WorkforceInnovationandOpportunityActandPayforSuccess
OnJuly22nd,PresidentObamasignedtheWorkforceInnovationandOpportunityAct(WIOA)intolaw.
WIOAisaproductofmonthsofnegotiationsamongleadersintheHouseandtheSenatetoreauthorize
theWorkforceInvestmentAct(WIA),thelawformerlygoverningtheworkforcedevelopmentsystemin
theUnitedStates.WIOAupdatesthecurrentworkforcedevelopmentsystemtoreflectthechanged
educationandtrainingneedsofourcurrentworkforce,astheoriginalWIAlegislationwaspassedin
1998,atimeofnearlyfullemployment.WhileWOIApreservesthecurrentWIAformulafunding
streams,itincludesnewrequirementsforamorecohesiveeducationandtrainingsystemthroughanew
unifiedplantobesubmittedbystatesannuallythatincludesworkforce,adultandvocationaleducation
programming,alongwithcrosstitleperformancemeasurestobetterassessprogrammaticperformance.
WIOAalsoincludesseveralnewprovisionsthatcansignificantlyimprovejobtrainingandemployment
foradultsandyouth.AmericaForwardandtheAmericaForwardCoalitionchampionedoneofthese
innovativeprovisionsonPayforSuccess,afundingapproachthatcangreatlyimproveoutcomesamong
government,rewardoutcomes-basedserviceprograms,andsavetaxpayerdollars.
PAYFORSUCCESSOVERVIEW
Referredtointhelegislationas‘PayforPerformance,’theconceptallowsthefederalgovernmentto
incentivizepublic-privatepartnershipstotackletoughsocialchallengesthatcostthetaxpayers
significantresourcesiftheyarenotaddressed.Thesekindsofpaymentstructuresprovidefundsonlyto
programsthatachievepre-determinedoutcomes.
Atthemostbasiclevel,PayforSuccessisaperformance-basedcontractingarrangementbetween
governmentandasocialserviceproviderinwhichimpactismeasuredrigorouslyfor“highbar”
outcomesandgovernmentonlypays‘forsuccess’whenresultsareachievedwithinaspecifictimeframe.
Byonlypayingforprogramsthatareworking,thesefundingmodelsusetaxpayerdollarsmore
efficientlyanddirectresourcestoprogramsgettingrealresults,insteadofonlymeasuringthenumber
ofpeopletheyserve.BecausePayforSuccessarrangementsdonotrequirepre-determined
interventions,localandstategovernmentscanbeflexibleinselectinginnovativeandeffectiveprograms
todelivermuchneededservicesintheircommunityandmayleantowardstrategiesthatpreventbad
outcomesinsteadofwaitinguntilremediationisnecessary.Insomecases,privatesectorfundersmay
provideup-frontfinancingforthedeliveryofservices(anarrangementknownas“SocialImpactBonds”),
takingontheriskthattheinterventionwillnotsucceedandreceivingsuccesspaymentsonlyifitdoes.
PAYFORSUCCESSINWIOA
WOIAaugmentsthePayforSuccessprovisionsofthebillbeyondwhatwasincludedorconsideredin
theindividualHouseandSenateWIAbills,including:
1. Restoringstatesoverallportionofformulafundsto15%-forthepastthreeyears,theportionof
WIAannualformulafunding(whichtotaled$2.6billioninFY14acrossthreefundingstreams)
allottedforstateWIAactivitieshadbeenreducedbyappropriatorsto5-10%ofoverallfunding.
WIOArestoresstates’allotmentto15%ofallthreeWIAformulafundingstreams,allowing
Governorstohavesignificantlymorefundingforinnovativestatewideactivities.Statescould
usesuchfundsforPayforSuccessapproaches.
2. CreationofapermanentPayforPerformanceauthority–WIOAcreatesapermanentauthority
withinallthreeWIAformulafundingstreams(Adult,Youth,andDislocatedWorkers)forPayfor
PerformanceasaneligibleuseofWIAfunds.Localworkforceboardscoulddevoteupto10%
acrossallthreeofWIAformulafundingstreamsforPayforPerformanceprogramming.
