining 50 percent of the formula funds will be distributed
to states based on the average number of program participants
for the previous three years for which complete data are
available as reported on the ETA 563.

The remaining features of the funding process will remain the same
including the use of the “hold harmless” factor in establishing each
state’s formula planning estimate, the process for requesting reserve

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funds and job search/relocation allowances, and the allocation for
administrative expenses. Specific guidance will be issued in advance
of FY 2005.
7. Program Reporting. The new funding process emphasizes the
importance of accurate and timely reporting of program participant
and expenditure data on the ETA 563 and SF 269. Reported data on
these forms will take on increasing importance in determining the level
of funds states may receive each year for serving trade affected
workers. Additional reporting elements could be considered for
inclusion in the TAA funding formula in future years, particularly those
related to outcomes reported on the Trade Act Participant Report
(TAPR). States should monitor the validity and timeliness of all data
reported in order to ensure fair and equitable treatment for all states
with regard to trade funding.
8. National Emergency Grants (NEG)/ Dual Enrollment.
Consideration was given to including prior year dual enrollment grants
in the TAA formula for calculating state planning estimates. After
careful consideration, it was determined that the inclusion of these
NEG awards would be inappropriate because NEGs are discretionary
funds available for unanticipated mass layoffs and are better suited to
augment ongoing TAA operating levels. Receipt of a prior year NEG
for a single, large layoff may not be the best predictor that the state
will experience future layoffs of that size. NEGs remain available
through the normal NEG application process.
9. Action Required. States should ensure that all trade program
staff are informed and knowledgeable of this policy.
10. Inquiries. States should direct all inquiries to the appropriate
ETA regional office.

Attachment A: FY 2004 State Formula Funded Planning Estimates and
Administrative Allotments
Attachment B:
FY 2004 Supporting Information for State Formula
Funded Planning
Estimates and Administrative Allotments