Narrative: III. b. 2.

The State Board will review its policies to comply with the requirements under WIOA. In order to bring all practices into compliance with WIOA and other federal regulations, the PRDEDC and the State Board will establish in the next months the following local policies or guidance:

                                                   Table 57 - In-Process State Policies and Procedures

The narrative does not have policies or processes addressing one-stop partner programs contributions to a one-stop delivery system.  Puerto Rico states that these guidelines will be added in the next few months.  However, States must establish a policy to addresses the handling of One-stop partners’ contributions including the application of the State Funding Mechanism and statutory caps.   Such policy or process should also identify the time frames and deadlines for local areas to negotiate and incorporate infrastructure funding agreements (IFAs) into their local MOUs.  (Compliance)

Puerto Rico did not describe their co enrollment and common intake processes for LWDAs and AJCs staff.  Additionally, Puerto Rico did not include the MOU/IFA policy.   Puerto Rico must include the co enrollment and common intake, and MOU/IFA policies and procedures (Compliance).

The WDP developed the public policy WIOA- 01-2017, Process to Develop the Memorandums of Understanding, issued on April 24, 2017, distributed to the presidents of the Local Boards, CEO, and Partners of the AJC. It establishes the legal basis and process for Local Boards and partners to negotiate memorandums of understanding.  The policy includes as attachment the Guide to the Preparation of the Infrastructure Financing Agreement (IFA) and Resource Allocation, prepared using as reference the TEGL 17-16, Infrastructure Funding of the One-Stop Delivery System. The WIOA-01-2017 policy sets the parameters for negotiation and the content that the agreement should have. The development of local memorandums is based on the state agreement signed by the grantees of the partner programs of the system.

The policy includes the legal reference, a definitions section, purpose, MOUS content, stages of the negotiation process, roles and responsibilities, and the guidelines for the development of infrastructure costs agreement. The next section shows a summary of the most relevant information on the policy. 

The purpose of the MOU is to provide information on the relationship between the Local Board, the AJC Operator, and the One-Stop System's partners.  The Local Board and the partner negotiated the MOU to ensure that the following WIOA principles are implemented:

1. Universal Access: All clients, including those with barriers to employment, will have access to job search, training, and occupational services in all -AJCs and will also be provided with information leading to decision-making targeting career development and the employment market.
2. Service in the One-Stop System: All clients can explore career development and job preparation services and access information on employment opportunities. 
3. Individual Choice: Customers will be able to choose from a variety of career, skills, employment, and training information to get the services and skills they need to increase their employability opportunities, based on individual needs, which will be nurtured by the advice and escape of CGU-AJC staff.
4. Regional Development: Create a labor development system that promotes the regional labor market's skills and improves the economic development of the Region and Local Area. Services such a comma, tax credits, incentives, and labor market information, must be accessible within the UGC-AJC.
5. Cost-efficiency: All customers have to have access to a system that minimizes costs, promotes the participation of employers and job seekers who use the system and so that services do not double
6. WIOA emphasizes full and active collaboration, good-faith negotiation, and the best agreement between the parties regarding services, costs, resources, and other provisions related to the best and most efficient Single Gesti6n System what is required by law and other applicable regulations.

 MOU must contain at least the following information:

