This Act may be cited as the “WIOA Performance Accountability Improvement Act”.

(a) State performance accountability measures.—

(1) PRIMARY INDICATORS OF PERFORMANCE.—Section 116(b)(2)(A) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3141(b)(2)(A)) is amended—

(A) in clause (i)—

(i) in subclause (II)—

(I) by striking “fourth” and inserting “second”; and

(II) by inserting “and remain in unsubsidized employment during the fourth quarter after exit from the program” after “the program”;

(ii) in subclause (V)—

(I) by striking “, during a program year,”;

(II) by striking “are in” and inserting “enter into”; and

(III) by inserting before the semicolon at the end the following: “within 6 months after the quarter in which the participant enters into the education or training program”; and

(iii) by amending subclause (VI) to read as follows:

“(VI) of the program participants who received training services and who exited the program during a program year, the percentage of such program participants who completed, prior to such exit, on-the-job training, employer-directed skills development, incumbent worker training, or an apprenticeship.”;

(B) in clause (ii)—

(i) in subclause (II), by striking “and” at the end;

(ii) in subclause (III), by striking the period at the end and inserting “; and”; and

(iii) by adding at the end the following:

“(IV) the percentage of program participants who, during a program year, participate in paid or unpaid work experiences as described in section 129(c)(2)(C).”; and

(C) by striking clause (iv).

(2) LEVELS OF PERFORMANCE.—Section 116(b)(3)(A) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3141(b)(3)(A)) is amended—

(A) by amending clause (iii) to read as follows:

“(iii) IDENTIFICATION IN STATE PLAN.—

“(I) SECRETARIES.—For each State submitting a State plan, the Secretaries of Labor and Education shall—

“(aa) not later than December 1 of the calendar year prior to the calendar year in which such State plan is submitted, for the first 2 program years covered by the State plan, and not later than December 1 of the year prior to the third program year covered by the State plan, for the third and fourth program years covered by the State plan, propose expected levels of performance for each of the corresponding primary indicators of performance for each of the programs described in clause (ii) for such State, which levels shall—

“(AA) be consistent with the factors listed in clause (v); and

“(BB) be proposed in a manner that ensures sufficient time is provided for the State to evaluate and respond to such proposals; and

“(bb) publish, on a public website of the Department of Labor, the statistical model developed under clause (viii) and the methodology used to develop each such proposed level of performance.

“(II) STATES.—Each State shall—

“(aa) evaluate each of the expected levels of performance proposed under subclause (I) with respect to such State;

“(bb) based on such evaluation of each such proposed level of performance—

“(AA) accept the expected level of performance as so proposed; or

“(BB) provide a counterproposal for such proposed expected level of performance, including an analysis of how the counterproposal addresses factors or circumstances unique to the State that may not have been accounted for in the proposed expected level of performance; and

“(cc) include in the State plan, with respect to each of the corresponding primary indicators of performance for each of the programs described in clause (ii) for such State—

“(AA) the expected level of performance proposed under subclause (I);

“(BB) the counterproposal for such proposed level, if any; and

“(CC) the expected level of performance that is agreed to under clause (iv).”; and

(B) in clause (v)(II)—

(i) in the matter preceding item (aa), by striking “based on” and inserting “based on (for each of the following factors that is found to be predictive of performance on an indicator for a program)”; and

(ii) in item (bb), by inserting “, foster care status, school status, education level, highest grade level completed, low-income status” after “ex-offender status”.

(b) Performance reports.—Section 116(d) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3141(d)) is amended—

(1) by amending paragraph (1) to read as follows:

“(1) IN GENERAL.—

“(A) TEMPLATE FOR PERFORMANCE REPORTS.—Not later than 12 months after the date of enactment of the WIOA Performance Accountability Improvement Act, the Secretary of Labor, in conjunction with the Secretary of Education, shall develop, or review and modify, as appropriate, to comply with the requirements of this subsection, the template for performance reports that shall be used by States (including by States on behalf of eligible providers of training services under section 122) and local boards to produce a report on outcomes achieved by the core programs. In developing, or reviewing and modifying, such templates, the Secretary of Labor, in conjunction with the Secretary of Education, shall take into account the need to maximize the value of the templates for workers, jobseekers, employers, local elected officials, State officials, Federal policymakers, and other key stakeholders.

“(B) STANDARDIZED REPORTING.—In developing, or reviewing and modifying, the template under subparagraph (A), the Secretary of Labor, in conjunction with the Secretary of Education, shall ensure that States and local areas, in producing performance reports for core programs and eligible training providers, collect and report, in a comparable and uniform format, information on common data elements, which use terms that are assigned identical meanings across all such reports.

