ARC 3268C
ECONOMIC DEVELOPMENT AUTHORITY[261]
Notice of Intended Action
Twenty-five interested persons, a governmental subdivision, an agency or association of 25 or more persons may demand an oral presentation hereon as provided in Iowa Code section 17A.4(1)“b.”
Notice is also given to the public that the Administrative Rules Review Committee may, on its own motion or on written request by any individual or group, review this proposed action under section 17A.8(6) at a regular or special meeting where the public or interested persons may be heard.
Pursuant to the authority of Iowa Code sections 15.106A and 15.108(6), the Iowa Economic Development Authority gives Notice of Intended Action to amend Chapter 7, “Iowa Jobs Training Program,” Iowa Administrative Code.
The proposed amendments to Chapter 7 incorporate changes made in statute over several legislative sessions and changes desired by community college stakeholders and the Economic Development Authority. These amendments are proposed to ensure consistent use of language and terms and that the allocation of funds conforms to Iowa Code chapter 260C; update program definitions, maximum award amounts, application scoring criteria where applicable, references to 261—Chapter 195, “Public Records and Fair Information Practices,” and forms used by community colleges; incorporate references to the 260F data system; and strike references to entrepreneurial training projects, job retention projects, and projects funded through the Grow Iowa Values Fund.
The Economic Development Authority Board approved this rule making at its meeting held on July 21, 2017.
Interested persons may submit comments on or before September 19, 2017. Written comments may be submitted to Kristin Hanks-Bents, Economic Development Authority, 200 East Grand Avenue, Des Moines, Iowa 50309; e-mail kristin.hanks-bents@iowaeda.com.
These amendments do not have any fiscal impact to the state of Iowa.
After analysis and review of this rule making, the Authority finds that providing financial assistance for projects under the Iowa Jobs Training Program will have a positive effect on job creation and growth.
These amendments are intended to implement Iowa Code chapter 260F.
The following amendments are proposed.
	Item 1. Adopt the following new definitions of “Agreement,” “Authority,” “Certification,” “Date of commencement of the project,” “Eligible business,” “Employee,” “Jobs training program,” “Participating business,” “Program services,” and “Project” in rule 261—7.3(260F):
“Agreement” means the agreement between a business and a community college concerning a project.
“Authority” means the economic development authority created in Iowa Code section 15.105.
“Certification” means the community college and business agree that the information contained in the application is accurate. The certification also gives the authority permission to research the history of the business and perform other related activities necessary for the evaluation of the application.
“Date of commencement of the project” means the date of the preliminary agreement or the date an application for assistance is received by the authority.
“Eligible business” or “business” means a business training employees which is engaged in interstate or intrastate commerce for the purpose of manufacturing, processing, or assembling products, warehousing or wholesaling products, conducting research and development, or providing services in interstate commerce, but excludes retail, health, or professional services and which meets the other criteria established by the authority. A business engaged in the provision of services must have customers outside of Iowa to be eligible. The business site to receive training must be located in Iowa. “Eligible business” does not include a business whose training costs can be economically funded under Iowa Code chapter 260E, a business which closes or substantially reduces its workforce by more than 20 percent at existing operations in order to relocate substantially the same operation to another area of the state, or a business which is involved in a strike, lockout, or other labor dispute in Iowa. If a business closes or substantially reduces its workforce by more than 20 percent at existing operations in order to relocate substantially the same operation to another area of the state, then the business is ineligible for 36 consecutive months at any of its Iowa sites from the date the new establishment opens.
“Employee” means a person currently employed by a business who is to be trained. An employee for whom training is planned must hold a current position intended by the employer to exist on an ongoing basis with no planned termination date. Training is available only to an employee who is hired by the business, is currently employed by the business, and for whom the business pays withholding tax. However, “employee” does not include a person with executive responsibilities, a replacement worker who is hired as a result of a strike, lockout, or other labor dispute in Iowa, or an employee hired as a temporary worker.
“Jobs training program” or “program” means the project or projects established by a community college for the training of employees.
“Participating business” means a business training employees which enters into an agreement with the community college.