1. Description of the services to be provided through the AJC, including how those services will be coordinated and provided.
2. A fiscal plan on how the costs of services and system operation will be subsidized, including infrastructure costs, operational cost and hared costs.
3. Methods for referral of individuals between the operator/ is of the UGC-AJC and partners for the service and activity concerned.
4. Methods to ensure that the needs of workers, youth and individuals with barriers to employment, including individuals with disabilities, are addressed through the provision of appropriate services, including access to technology and materials that are available in the UGC-AJC.
5. Description of the reports that each partner must produce under the program/agency regulation it represents concerning the services it provides in the UGC-AJC, who and how he will be responsible for collecting and submitting the required information.
6. Description of the services to be provided through the AJC UGC, including how those services will be coordinated and provided. 
7. The duration of the MOU and the procedures for amending and/or reviewing it.
8. Guarantees that each MOU will be reviewed, at least every three (3) years so that appropriate funds are allocated, and the provision of services is ensured.
9. The MOU must be updated in a period of not more than three (3) years to reflect any changes in signers and cost-sharing.
10. If a partner using the process described in section 678.750 of the WIOA Final Rule appeals the determination of the infrastructure cost assigned to be assumed, resulting in some change in the WIOA's contribution to infrastructure costs, the MOU must be updated to show such determination.
11. The determination of the format that the MOU will have is of the Local Board, also complying with the requirements set out in section 678.500 of the WIOA Interpretative Regulations and with any other provisions by the State.
12. The MOU may contain any other provision agreed by the parties, which must be consistent with WIOA Title I and its Regulations, Laws and regulations related to programs administered by partners and other applicable legal regulations. Such additional provisions may not be contravened with the provisions of this Circular Charter.

Availability of Career Services and Employer Services

4. 1. Basic career services will be universally available to the entire population.
   2. Each partner is responsible for the provision of the services corresponding to the program or agency they represent.
   3. Career services are detailed in section 678.430 of the Final Rule. Also, section 678.435 describes the services to employers to be available in the AJC.
   4. Mainly, employers' services fall into two categories:
      1. Participation and Commitment- Educate and provide general information to employers on how the services in the AJC can represent solutions to their challenges or needs in terms of the employment of qualified personnel.
      2. Business Services- develop customized strategies based on their profile to determine the needs of employers in a way that addresses the challenges related to Recruitment, Employment, Training, Closures, and Layoff
5. Multi-Barrier Employment Population Services - Partners must ensure that services are available to individuals with barriers to employment.
6. Continuous Improvement and Duplication of Service
   1. All partners will participate in the process of programmatic review and continuous improvement to offer the best services, avoid duplication, and consider an innovative approach to the delivery of services.
   2. Partners will participate in the day-to-day development and improvement of the system's procedures, policies, and operational administration and the Single Management Center.
   3. To ensure that services are responsive to community needs, partners will interview customers for feedback related to satisfaction with the service and care provided at the CGU-AJC. Tools will be developed to measure continuous improvement and avoid service duplication:

1. Evaluation Sheet- to be administered among all AJC staff, including partners, every three months. This Evaluation Sheet shall consider the delivery of services, referral processes, among others.
2. Customer Service Survey- which will be administered every three (3) months by the -AJC Operator to participants. To do this, the operator will choose a statistic sample corresponding to 35% of the total daily average participants.
3. The results of these tools will be taken into account to measure the effectiveness and efficiency of AJC processes and services.

7. Performance Measure - All partners will work together to achieve and exceed the Performance Measures negotiated with DOLETA.
8. The AJC operator will report on the progress of these measures, and all partners will discuss alternatives to mutually achieve performance, to make the negotiated rates, and share responsibility.
9. Common Operating System - All partners will integrate in the common operating system for the taking of information, evaluation, referral and monitoring of participants in the UGC-AJC.
10. Priority of Service: All employment and training programs or partners, subsidized with federal funds, and administered by AJC partners will observe a preferred system for people with disabilities, veterans, pregnant women, people over 65, and other priority population.. Employment and training opportunity must be provided to such population and/or other eligible persons as established by federal and State laws and federal policies applicable to the grants

Infrastructure Funding Agreement (IFA) and Resource Allocation Guidelines

The Infrastructure Funding of the One-Stop Delivery System (AFI) and Resource Allocation Agreement Guidelines was prepared using TEGL 17-16, Infrastructure Funding of the One-Stop Delivery System. The WIOA-01-2017 policy sets the parameters for negotiations of one-stop center cost allocation. The allocation and distribution among AJC core programs, infrastructure costs, are governed by WIOA Section 121(h), its Final Regulations and the Federal Cost Principles contained in the Uniform Administrative Requirements, Principle Costs, and Audit Requirements for Federal Awards of 2 CFR part 200 (Uniform Guidance).