LegislativeLanguage
(d)PermissibleLocalEmploymentandTrainingActivities.--
(1)Ingeneral.--
(A)Activities.--Fundsallocatedtoalocalareaforadultsunderparagraph(2)(A)or(3),as
appropriate,ofsection133(b),andfundsallocatedtothelocalareafordislocatedworkersunder
section133(b)(2)(B),maybeusedtoprovide,throughtheone-stopdeliverysysteminvolved(and
throughcollaborationwiththelocalboard,forthepurposeoftheactivitiesdescribedinclauses
(vii)and(ix))--
...
(iii)implementationofapay-for-performancecontractstrategyfortrainingservices,forwhich
thelocalboardmayreserveandusenotmorethan10percentofthetotalfundsallocatedtothe
localareaunderparagraph(2)or(3)ofsection133(b)
3. Statesgiventheauthoritytoincentivizelocals’useofPayforPerformance–statescanusenonfederalresourcestoencouragetheuseofPayforPerformancebylocalworkforceinvestment
areas.
LegislativeLanguage:
(h)EstablishingPay-for-PerformanceContractStrategyIncentives–Usingnon-Federalfunds,the
Governormayestablishincentivesforlocalboardstoimplementpay-for-performancecontract
strategiesforthedeliveryoftrainingservicesdescribedinsection134(c)(3)oractivitiesdescribed
insection129(c)(2)inthelocalareasservedthelocalboards.
4. AdditionalPayforSuccesssupportmechanismsofferedbystates-stateswouldbenewly
authorizedtousetheirownWIOAfundstoprovidetechnicalassistancetohelplocalworkforce
areasimplementPayforPerformancestrategies.
5. NewserviceproviderseligibleforPayforSuccesscontracts–PayforPerformancecontracts
authorizedunderWIOAcanbeawardedtoinnovatorsincludingintermediaries,community
basedorganizations,andothers,whicharenewlyenumeratedinthebill.Bycontrast,winnersof
PayforSuccessfundsundertheWorkforceInnovationFund,forinstance,havebeenlimitedby
statutetostatesandlocalworkforceboards.
6. Opportunitytoestablishstraightforwardandsimplifiedoutcomegoalsdifferentfrompast
arrangementstypicalofWIAprograms
LegislativeLanguage
Section116(b)(2)(K)(K)inthecaseofaStateinwhichlocalareasareimplementing
pay-for-performancecontractstrategiesforprograms—(i)theperformanceofserviceproviders
enteringintocontractsforsuchstrategies,measuredagainstthelevelsofperformancespecified
inthecontractsforsuchstrategies
DefinitionofPayforSuccessinWIOA
Thefollowingprovisiondefinespayforperformanceinthebill:
(47)PayforPerformanceContractStrategy–Theterm‘pay-for-performancecontractstrategy’means
aprocurementstrategythatusespay-for-performancecontractsintheprovisionoftrainingservices
describedinsection134(c)(3)oractivitiesdescribedinsection129(c)(2),andincludes–
(A)contracts,eachofwhichshallspecifyafixedamountthatwillbepaidtoaneligibleservice
provider(whichmayincludealocalornationalcommunity-basedorganizationorintermediary,
communitycollege,orothertrainingprovider,thatiseligibleundersection122or123,asappropriate)
basedontheachievementofspecifiedlevelsofperformanceontheprimaryindicatorsofperformance
describedinsection116(b)(2)(A)fortargetpopulationsasidentifiedbythelocalboard(including
individualswithbarrierstoemployment),withinadefinedtimetable,andwhichmayprovideforbonus
paymentstosuchserviceprovidertoexpandcapacitytoprovideeffectivetraining;
(B)astrategyforindependentlyvalidatingtheachievementoftheperformancedescribedin
subparagraph(A);and
(C)adescriptionofhowtheStateorlocalareawillreallocatefundsnotpaidtoaprovider
becausetheachievementoftheperformancedescribedinsubparagraph(A)didnotoccur,forfurther
activitiesrelatedtosuchaprocurementstrategy,subjecttosection189(g)(4).
ADDITIONALCHANGESINWIOARELATEDTOPAYFORSUCCESS
ApartfromthespecificPayforSuccessprovisions,thereareseveralimportantchangesinWIOAthat
relatetoPayforSuccessandhavethepotentialtodirectevenmoreresourcestowardoutcomesrelated
programsforyouthandothers.Theseinclude:
1)Pay-for-performancetrainingcontractsforadultsandyouth
• WIOAcreatesapermanentauthoritywithinallthreeWIAformulafundingstreams(Adult,
Youth,andDislocatedWorkers)forPayforPerformanceasaneligibleuseofWIAfunds.
