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The U.S. Department of Labor’s Employment and Training Administration recently published a significant guidance letter, Maximizing Innovation in Workforce Innovation and Opportunity Act Programs. The letter invites state waiver requests under the Workforce Innovation and Opportunity Act (WIOA) and highlights numerous existing flexibilities as a means “to maximize innovation in the public workforce system and better serve job seekers and employers.” The guidance letter also implements numerous concepts previewed in the America’s Talent Strategy published by the Departments of Labor, Education, and Commerce in August.

Many of the letter’s provisions closely align with America Forward’s recommendations on WIOA and reform of the workforce system, including:

• Pay-for-performance. The letter invites waivers to raise the cap on local workforce boards’ use of pay-for-performance contracts (which prioritize longer-term outcomes for workforce participants) for Title I formula programs from the challenging 10 percent statutory cap to as high as 50 percent. These waivers could substantially strengthen the feasibility of pay-for-performance contracting, which was introduced in the 2014 WIOA reauthorization but has been challenging to implement in practice.

• Supportive services post-completion. States can pursue waivers to provide targeted supportive services for Title I Adult and Dislocated Worker participants up to 12 months after they complete their career or training services. Many of the most effective programs provide continued support for program graduates, and extensive evidence demonstrates the importance of supportive services to facilitate durable economic mobility.

• Allowing all training services under training contracts. States can pursue waivers that would allow states and local areas to deliver all formula-funded training services under training contracts (as opposed to the typical voucher-based model), with an emphasis on high-impact programs that involve work-aligned training, such as apprenticeships, that have proven pathways to employment. A greater focus on contracts could help shift funding to programs like sectoral training that have some of the strongest outcomes but fit poorly in the standard Individual Training Account model, whether because they are more expensive or use a cohort approach.

• Employment-connected opportunities. The letter also lifts up numerous valuable waiver opportunities highlighted in previous guidance, including on-the-job training reimbursement, transitional jobs, and incumbent worker training.

• Emphasizing flexibility. DOL highlights numerous promising opportunities already available without waivers, such as opportunities to leverage the Governor’s Reserve for innovative, evidence-based activities (as California has done to support employment social enterprises); to braid funding streams; to implement groundbreaking training models like virtual reality approaches; and to support apprenticeships under WIOA.

We look forward to the innovative, evidence-focused approaches these new opportunities could foster, as well as the potential for demonstrations to set the stage for a strong, comprehensive WIOA reauthorization.