1. All programs must contribute to infrastructure costs and certain additional costs, comma required by 20 CFR 678,700 and 678,760, 34 CFR 361,700 and 361,760 and 34 CFR 463,700 and 463,760. Under federal cost principles, a member's contribution must be a reasonable, necessary, and assignable cost to the program.
2. The Guide describes the governor's responsibilities, the State and State board, the Local Board, CEOs, and partners to determine infrastructure costs and their roles in the development of Local Financing Mechanisms (LFMs) and State Financing Mechanisms (MFS).
3. All costs incurred in the operation of the AJC must be allocated in compliance with federal cost principles and using an accepted cost allocation methodology. These methodologies should be described in an Infrastructure Financing Agreement (IFA), which each Local Board must submit to the State along with the Memorandum of Understanding and The Local Plan.
4. The IFA must be certified and approved by the AJC Operator and each required and optional partner.
5. Consistent with the 20 CFR 678,755, 34 CFR 361,755 and 34 CFR 463,755, the IFA must include the following elements:
   1. the validity of the IFA (which may be different from the MOU's validity);
   2. identification of the infrastructure cost budget, which is a component of the AJC's operational budget;
   3. identification of all AJC partners, the CEO(s) and the Local Board participating in the IFA;
   4. a description of the process for periodic review and modification to ensure equitable benefits between partners in the agreement;
   5. information on the Local Board's measures, the CEO(s) and the core partners to reach consensus or ensure that the Local Area followed the state financing process (SFM);
   6. a description of the process to be used among partners to resolve infrastructure financing issues during the MOU's duration, in cases where no consensus is reached.

Infrastructure Financing Mechanisms

Infrastructure costs can be financed through two methods, the Local Financing Method (LFM) and the State Financing Method (SFM). The LFM method allows flexibility to the Local Board and partner programs to establish the design and allocation of funds through consensus. The intention of the LFM to make a good-faith effort to reach agreement in the development of an AFI. On the other hand, the SFM is thinking about it as an alternative when the required consensus between the Local Boards and partner programs is not achieved.

AJC Operational Costs

The AJC budget should contain a base budget, which is based on the individual budgets that distribute in two types of costs specifically described in the Rule: (1.) the Infrastructure Costs, defined in WIOA's 121(h)(4); and (2.) the Additional Costs, which consist of operating costs and cost of shared services that are related to the operation of the AJC (but do not constitute the infrastructure costs), described in Section 121(i) of WIOA. Specific references on infrastructure costs can be found in sections 20 CFR 678,755, 34 CFR 361,755, and 34 CFR 463,755

1. Infrastructure Costs -Infrastructure costs are defined as the overall operating costs of the AJC, not related to the payment of human resources (salaries, or marginal benefits, among others), and may include the rental of physical facilities, utilities and maintenance, equipment (including products related to evaluation and technological assistance for persons with disabilities) and technology to facilitate access to the JJ (including planning activities and candidate search (outreach)) and may include the costs associated with establishing the identifier American Job Center (AJC) and related materials, as defined in Uniform Guidance 2 CFR 200.94, necessary for the operation of the center. Include:
2. Non-personnel costs - Non-personnel costs are all costs that are not compensation for personal services
3. Personnel costs -.  In contrast to non-personnel costs for the one-stop system, personnel costs include salaries, wages, and fringe benefits of the employees of partner programs or their sub-recipients, as described in 2 CFR 200.430 (Compensation – personal services) and 2 CFR 200.431 (Compensation – fringe benefits) of the Uniform Guidance.
4. Additional Costs- One-stop partners must share in additional costs, which must include applicable career services, and may include shared operating costs and shared services necessary for the general operation of the one-stop center
5. Career Services - One-stop partners must ensure that at least some career services, described in WIOA sec. 134(c)(2), are provided at the one-stop center.
6. Shared Operating Costs and Shared Services - One-stop partners may also share other costs that support the operations of the one-stop centers and the costs of shared services.  The costs of shared services may include initial intake, assessment of needs, appraisal of basic skills, identification of appropriate services to meet such needs, referrals to other one-stop partners, and business services (WIOA sec. 121(i)(2), 20 CFR 678.760, 34 CFR 361.760, and 34 CFR 463.760).