• Localworkforcecoulddevoteupto10%acrossallthreeofWIAformulafundingstreamsforPay
forPerformanceprogramming(about$240M-$300Mofpotentialresourcesdevotedto
outcomes-basedprograms).
2)Eliminatesthe“sequenceofservices”andmerges“coreandintensiveactivities”intoacombined
“careerservices”
• Thisenableslocalboardsandproviders,includingnewprovidersauthorizedforPayforSuccess
strategies,todevelopholisticstrategiesthatcantrainworkersandjobseekersforindemand
careersratherthansimplyprovidingthemjobsearch,summerworkexperience,orotherlimited
assistance.
3)Increasestheabilitytouseon-the-jobtraining(reimbursementratesupto75percentforeligible
employers),incumbentworkertraining(mayuseupto20percentoflocalfunds),andcustomized
training
•
LowskilledandotherincumbentworkerswerenoteligibleforassistanceunderWIAandonthe
jobtrainingforeligibletraineeswasextremelylimited.WIOAopensupstrategiesforincumbent
workersandonthejobtrainingtraineesandbetterincentivizesemployers.
4)Newopportunitiestoutilizepriorlearningassessments(PLA)
• AmericaForwardhasadvocatedsuccessfullyforpriorlearningassessmentstobeusedbythe
VeteransAdministrationsothatveteransdonothavetousetheirlimitededucationbenefitsfor
classroomtrainingincollegelevelskillareasthattheyhavealreadymasteredinthemilitary.
ThisWIOAprovisionisa“nextstep”inadvocacyforPLAapproaches.UnderWIOA,theuseof
PLAscanobviatetheneedforstudents,workers,andjobseekerstoconsumelimitedWIOA
dollarsforthosepartsofaworkforcetrainingcurriculumwheretheycandemonstratemastery
throughassessment.
5)Requirementsforimplementationofindustryorsectorpartnershipsandcareerpathwaystrategies
• Thenewlawdirectsmoreresourcestowardprogramsthatsupportdisconnected/opportunity
youth(outofschoolyouth,youthnotemployedornotinvocationaltraining,etc.).Itrequires75
percentofallyouthfundingtosupportout-of-schoolyouth,ofwhich20percentisprioritized
forwork-basedactivitiessuchasinternships.
• Theshifttowardprioritizingoutofschoolyouthandwork-basedactivitiescouldresultinclose
to$600Minrefocusedyouthresources.
6)Restoresthe15percentfundingreservationatthestateleveltoallowstatestheflexibilitytoaddress
specificneedsandpromoteinnovationssuchasPayforPerformance
• Thisflexibilitycanbeusedtofundevaluationsofprograms,explorenewdataapproaches,etc.
• Nationwide,theseresourcesapproximates$400M.
7)Incorporatesmoredesirableandeffectivestatisticaltechniques,suchasregressionanalyses,thatcan
helpminimizedisincentivesfordeliveringservicestopopulationswithsignificantbarriers,particularlyin
lightofthecommonmeasuresimplementedacrosstargetgroupsunderWIOA
• WIOAestablishescommonmeasuresforeachtargetpopulation(youth,dislocatedworkers,
adults)which,unadjusted,couldleadtodisincentivestoservingmoredisadvantaged
populations.Examplesofthisinclude:
• Olderlowincomeindividualsoftenseekup-skillingforparttimeemployment.Common
measuresforadultsfocusedonlyonfulltimeworkandearningsandunadjustedforthe
employmentneedsofthispopulationcouldmeanthatfewlowincomeolderworkers
wouldbeservedunderWIOA.
• Verylowincomemigrantworkershavework-relatedneedswhichjobtrainingproviders
addressthroughtransportation,housingandemergencyassistanceservices.Thesehelp
themgetandkeepemploymentafterWIA-fundedtraining.And,ofcourse,theirworkis
usuallyseasonal.Individualswithdisabilitieshaveotherspecialneedsthatmustbe
addressedbyprovidersforthemtobesuccessfulintrainingandjobplacements.
Commonmeasuresrelatedonlytofulltimeemploymentandwagegainsand
unadjustedforthecostsofaddressingsuchspecialneedscouldcauseproviderstoavoid
servingthemand/oractuallyworkagainstthemremainingemployed.