“Program services” includes but is not limited to the following:
	1.	Training of employees;
	2.	Adult basic education and job-related instruction;
	3.	Career and technical skill-assessment services and testing;
	4.	Training facilities, equipment, materials, and supplies;
	5.	Administrative expenses for the jobs training program;
	6.	Subcontracted services with institutions governed by the state board of regents, private colleges or universities, or other federal, state, or local agencies;
	7.	Contracted or professional services.
“Project” means a training arrangement which is the subject of an agreement entered into between a community college and an eligible business to provide program services. “Project” also means an authority-sponsored training arrangement which is sponsored by the authority and administered under Iowa Code sections 260F.6A and 260F.6B.
	Item 2. Rescind the definitions of “Department,” “Lead business,” “Prospective employee,” and “Supplier network training” in rule 261—7.3(260F).
	Item 3. Amend rule 261—7.4(260F) as follows:
261—7.4(260F) Program funding.
	7.4(1) Program funds consist of any moneys allocated by the department authority and the board for the purpose of this program, all repayments of loans or other awards or recaptures of awards, and earned interest, including interest earned on program funds held by the community colleges.
	7.4(2) A community college 260F account is established in the department authority. The distribution allocation of funds in this account, to the community colleges, shall be based upon the percentages prescribed in this rule, unless the general assembly stipulates otherwise in the appropriation process determined using the distribution formula established in Iowa Code section 260C.18C.
	7.4(3) Sixty-seven point five percent of the funds from the community college 260F account shall be distributed to each community college using the distribution formula established in Iowa Code section 260C.18.
	7.4(4) Twenty-five percent of the funds from the community college 260F account shall be distributed to community colleges for high technology apprenticeship programs based upon related eligible contact hours under the programs administered during the prior fiscal year as determined by the department of education. Contact hours generated in on-the-job training experiences are not eligible for consideration for apprenticeship funding.
	7.4(5) Seven point five percent of the funds from the community college 260F account shall be held by the department to fund community college-sponsored business network training projects and shall be available on a first-come, first-served basis, based on the date an application is received by the department.
	7.4(6) 7.4(3) Any unexpended or uncommitted funds remaining in the community college 260F account on May 1 of the fiscal year shall revert to a general account to be available on a first-come, first-served basis, based on the date an application is received by the department authority.
	7.4(7) Contingent on the availability of program funds, a department-sponsored business network training project account consisting of funds allocated by the department and the board is established in the department to fund department-sponsored business network training projects.
	7.4(8) Contingent on the availability of program funds, a department-sponsored high technology apprenticeship project account consisting of funds allocated by the department board is established in the department to fund department-sponsored high technology apprenticeship training projects.
	Item 4. Amend subrules 7.5(1) and 7.5(2) as follows:
	7.5(1) The maximum award which may be approved for each project at a business site is $25,000 $50,000 in a fiscal year.
	7.5(2) A business site may be approved for multiple projects, but the total of the awards for two or more projects shall not exceed $50,000 $100,000 within a three-year period. The three-year period shall begin with the department authority approval date of the first project approved within the three-year period.
	Item 5. Strike “department” wherever it appears in subrules 7.6(3), 7.7(2) and 7.10(3), rule 261—7.19(260F), subrules 7.21(2), 7.21(3), 7.24(2), 7.24(4) to 7.24(6) and 7.24(8), rule 261—7.25(260F), subrules 7.26(2), 7.26(4) to 7.26(6) and 7.26(8), rule 261—7.27(260F), subrules 7.30(6) and 7.32(4) to 7.32(6), and rule 261—7.33(260F) and insert “authority” in lieu thereof as the context requires.
	Item 6. Amend rule 261—7.9(260F) as follows:
261—7.9(260F) Use of program funds.
	7.9(1) The following costs associated with the administration of any project are eligible for program funding:
	a. 	Community college administrative costs associated with the development and operation of a project, not to exceed the rate charged for a 260E project 15 percent of the project cost.
	b. 	Legal fees.
