What States Should Know About the New WIOA Waiver Guidance

In the absence of Congressional leadership action on long-needed updates to the Workforce Innovation and Opportunity Act (WIOA), the administration has taken steps to encourage states to pursue waivers from existing requirements as a way to drive innovation within the workforce system. In late November, the Department of Labor’s Employment and Training Administration issued a Training and Employment Guidance Letter (TEGL) on Maximizing Innovation in Workforce Innovation and Opportunity Act Programs which provides examples of existing and potential waivers states could seek to promote innovation. While some of the approaches outlined could support the needs of our network, others would allow states to make changes that could significantly affect local input, alter governance structures, and negatively impact access to the workforce system.

The TEGL outlines five strategic pillars for the workforce system:

• Industry-Driven Strategies – aligning workforce strategies with industry needs

• Worker Mobility – supporting activities that promote upward mobility for workers

• Integrated Systems- advancing greater system alignment and streamlining

• Accountability – ensuring measurable results and making adjustments to systems and providers when outcomes are not met

• Flexibility and Innovation – leveraging existing authorities and waivers to drive innovation

While these pillars reflect goals that NSC and our network broadly share, some of the solutions proposed to advance them could weaken local leadership and stakeholder engagement.

Waiver Approaches That Raise Concerns for Local Governance and Access

One area where the TEGL provides specific guidance is board composition and governance. One waiver highlighted by the TEGL suggests that states waive workforce development board membership requirements as long as significant business representation is present. While employer input is critical, this approach could exclude or limit other key workforce voices from labor, the community, and education partners undermining the important balance that the workforce boards should reflect.

Similarly, the TEGL points to the ability for a state workforce board to act as a local board. Although the guidance notes that local input and funding must continue, this waiver appears to function as a pathway to consolidating local workforce areas or creating single local-area states. In addition, the TEGL outlines a waiver that would allow states to combine multiple planning regions into a single local workforce area. This approach is presented as a way to improve coordination of services, but it raises concerns that it could also be used to further consolidate control at the state level.

While not all consolidation is problematic, concentrating too much control over the workforce system at the state level risks sidelining local stakeholders and employers. These proposals echo familiar efforts that we saw in the stalled WIOA reauthorization effort to move the system towards a consolidated “one door” model a form of consolidation marked by block granting that often ultimately leads to lower levels of investment in public services.

The TEGL also describes a waiver to the requirement that each local area have an American Job Center. The suggested waiver would allow states to permit virtual tools or affiliated sites in the community like libraries and colleges to serve in place of a physical AJC site. There are some practical advantages to this approach, but it is important to ensure that workers and employers maintain local access to one stop infrastructure and resources

The TEGL also proposes several existing and potential waivers to WIOA youth requirements, including allowing in-school youth to access individual training accounts, permitting states to lower the out-of-school youth expenditure requirement from 75 percent to 50 percent to create additional flexibility for serving in-school youth, and allowing states to waive the requirement to provide all 14 youth program elements. While these flexibilities are intended to expand options for in-school youth, it is critical to ensure that waivers do not inadvertently reduce access to services or funding for Opportunity Youth, who continue to face significant barriers to education and employment.

Waiver opportunities that could strengthen outcomes for workers and learners

One of the more promising potential waivers outlined in the TEGL would allow states to provide supportive services to participants for up to 12 months after program completion. One of the biggest indicators of success in both training programs and the workplace is access to holistic supports. This potential waiver could support job retention by helping participants navigate benefits cliffs and temporarily offset lost supports, such as transportation, living expenses, and childcare.

Additional Waiver Options States May Consider

The TEGL highlights several other waiver options and existing authorities that states are encouraged to use to support innovation within the workforce system:

• Waiver allowing up to 50 percent of the Governor’s Reserve to be used for rapid response in the first year of funding – This waiver could support innovation by expanding the use of on-the-job training reimbursements, transitional jobs, incumbent worker training, and work-based learning opportunities for in-school youth.

• Potential waiver raising the cap on pay-for-performance strategies from 10 percent to up to 50 percent of WIOA allocations – While NSC has not taken a formal position on the pay-for-performance provisions included in A Stronger Workforce for America Act (ASWA) and reflected in ETA’s approach, a 50 percent cap is notably high, particularly given that ASWA set the cap at 40 percent for local activities and lower thresholds were included in other areas related to pay-for-performance in that legislation.

• Potential waiver allowing all training to be delivered through training contracts – ETA frames this waiver as a way to address variation in quality across state Eligible Training Provider Lists and to strengthen employer input, particularly where programs are validated by employers and include job or interview guarantees. While this approach mirrors provisions in the proposed WIOA reauthorization under ASWA, the guidance emphasizes engagement with individual employers and does not explicitly reference industry or sector partnerships, which may offer a more effective strategy.

What states are doing – and what we’re watching next

Beyond specific waiver examples, the TEGL also encourages states to make greater use of existing statutory authorities. These include transferring funds between WIOA Adult and Dislocated Worker programs; leveraging wage reimbursement of up to 75 percent (or potentially higher) for on-the-job training; utilizing the 15 percent Governor’s Reserve; and reserving up to 25 percent of Dislocated Worker funds for rapid response to unemployment increases. Notably, this section again highlights local area mergers through both informal coordination and formal redesignation, reinforcing a broader emphasis on consolidation and “One Door” approaches. At the same time, the TEGL includes a welcome focus on investing in technology and staff training, including career navigation, as part of efforts to strengthen service delivery.

National Skills Coalition is interested in learning how states and local workforce areas are approaching the waivers outlined in the TEGL, including potential benefits and challenges. and whether any waivers are being actively pursued. We also welcome information on any waivers that states are actively considering or pursuing. Partners are encouraged to share their perspectives with Megan Evans at megane@nationalskillscoalition.org