Operational Guidance | OG 05-2026: Waiver of Expenditure Requirement for Out-of-School Youth
- Date: August 14, 2026
- Subject: Waiver of Expenditure Requirement for Out-of-School Youth
- From: Andrea L. DeSantis, Assistant Secretary for Workforce
Purpose:
The purpose of this guidance is to announce and provide guidelines for the local Workforce Development Boards (WDBs) to implement North Carolina’s approved waiver of the Workforce Innovation and Opportunity Act (WIOA) Title I Youth 75 percent expenditure requirement for Out-of-School Youth (OSY).
This Operational Guidance (OG) rescinds OG 07-2022, Change 2. The procedures herein supersede all previous policies, procedures, and guidelines regarding the Waiver of Expenditure Requirement for Out-of-School Youth.
Background:
Under the U.S. Department of Labor's (USDOL) waiver authority outlined in Section 189(i)(3)(A) of the WIOA, the Secretary may waive certain provisions of WIOA Title I subtitles A, B, and E. WIOA Section 189(i)(3)(B) and 20 CFR§ 679.620 identify elements that must be included in a waiver request. A governor may request waivers at any time by submitting a waiver through the State's Unified Plan, Combined Plan, or Plan modification, or by submitting a separate waiver plan.
WIOA explicitly states that low-income individuals and those with barriers to employment are priority populations for funding and service. WIOA requires that at least 75 percent of WIOA Title I Youth Governor's reserve funds and local WIOA Title I Youth formula funds be allocated for workforce development services for OSY. On August 18, 2022, the initial waiver request to reduce the OSY expenditure requirement was submitted to USDOL and on April 30, 2026, a subsequent waiver request was submitted.
The U.S. Department of Labor Employment and Training Administration (ETA) approved North Carolina’s request to waive the requirement for WDBs to expend 75 percent of youth formula funds on OSY, for Program Years (PY) 2022 - 2027. As a result, North Carolina may reduce the WIOA Title I Youth funds expenditure requirement for OSY from 75 percent to a minimum of 50 percent. The reduction of the OSY expenditure rate provides the opportunity for boards to increase the expenditure rate for In-School Youth (ISY) from 25 percent to up to 50 percent. Under this approval, each PY includes a two-year performance period during which the waiver is in effect.
The ETA expects that the number of ISY served will increase, and performance accountability outcomes for overall WIOA Youth (including both ISY and OSY) will remain steady or increase for the majority of the WIOA Youth performance indicators.
Action:
Local Area WDBs must continue to serve the youth population and track all programmatic services, expenditures, and performance metrics. WDBs are not required to implement the youth expenditure waiver and have the option to continue to adhere to the 75 percent (or more) expenditure requirement for OSY.
Local WDBs that elect to implement the OSY waiver must update their local youth program design and service delivery models, in addition to increasing the number of ISY served.
For PY 2026, WDBs choosing to implement the youth expenditure waiver must notify the assigned DWS Planner of the decision to implement. The notification must be provided on agency letterhead and may be transmitted by email. In addition, WDBs must review and submit any necessary revision to the PY 2026 Local Area Plan, specifically Youth Section Question 3. For PY 2027, additional questions will be included in the Plan Instructions to address waiver implementation. WDBs will be able to document their decision to implement the waiver and describe updates to their youth program design and service delivery model.
Effective Date:
July 1, 2026
Expiration:
June 30, 2029
Contact:
DWS Planner
Attachment:
PY 2026-2027 USDOL Waiver Approval Letter and WIOA Waiver Requests