	7.9(2) The following costs associated with the provision of program services for any project are eligible for program funding:.
	a. 	Vocational and skill assessment testing.
	b. 	Adult basic education.
	c. 	Job-related training.
	d. 	Cost of company, college, or contracted trainer or training services.
	e. 	Training-related materials, equipment, software, and supplies.
	f. 	Lease or rental of training facilities.
	g. 	Training-related travel and meals.
	h. 	Subcontracted services.
	i. 	Contracted or professional services.
	j. 	Pre-employment training for prospective employees.
	7.9(3) Reimbursement of employee wages while the employee is in training is not allowed.
	7.9(4) Production equipment, when used for training, may be an allowable cost. The cost of equipment used in training but subsequently used in production shall be prorated, as identified in 261—8.12(15,76GA,ch1180), with the percentage of “used in production” cost paid by the business.
	7.9(5) A community college may use funds awarded to a project to cover reasonable administrative costs and legal fees for that project when such costs are not covered by application fees or interest earnings. This includes administrative and legal costs incurred for a project that is canceled after funds are released to the community college but before being released to the business.
	7.9(6) A community college may not use funds from one project’s program award to cover any costs incurred by another project.
	Item 7. Rescind subrule 7.10(2).
	Item 8. Renumber subrule 7.10(3) as 7.10(2).
	Item 9. Rescind and reserve rule 261—7.11(260F).
	Item 10. Amend rule 261—7.12(260F) as follows:
261—7.12(260F) Separate account. The community college shall establish a separate program account in order to document all program transactions and from which repayments for loans shall be made to the department authority.
	Item 11. Rescind and reserve rules 261—7.13(260F) to 261—7.17(260F).
	Item 12. Amend rule 261—7.18(260F) as follows:
261—7.18(260F) Agreement Letter of intent.
	7.18(1) A letter of intent allows training to start on a specific date.
	7.18(1) 7.18(2) A community college and a business , or apprenticeship sponsor or entrepreneurial training provider may, but are not required to, enter into an agreement a letter of intent.
	7.18(2) 7.18(3) A community college and a business or entrepreneurial training provider which enter into an agreement a letter of intent shall use Agreement Letter of Intent, Form 260F-2. A college and an apprenticeship sponsor which enter into an agreement a letter of intent shall use Apprenticeship Agreement Letter of Intent, Form 260F-2A.
	7.18(3) 7.18(4) An agreement A letter of intent shall remain in effect for a maximum of one calendar year from the date of the agreement letter. An agreement A letter of intent for one project does not establish the commencement date for subsequent projects.
	Item 13. Amend rule 261—7.20(260F) as follows:
261—7.20(260F) Application process.
	7.20(1) An application for training assistance must be submitted to the department authority by a community college on behalf of a business or apprenticeship sponsor. An application shall not be accepted by the department authority if submitted directly by a business or apprenticeship sponsor.
	7.20(2) Community colleges shall use Application for Assistance, Form 260F-1, available in the 260F data system, to apply for 260F business assistance. Apprenticeship Application for Assistance, Form 260F-1D, shall be used for apprenticeship assistance.
	7.20(3) Required contents of the application will be described in the application package.
	7.20(4) Applications must be submitted via the 260F data system to Iowa Department of Economic Development, Division of Administration, Workforce Development Programs, 200 East Grand Avenue, Des Moines, Iowa 50309. Required forms and instructions are available at this address the authority.
	7.20(5) The department authority will score applications according to the criteria specified in 261—7.21(260F).
	7.20(6) To be funded, an application must receive a minimum score of 65 out of a possible 100 points and meet all other eligibility criteria specified elsewhere in these rules.
	7.20(7) The department authority may approve, reject, defer, or refer an application to another training program.
	7.20(8) The department authority reserves the right to require additional information from the business or apprenticeship sponsor.
	7.20(9) Application approval shall be contingent on the availability of funds. The department authority shall reject or defer an application if funds are not available.