Funding Types and Sources.

Funding for infrastructure costs and additional costs, such as shared costs and shared services, may be in the form of:  (1) cash, non-cash, and third-party in-kind contributions; (2) funding from philanthropic organizations or other private entities; or (3) other alternative financing options, as described in WIOA sec. 121(c)(2)(A)(ii) and 20 CFR 678.715, 34 CFR 361.715, and 34 CFR 463.715. The infrastructure funding may be from funds classified as administrative, program, or both, depending on the partner program’s requirements. 

Uniform Guidance – Federal Cost Principles

Any cost paid for with federal grant funds must comply with Subpart E, Federal Cost Principles of the Uniform Guidance at 2 CFR part 200.  The Federal Cost Principles, applicable to one-stop partners that are Federally-funded, provide general guidance for developing cost allocation methodologies and determining if contributions towards infrastructure costs and additional costs are necessary, reasonable, and allocable to their program based upon relative benefits received.  Additionally

Proportionate Use 

Proportionate use refers to a partner program contributing its fair share of the costs proportionate to: (1) the use of the one-stop center by customers that may include reportable individuals and participants in its program at that one-stop center; (2) the amount of square footage occupied by the partner program in the one-stop center; or (3) another allocation base consistent with the Uniform Guidance.

Relative Benefit

The process of measuring the benefit of a program must use reasonable methods and is related to the benefit received by the partner at the center.

Partner Programs with Multiple Grant Recipients

In this situation, each contracted grant recipients must contribute to infrastructure

Cost Allocation

Cost allocation is based on the premise that federal programs must have an equitable proportion of cost-sharing, based on the benefit received by each program.

1. Definition of Allocation of 2 CFR 200.4

It is the process of assigning a cost or a cost group, to one or more cost objectives, in reasonable proportion with the expected benefit or other equitable relationship. The process can involve assigning a cost directly to a final cost goal or through one or more intermediate cost goals.

2. Assignable Cost

The 32 CFR 200,405 details the criteria for determining assignable costs under a federal program.

3. Allocation Methodologies.

In the development of the methodology, the partners: (1) determine the infrastructure costs budget and the budget(s) for additional costs, which must include career services and may include shared services and shared operating costs for a particular comprehensive one-stop center; (2) determine which methodologies are reasonable and acceptable; and (3) from the acceptable methodologies, select the methodology (or methodologies) that will be applied to the different cost categories.  Partners should focus on identifying methodologies that most effectively allocate costs based upon proportionate use and relative benefits received by the partners.

4. Allocation Bases 

When costs cannot be directly assigned to a final cost objective, the costs are placed in a pool that will be allocated later to the benefiting partner programs.

5. Inputs

The inputs are the most commonly used allocation bases for the resources used in a process, activity, or service.  Using inputs, the cost is allocated at the same time it is incurred and the usage must be documented.  Examples of input bases include:  (1) staff time allocated on the basis of timesheets and time distribution records; (2) facilities allocated on the basis of square footage; (3) accounting services allocated on the basis of transactions; and (4) equipment or supplies allocated based on usage.

6. Outputs 

The Departments consider outputs to be the results of an activity or service.  Examples of output allocation bases include: (1) participants and reportable individuals under a specific program; (2) number of customers who are obtaining employment after self-directed job search; and (3) number of customers receiving a specific career service.

Basic Cost Allocation Principles

1. Allowable Costs

To be allowed, a cost must be necessary and reasonable for proper and efficient administration of the program. To reduce the risk of expense accumulation and be responsible for unintended costs, the planned program expenses, the terms and conditions of the delegation of funds, and the applicable regulations should be carefully reviewed before incurring any cost of a program.

