1. (a) The Commission may deobligate the following funds midyear, as set forth in §800.74(b):

   1. (1) Child Care (with the exception of unmatched federal Child Care funds that are contingent upon a Board securing local funds, as set forth in §800.73), Choices, Employment Service, Food Stamp Employment and Training, Project RIO, Trade Act Services, WIA Alternative Funding for Statewide Activities, and WIA Alternative Funding for One-Stop Enhancements funds: if a Board fails to achieve the expenditure of an amount corresponding to 90% or more of the relative proportion of the program year; and

   2. (2) WIA formula allocated funds:

      1. (A) if a Board fails to achieve the expenditure of an amount corresponding to 80% or more of the relative proportion of the program year for each category of WIA formula allocated funds; and
      2. (B) after the end of the twelfth month following the beginning of a program year, any unexpended funds that exceed 20% of the allocation for each category of WIA formula allocated funds for the program year.

2. (b) For midyear deobligations during the first program year:

   1. (1) Boards that are failing to meet the expenditure thresholds, as set forth in §800.74(a), have not achieved at least 95% of the applicable performance measures, or have not achieved a reasonable per participant cost, as set forth in §800.74(d)(2), at the end of months five, six, seven, or eight will be reviewed to determine whether they also have failed to meet such thresholds in the two previous months.
   2. (2) Boards that have failed to meet expenditure and performance thresholds for three consecutive months, as set forth in §800.74(b)(1), may be subject to deobligation.
3. (c) The Commission may deobligate no more than the difference between a Board's actual expenditures as of the end of the three-consecutive-month period during which the Board has failed to expend the amount corresponding to the relative proportion of the program year, as set forth in §800.74(a), and the amount corresponding to the relative proportion of the program year.

4. (d) The Commission will not deobligate funds from a Board that failed to meet the expenditure thresholds as set forth in §800.74(a):

   1. (1) if less than 60 days prior to the potential deobligation period, a contract amendment has been executed with the Board for a supplemental allocation or reallocation of funds in the same program category of funding; or

   2. (2) if a Board has achieved at least 95% of the applicable performance measures and has achieved a reasonable per participant cost, as of the end of the third consecutive month during which the Board has failed to expend the amount corresponding to the relative proportion of the program year as set forth in §800.74(a). Factors that the Commission may review to determine the reasonableness of per participant costs include:

      1. (A) the statewide cost per participant served;
      2. (B) the Board's service levels for each category of funding, as specified in the approved Board plan;
      3. (C) transfers or redesignations of funds;
      4. (D) expenditures reported in accordance with the Agency's financial reporting requirements; and
      5. (E) other local factors that may affect the cost of providing services.
5. (e) The Commission may deobligate funds if a Board is not meeting expenditure thresholds as set forth in §800.74(a), has not achieved at least 95% of the applicable performance measures, or has not achieved a reasonable per participant cost.

6. (f) A Board subject to deobligation for failure to meet the requirements set forth in §800.74(d)(2) shall submit a written justification within five working days of the date of notification from the Commission. A Board may voluntarily provide a written justification prior to receiving a formal request from the Commission. The written justification shall provide sufficient detail regarding the actions a Board will take to address its deficiencies, and may include:

   1. (1) expansion of services proportionate to the available resources;
   2. (2) projected service levels and related performance;
   3. (3) outstanding obligations; and
   4. (4) any other factors a Board would like the Commission to consider.
7. (g) To the extent this section is found not to comply with federal requirements, or should any related federal waivers expire, the Commission will be subject to federal requirements in effect, as applicable.

Source Note:The provisions of this §800.74 adopted to be effective July 12, 2006, 31 TexReg 5465.