	Item 14. Amend subrule 7.21(1) as follows:
	7.21(1) The criteria used for scoring 260F business or consortium applications and the points for each criteria are as follows:
	a. 	More than 50 percent of the business’s sales are out of state, 5 points.
	b. 	More than 50 percent of the business’s operating expenditures are spent within the state of Iowa, 5 points.
	c. 	The number of the business’s in-state competitors is low, 5 points.
	d. 	The business’s products have increased or will increase the business’s customer base in Iowa, 5 points.
	e. 	The business’s products have resulted in or will result in a decrease in the importation of foreign-made goods into the USA, 5 points.
	f. 	The majority of the business’s suppliers are located in Iowa, 5 points.
	g. 	The business’s current products help diversify Iowa’s economy, 5 points.
	h. 	The business indicates the potential for future growth and product diversification, 5 points.
	i. 	The business’s average wage rate for all employees is above the average wage rate in the county or region where the business is located, 5 points. “Region” is the service delivery area as defined in Iowa Code section 84B.2.
	j. 	The business provides employee health insurance and other benefits, 5 points.
	k. 	The majority of the business’s employees are employed full-time, 5 points.
	l. 	New skills which employees acquire from the training program will increase the marketability of their skills, 10 points.
	m. 	The application has established the business’s need for training, 10 points.
	n. 	The 260F cost of training per employee does not exceed comparable costs for training at a state of Iowa community college or university, 5 points.
	o. 	The business’s contribution to the training project is above the minimum program match requirement, 5 points.
	p. 	The application documents that all considerations, including funding required to begin the training project, have been addressed, 5 points.
q.  The application establishes a positive training impact on the business’s ability to survive, 10 points.
	a. 	The business has a plan for future potential growth and product diversification. 10 points.
	b. 	The majority of the business’s employees are permanent full-time. 10 points.
	c. 	Average wages for employees are at or above the laborshed wages for the business’s location. 10 points.
	d. 	The business provides a cash match greater than 25 percent (minimum). 10 points.
	e. 	The application explains why the business needs the training identified in the training plan. 10 points.
	f. 	The application explains how the training will contribute to the continued existence of the business. 10 points.
	g. 	The application identifies which skills the employees will acquire from the training and how the skills will increase the employees’ marketability. 5 points.
	h. 	The average cost of training per employee is comparable to the cost of training at Iowa community colleges or universities. 5 points.
	i. 	The application documents that all considerations, including funding required to begin the training project, have been addressed. 5 points.
	j. 	The employer provides health insurance and at least one other employee benefit. 5 points.
	k. 	Employee skills, knowledge, and abilities will be improved as a result of this training. 10 points.
	l. 	The business’s competitive stance will be improved as a result of this training. 10 points.
To be funded, applications must receive a minimum score of 65 out of 100 points and meet all other applicable eligibility criteria.
	Item 15. Rescind and reserve subrule 7.21(4).
	Item 16. Amend rule 261—7.22(260F) as follows:
261—7.22(260F) Training contract agreement.
	7.22(1) A community college shall enter into a training contract agreement with the business(es), lead business, lead organization, apprenticeship sponsor(s), or lead apprenticeship sponsor within 90 days of written notice of application approval from the department authority, using Training Contract Agreement, Form 260F-4, for 260F business-driven projects and using Form 260F-4D for apprenticeship projects.
	7.22(2) A business or apprenticeship sponsor shall not modify any provision of the contract agreement without the written approval of the community college.
	7.22(3) The community college, with the written consent of the business or apprenticeship sponsor, has the authority to modify all provisions of the contract agreement except for 260F business, business network and consortium project modifications which result in a reduction of the number of employees to be trained or which significantly change the training program.
	7.22(4) The community college and the business or apprenticeship sponsor are authorized to change the ending date of training, training provider, or other minor modifications to the training program. A signed copy of the modification must be sent to the department.  All modifications must be uploaded to the 260F data system prior to the ending date of training. If the modification authorizes a change of the ending date of training, the modification must be uploaded to the 260F data system prior to the original ending date of training. For example, if a training agreement specifies an ending date of training of December 31, 2018, and a community college and business agree to extend the ending date of training to December 31, 2019, then the modification must be uploaded prior to December 31, 2018.
	7.22(5) Modifications of 260F business, business network and consortium projects which result in a reduction of the number of employees to be trained or change the training program content must be approved by the department authority, community college, and business.
	7.22(6) The contract agreement shall not be modified in any way that would result in a violation of the Act Iowa Code chapter 260F.