2. Reasonable Costs

For a reasonable cost, the cost must not exceed the costs that would be incurred by a prudent person under the same circumstances. In order to determine the reasonableness of a given cost, consideration should be given to:

1. Whether the cost is of a type generally recognized as normal and necessary for the operation of the organization or the management of the assignment.
2. The requirements or restrictions imposed by factors such as generally accepted business practices, state and federal laws, regulations and terms and conditions of the allocation
3. If the individuals and/or parties concerned act prudently within the circumstances, taking into account their responsibilities to the organization, its members, employees, customers, the general public and public interest.
4. Important deviations from established organization practices that can unreasonably increase operating costs.

3. Assignable Costs

For a cost to be assignable to a given cost objective, other costs incurred for the same purpose must be treated as constantly treated in similar circumstances. Any cost assignable to a particular fund, grant, or assignment or other cost objective, under these principles, may not be changed to other federal grants or allocations to cover funding deficiencies, to avoid restrictions imposed by law or assignment contract, or for other reasons.

However, this prohibition is not a limitation on cost change that is allowed under two or more allocations under existing agreements within the programs.

4. Benefits

Benefit measurement is a critical requirement and central task to perform under a cost distribution. Costs are assignable to a particular cost target considering the expected benefits from that cost goal

When direct benefit measurement cannot be done efficiently and effectively, then it is appropriate to group this type of costs into a cost pool, to subsequently make a distribution. The allocation basis should be the mechanism used to allocate combined costs (pool) to final cost targets. Partners must be careful that the selected base does not distort the expected results.

Cost Allocation Plan (CAP) - Method for Documenting Cost Allocation

The CAP is the method by which an organization identifies, group, and distributes the direct and indirect costs allowed in grants and contracts. Accounting records are the evidence required to justify all expenses included in a cost-sharing plan. The CAP must include at least the following elements:

1. An organizational chart that identifies all partners, type of services and staff functions
2. A description of the types of services and programs delivered at the center.
3. A copy of the official budget that includes all the costs to operate the AJC
4. A description of the methods used in allocating expenses for each cost objective that includes the following:
   1. A narrative description of the methodology for the allocation of expenses for each cost objective
   2. An overview of direct costs and cost types,
   3. A list of indirect costs, pool costs, basis for the allocation of each pool cost type, and supporting documentation for each allocation base.
   4. A summary of the allocation of the costs of the core services allocated for the operation of the AJC
   5. A certification from the AJC operator that the cost allocation methodology has been prepared in accordance with the guidelines and instructions given by the State. If the AJC wishes to certify your PAC, you can use a certification statement developed by the Local Board.

Factors to Develop a PAC

1. Simple - use the most straightforward and least expensive method possible, based on a measure to calculate the relative benefit are expect to receive, which can produce an equitable allocation of costs between programs.
2. Replicable - the process that unfolds must be replicable at any time
3. Consider Available Resources - it is essential to consider the structure and capabilities of the accounting system in the design of a cost allocation process.
4. Make changes wisely - Making changes to the CAP that result in a retroactive redistribution of costs to the cost objective, would be permissible only when the change results in a more equitable distribution of costs. Such changes in the allocation methodology must be received by the necessary, justified, and documented prior approvals.

Example of a Cost Allocation Process

The Guide includes a practical example showing cost estimates based on square feet, pool cost objective of physical facilities, number of expected participant’s equipment costs, and wages.

Certification of the AJC Infrastructure Financing Agreement

1. It is a matter of certifying that in the CAP, the included expenses are correctly allocated in accordance with the rules and regulations established for the use of WIOA funds
2. Costs presented in the CAP have been duly negotiated and reviewed for  AJC's partners, and they are fair and reasonable, considering the contribution of each partner to the operation of the center and the provision of services.
3. It includes the signature of the persons responsible for negotiating the CAP and the date of certification of the agreements.