“(C) ADDITIONAL REPORTING.—The Secretary of Labor, in conjunction with the Secretary of Education—

“(i) in addition to information on the common data elements described in subparagraph (B), may require a core program to provide additional information as necessary for effective reporting; and

“(ii) shall periodically review any requirement for additional information to ensure the requirement is necessary and does not impose an undue reporting burden.”;

(2) in paragraph (2)—

(A) by redesignating subparagraphs (J) through (L) as subparagraphs (K) through (M), respectively and inserting after subparagraph (I) the following:

“(J) the median earnings gain of participants who received training services, calculated as the difference between—

“(i) median participant earnings in unsubsidized employment during the second quarter after program exit; and

“(ii) median participant earnings in unsubsidized employment in the second quarter prior to entering the program;”; and

(B) in subparagraph (L), as so redesignated, by striking clause (ii); and

(C) by striking “strategies for programs” and all that follows through “the performance”, and inserting “strategies for programs, the performance”;

(3) in paragraph (3)—

(A) in subparagraph (B), by striking “and” at the end;

(B) by redesignating subparagraph (C) as subparagraph (E); and

(C) by inserting after subparagraph (B) the following:

“(C) the percentage of the local area’s allocation under section 133(b) that the local area spent on services paid for through an individual training account described in section 134(c)(3)(F)(iii) or a training contract described in section 134(c)(3)(G)(ii);

“(D) the percentage of the local area’s allocation under section 133(b) that the local area spent on supportive services; and”;

(4) by amending paragraph (4) to read as follows:

“(4) CONTENTS OF ELIGIBLE TRAINING PROVIDERS PERFORMANCE REPORT.—

“(A) IN GENERAL.—The State shall use the information submitted by the eligible providers of training services under section 122 and administrative records, including quarterly wage records, of the participants of the programs offered by the providers to produce a performance report on the eligible providers of training services in the State, which shall include, subject to paragraph (6)(C)—

“(i) with respect to each program of study (or the equivalent) of such a provider—

“(I) information specifying the levels of performance achieved with respect to the primary indicators of performance described in subclauses (I) through (IV) of subsection (b)(2)(A)(i) with respect to all individuals engaging in the program of study (or the equivalent); and

“(II) the total number of individuals exiting from the program of study (or the equivalent);

“(ii) with respect to all such providers—

“(I) the total number of participants who received training services through each of the adult program, and the dislocated worker program, authorized under chapter 3 of subtitle B, disaggregated by the type of entity that provided the training, during the most recent program year and the 3 preceding program years;

“(II) the total number of participants who exited from training services, disaggregated by the type of entity that provided the training, during the most recent program year and the 3 preceding program years;

“(III) the average cost for the participants who received training services, divided by the average earnings received by such participants during the second quarter after exit from the program, disaggregated by the type of entity that provided the training, during the most recent program year and the 3 preceding program years; and

“(IV) the number of individuals with barriers to employment served by each of the adult program, and the dislocated worker program, authorized under chapter 3 of subtitle B, disaggregated by each subpopulation of such individuals, and by race, ethnicity, sex, and age; and

“(iii) with respect to each recognized postsecondary credential on the list of credentials awarded by eligible providers in the State described in section 122(d)—

“(I) information specifying the levels of performance achieved with respect to the primary indicators of performance described in subclauses (I) through (IV) of subsection (b)(2)(A)(i) for all participants in the State receiving such credential; and

“(II) information specifying the levels of performance achieved with respect to the primary indicators of performance described in subclauses (I) through (IV) of subsection (b)(2)(A)(i) for participants in the State receiving such credential with respect to individuals with barriers to employment, disaggregated by each subpopulation of such individuals, and by race, ethnicity, sex, and age.”; and

(5) in paragraph (6)—

(A) by amending subparagraph (A) to read as follows:

“(A) STATE PERFORMANCE REPORTS.—The Secretary of Labor and the Secretary of Education shall annually make available the performance reports for States containing the information described in paragraph (2), which shall include making such reports available—

“(i) digitally using transparent, linked, open, and interoperable data formats that are human readable and machine actionable such that the data from these reports—

“(I) is easily understandable; and

“(II) can be easily included in web-based tools and services supporting search, discovery, comparison, analysis, navigation, and guidance; and

“(ii) in a printable format.”; and

(B) in subparagraph (B)—

(i) by striking “(including by electronic means), in an easily understandable format,”; and

(ii) by adding at the end the following: “The Secretary of Labor and the Secretary of Education shall include, on the website where the State performance reports required under subparagraph (A) are made available, a link to local area performance reports and the eligible training provider report for each State. Such reports shall be made available in each of the formats described in subparagraph (A).”.

(c) Evaluation of State programs.—Section 116(e) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3141(e)) is amended—

(1) in paragraph (1)—

(A) in the first sentence, by striking “shall conduct ongoing” and inserting “shall use data to conduct analyses and ongoing”; and

(B) in the second sentence, by striking “conduct the” and inserting “conduct such analyses and”; and

(2) in paragraph (2), by adding “A State may use other forms of analysis, such as machine learning or other advanced analytics, to improve program operations and outcomes and to identify areas for further evaluation.” at the end.

(d) Sanctions for State failure To meet State performance accountability measures.—Section 116(f) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3141(f)) is amended to read as follows:

“(f) Sanctions for State failure To meet State performance accountability measures.—

“(1) TARGETED SUPPORT AND ASSISTANCE.—

“(A) IN GENERAL.—If a State fails to meet 80 percent of the State adjusted level of performance for an indicator described in subsection (b)(2)(A) for a program for any program year, the Secretary of Labor and the Secretary of Education shall provide technical assistance.