	7.22(7) Lead businesses, lead apprenticeship sponsors and lead organizations that choose to be the only signatory on the training contract for a department-sponsored authority-sponsored business network, community college-sponsored business network, department-sponsored authority-sponsored apprenticeship or community college-sponsored apprenticeship project shall be responsible for all default and reporting requirements on behalf of the other businesses or apprenticeship sponsors participating in the project.
	Item 17. Amend rule 261—7.23(260F) as follows:
261—7.23(260F) Special requirements for community college consortium projects.
	7.23(1) The community college shall submit Consortium Application for Assistance, Form 260F-1A  available on the 260F data system, to the department authority for project approval.
	7.23(2) The community college shall enter into a training contract agreement with the consortium within 90 days of written notice of application approval from the department authority, using Consortium Training Contract Agreement, Form 260F-4A.
	7.23(3) All default provisions specified in 261—7.30(260F) shall apply to consortium projects.
	7.23(4) In the event of a default, a financial penalty will be assigned by the department authority to the consortium business or businesses identified by the community college as being responsible for the default.
	7.23(5) Each business that participates in the consortium shall complete a Final Performance Report, Form 260F-5, at the completion of training as a condition of the loan’s being forgiven.
	Item 18. Amend rule 261—7.24(260F), introductory paragraph, as follows:
261—7.24(260F) Special requirements for community college-sponsored business network projects. The community colleges and the authority are authorized to fund business network training projects which include five or more businesses and are located in two or more community college districts. A business network training project must have a designated organization or lead business to serve as the administrative entity that will coordinate the training program. The businesses must have common training needs and develop a plan to meet those needs.
	Item 19. Amend subrule 7.24(10) as follows:
	7.24(10) In the case of business network training assistance, which takes the form of supplier network training as defined in 261—7.3(260F), the department authority shall make a good faith effort to determine the probability that the proposed project will cause the displacement of employees of existing Iowa businesses. Any business network training project which takes the form of supplier network training and would have the effect of displacing employees of existing Iowa end-product manufacturers shall not be approved.
	Item 20. Amend rule 261—7.26(260F), introductory paragraph, as follows:
261—7.26(260F) Special requirements for community college-sponsored high technology apprenticeship projects. The community colleges and the authority are authorized to fund high technology apprenticeship programs which comply with the requirements specified in Iowa Code section 260C.44 and which may include both new and statewide apprenticeship programs. Notwithstanding the provisions of Iowa Code section 260F.6(2), relating to maximum award amounts, moneys allocated to the community colleges with high technology apprenticeship programs shall be distributed to the community colleges based upon contact hours under the programs administered during the prior fiscal year as determined by the department of education.
	Item 21. Rescind and reserve rules 261—7.28(260F) and 261—7.29(260F).
	Item 22. Amend subrules 7.30(1) and 7.30(2) as follows:
	7.30(1) A business or apprenticeship sponsor fails to complete the training project within the agreed period of time as specified in the training contract agreement. Such business or apprenticeship sponsor shall be required to repay 20 percent of total project funds expended by the community college and the business.
	7.30(2) A business or apprenticeship sponsor fails to train the agreed number of employees as specified in the training contract agreement. Such business or apprenticeship sponsor shall be required to repay a proportionate amount of total project funds expended by the community college and the business or apprenticeship sponsor. The proportion shall be based on the number of employees not trained compared to the number of employees to have been trained.
	Item 23. Amend rule 261—7.31(260F) as follows:
261—7.31(260F) Options and procedures on default.
	7.31(1) The community college shall notify the department within five working days, using Notice of Possible Default, Form 260F-6, authority whenever the community college determines that an event of default has occurred or is likely to occur.
	7.31(2) The community college shall document its efforts to reconcile the condition(s) responsible for the default and shall provide the department authority with copies of all related correspondence and documents of the community college and the business or apprenticeship sponsor.
	7.31(3) The community college shall notify the department, using Declaration of Default, Form 260F-7, authority when it has determined that an event of default cannot be cured.
	7.31(4) When notice of failure to cure the default is received from the community college, the department authority shall communicate with the business or apprenticeship sponsor, in writing, in an attempt to resolve the default.
