TEGL 12-97 Attachment 5

Incentive Policies that Promote Continuous Performance Improvement

There are many methods of setting incentive targets that would promote performance improvement each year under ETA's Strategic Plan required by the Government Performance and Results Act (GPRA). Among these methods are: 1) States substitute a new, higher departure point in the performance standards worksheets, and 2) States set a challenging State performance target and reward according to the extent to which SDAs meet target or make progress toward meeting it.

States adopting either of these methods would be adopting a definition of "exceeding a performance standard" that requires performance above the level of performance specified as minimally acceptable and non-sanctionable. Thus, SDAs with performance at or above the performance standard, but below the incentive target (or rewardable level), would be considered as "meeting performance standards". All SDAs with performance in the range between the standard (the sanctionable level) and the rewardable level would be treated as merely meeting the performance standard. Only SDAs with performance above the rewardable level would be considered as "exceeding" performance standards.

Because only SDAs exceeding the rewardable level are defined as "exceeding" standards, the State is not required to provide incentives to SDAs with performance above the standard but below the rewardable level, even if that level of performance is achieved for all of the Secretary's core standards. Incentives are required only for SDAs that exceed all core standards by the Governor's definition of exceeding, which for these methods requires performance above the rewardable level.

For more information on developing incentive policies that reward performance at separate, higher levels than sanctionable levels, see the Guide to JTPA Performance Standards for Program Years 1996 and 1997, Chapter V, pages 15 to 34.

Method A: Adopting a Higher Departure Point.  In the first method, a higher departure point is substituted for the national departure point in the performance standards worksheets just for the purpose of determining which local areas merit performance rewards on each measure (while continuing to use the lower national departure point for sanctions purposes). The higher departure point for incentives could be set at: 1) the GPRA goal level for the appropriate measure, or 2) a percentile of national performance higher than that used for establishing the national departure points (percentiles of national performance are supplied in the Guide to JTPA Performance Standards).

To illustrate the first method using the GPRA goal level for the Adult Follow-Up Employment Rate: in the performance standards worksheet, the national departure point of 60% would be replaced by 64% (the GPRA goal level) for PY 1998, and by 65% for PY 1999. The effect would be to raise the local area's standard calculated by the worksheet to a higher, rewardable level. If the local area achieved the higher level, it would qualify for incentives attached to this measure in the State's policy (all other conditions being met).

Method B: Setting State Performance Improvement Targets.  The second method of using incentives to encourage performance improvement would be for the State to set a target performance improvement level for the State. It would then allocate various levels of performance or performance improvements calculated to achieve the State's target among the local areas. States with average performance at or above the national average could set a performance improvement target equivalent to the national rate of performance improvement implicit in the GPRA goal. States with performance below the national average should aim for a higher rate of performance improvement than the rate implicit in the GPRA goals.

For example, a State with average performance on the Adult Follow-Up Employment Rate of 65% in PY 1996 could say its PY 1998 target is 67%, an increase equivalent to the increase in the national average from 62% in PY 1996 to the GPRA goal of 64% in PY 1998. The State could then say that high-performing SDAs need achieve a lesser rate of performance improvement, and low-performing SDAs must achieve a higher rate of performance improvement, so that the overall effect statewide would be to achieve a 67% rate.