“(B) SANCTIONS.—

“(i) IN GENERAL.—If the State fails in the manner described in subclause (I) or (II) of clause (ii) with respect to a program year, the percentage of each amount that would (in the absence of this paragraph) be reserved by the Governor under section 128(a)(1) for the immediately succeeding program year shall be reduced by 5 percentage points.

“(ii) FAILURES.—A State shall be subject to clause (i)—

“(I) if (except in the case of exceptional circumstances as determined by the Secretary of Labor or the Secretary of Education, as appropriate), such State fails to submit a report under subsection (d) for the appropriate program year; or

“(II) for a failure under subparagraph (A) that continues for a second consecutive year.

“(2) COMPREHENSIVE SUPPORT AND ASSISTANCE.—

“(A) IN GENERAL.—If a State fails to meet an average of 90 percent of the State adjusted levels of performance for a single program across all corresponding performance indicators for any program year, or if a State fails to meet an average of 90 percent of the State adjusted levels of performance for a single corresponding performance indicator across all programs for any program year, the Secretary of Labor and the Secretary of Education shall provide technical assistance, as described and authorized under section 168(b), including assistance in the development of a comprehensive performance improvement plan.

“(B) SECOND CONSECUTIVE YEAR FAILURE.—If such failure under subparagraph (A) continues for a second consecutive year, the percentage of each amount that would (in the absence of this subsection) be reserved by the Governor under section 128(a)(1) for the immediately succeeding program year shall be reduced by 10 percentage points.

“(3) REALLOTMENT OF REDUCTIONS.—Any amounts not reserved under section 128(a)(1) for a State for a program year pursuant to paragraph (1)(B) or (2)(B) of this subsection shall be realloted to other States in a manner consistent with paragraph (1)(B) or (2)(B) of section 132(b).”.

(e) Sanctions for local area failure To meet local performance accountability measures.—Section 116(g) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3141(g)) is amended—

(1) in paragraph (1)—

(A) by inserting “80 percent of the” before “local performance”; and

(B) by striking “local performance accountability measures” and inserting “local level of performance for a single corresponding performance indicator for a single program, an average of 90 percent of the local levels of performance across all corresponding performance indicators for a single program, or an average of 90 percent of the local levels of performance for a single corresponding performance indicator across all programs,”; and

(2) in paragraph (2)—

(A) by amending subparagraph (A) to read as follows:

“(A) IN GENERAL.—If such failure continues, the Governor shall take corrective actions, which shall include—

“(i) in the case of a failure, as described in paragraph (1), for a second consecutive year, on any individual indicator, across indicators for a single program, or on a single indicator across programs, a 5-percent reduction in the amount that would have otherwise been provided (in the absence of this clause) to the local area for the immediately succeeding program year under chapter 2 or 3 of subtitle B for the program subject to the performance failure;

“(ii) in the case of a failure, as described in paragraph (1), for a third consecutive year, the development of a reorganization plan through which the Governor shall—

“(I) require the appointment and certification of a new local board, consistent with the criteria established under section 107(b);

“(II) prohibit the use of one-stop partners identified as achieving a poor level of performance; and

“(III) revise or redesignate a local area, which may include merging a local area with another local area if the Governor determines that the likely cause of such continued performance failure of a local area is due to such local area’s designation being granted without the appropriate consideration of parameters described under section 106(b)(1)(B); or

“(iii) other significant actions determined appropriate by the Governor.”;

(B) in subparagraph (B)(i), by inserting “(ii)” after “subparagraph (A)”; and

(C) by adding at the end the following:

“(D) REALLOCATION OF REDUCTIONS.—Any amounts not allocated under chapter 2 or 3 of subtitle B to a local area for a program year pursuant to subparagraph (A)(i) retained by the Governor and added to the funds reserved under section 128(a)(1) or 133(a)(1), as applicable.”.

(f) Establishing pay-for-Performance contract strategy incentives.—Section 116(h) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3141(h)) is amended by striking “non-Federal funds” and inserting “the funds reserved under section 128(a)(1)”.

(g) Fiscal and management accountability information systems.—Section 116(i) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3141(i)) is amended—

(1) in paragraph (2), by inserting “, and may use information provided from the National Directory of New Hires in accordance with section 453(j)(8) of the Social Security Act (42 U.S.C. 653(j)(8))” after “State law”;

(2) by redesignating paragraph (3) as paragraph (4); and

(3) by inserting after paragraph (2) the following:

“(3) DESIGNATED ENTITY.—The Governor shall designate a State agency (or appropriate State entity) to assist in carrying out the performance reporting requirements for core programs and eligible providers of training services. The designated State agency (or appropriate State entity) shall be responsible for—

“(A) facilitating data matches using quarterly wage record information, including wage record information made available by other States, to measure employment and earnings outcomes;

“(B) data validation and reliability, as described in subsection (d)(5); and

“(C) protection against disaggregation that would violate applicable privacy standards, as described in subsection (d)(6)(C).”.