	7.31(5) When the department’s authority’s efforts to reconcile are successful, the department authority shall notify the community college, in writing, to continue project operations. Continuation of project operations may be subject to new conditions imposed by the department authority as part of the reconciliation.
	7.31(6) When the department’s authority’s efforts to reconcile are unsuccessful and upon the department’s authority’s request, the community college shall assign the agreement to the department authority for appropriate proceedings at which time the department authority shall institute collection procedures or notify the attorney general to initiate appropriate legal actions.
	7.31(7) When a community college assigns an agreement to the department authority for a project declared to be in default, the community college shall return all remaining 260F funds to the department authority within 45 days of assignment.
	Item 24. Amend subrules 7.32(1) and 7.32(2) as follows:
	7.32(1) When a community college determines that a business or apprenticeship sponsor is in default, and the default has not been cured within the time period stated in the contract, the school community college is authorized to withhold training funds and payments to the business or apprenticeship sponsor, without notice to the business or apprenticeship sponsor.
	7.32(2) The attorney general may take whatever action at law or in equity as necessary and desirable to satisfy the default, including pursuit of a tax sale of the employer’s business property as provided for under Iowa Code section 260F.3(6).
	Item 25. Amend rule 261—7.34(260F) as follows:
261—7.34(260F) Open records. Information submitted to the department authority is subject to Iowa Code chapter 22, the public records law. Applications for training funds submitted to the department authority are available for public examination. Information If a business provides information which the business believes contains trade secrets recognized and protected by such as as such by law, or the release of which would give an advantage to competitors and serves no public purpose or which meets other provisions for confidential treatment as authorized in Iowa Code section 22.7, and establishes that such information is subject to confidential treatment under Iowa Code section 22.7 or as otherwise provided for by law, then such information shall be kept confidential. The department has adopted, with certain exceptions described in 261—Chapter 100, Uniform Rules on Agency Procedure, relating to public records and fair information practices. The uniform rules are printed in the first Volume of the Iowa Administrative Code. Uniform rule X.5 Rule 261—195.5(17A,22) describes how a person may request a record to be treated as confidential and withheld from public examination. Businesses requesting confidential treatment of certain information submitted to the department authority shall follow the procedures described in the uniform rule 261—195.5(17A,22). The department authority will process such requests as outlined in uniform rule X.5 and 261—Chapter 100 rule 261—195.5(17A,22).
	Item 26. Amend rule 261—7.35(260F) as follows:
261—7.35(260F) Required forms. Use of the following forms by the The community college is required to complete and upload the following forms, as applicable, within the 260F data system:
	1.	General Application for Assistance, Form 260F-1;
	2. and 3. No change.	
	4.	Business Network Application for Assistance ( Department Authority), Form 260F-1C;
	5.	No change.
	6.	Apprenticeship Application for Assistance ( Department Authority), Form 260F-1E;
	7.	Agreement Letter of Intent, Form 260F-2;
	8.	Apprenticeship Agreement Letter of Intent, Form 260F-2A;
	9.	No change.
	10.	Training Contract Agreement, Form 260F-4;
	11.	Consortium Training Contract Agreement, Form 260F-4A;
	12.	Business Network Training Contract Agreement (Community College), Form 260F-4B;
	13.	Apprenticeship Training Contract Agreement (Community College), Form 260F-4D;
	14.	Business Network Training Contract Agreement ( Department Authority), Form 260F-4C;
	15.	Apprenticeship Training Contract Agreement ( Department Authority), Form 260F-4E;
	16.	No change.
	17.	Apprenticeship Performance Report, Form 260F-5A;
	18. 17.	Notice of Possible Default, Form 260F-6;
	19. 18.	Declaration of Default, Form 260F-7.;
	19.	College and Business Certification, 260F-8;
	20.	Environmental Quality Form, to include a Solid Waste Plan and Hazardous Waste Plan (if applicable), Form 260F-9.
	Item 27. Amend 261—Chapter 7, implementation sentence, as follows:
These rules are intended to implement 2003 Iowa Acts, First Extraordinary Session, House File 692, and Iowa Code chapter 260F as amended by 2003 Iowa Acts, First Extraordinary Session, House File 683 Iowa Code chapter 260F.