What is the Role of the Memorandum of Understanding (MOU) in Workforce Development?
Understanding Memorandums of Understanding: A Critical Tool for American Job Centers
Workforce development professionals who have dedicated their careers to this field understand how crucial it is to help jobseekers obtain well-paying jobs. They also recognize the significant impact on employers as they receive support to connect with the talent they need in their communities. Thankfully, through workforce development systems, employers are often incentivized to fairly compensate workers by investing in their ongoing development, including upskilling and reskilling.
According to the National Association of State Workforce Agencies, there are hundreds of American Job Centers operating across the United States, serving millions of participants annually through coordinated partnerships established under the Workforce Innovation and Opportunity Act (WIOA). Understanding how these partnerships function through formal agreements is essential for local workforce development boards looking to maximize their impact. In this blog, we explore the role of Memorandums of Understanding (MOUs) and how local workforce development boards are leveraging them to improve service delivery.
Defining the MOU: More Than Just a Contract
As defined in 20 CFR 678.500(a) “The MOU is the product of local discussion and negotiation, and is a contract developed and executed between Local WDBs and the One-Stop partners, with input from the Chief Elected Official (CEO) and all partners relating to the operation of the AJC One-Stop delivery system in the local area.” MOUs define the AJC operating budget and serve as the financial plan for the AJC and the partner agencies.
There are three components of the MOU:
- The MOU terms and conditions
- Infrastructure Funding Agreements
- The Operating Budget
Local areas utilize their MOUs as a foundation to negotiate how they share customers, services and costs. Local Boards must work with all of the required partners in their area to develop an agreement regarding the operations of their local system. Once shared services have been established, then the local area needs to make a plan on how to address and deliver those services. The next step should be how to develop a service delivery model within the Infrastructure Agreement (IFA) that addresses shared resources and costs. Most states provide guidance and/or templates for local areas to follow.
The Strategic Importance of MOUs Under WIOA
The MOU identifies the resources and the delivery of services necessary to support the training needs of job seekers, and the employers' need for skilled workers. To support the AJC, Local Boards, CEOs and workforce partner agencies enter into a Memorandum of Understanding to define operations in the centers.
From a broader perspective, WIOA legislation is designed to strengthen and improve the public workforce system, and helps employers hire and retain skilled workers by leveraging resources and services. It helps job seekers with barriers to employment explore career pathways and obtain quality jobs and careers. WIOA requires states and local areas to strategically align workforce development programs. WIOA's emphasis on accountability, transparency and regional collaboration with states and their local workforce areas has improved the American Job Center (AJC) system and services. Integration of services and leveraging of resources is at the forefront of WIOA and has resulted in improved services in the AJCs.
AJCs serve as access points to the public and provide education and training programs in local areas. It is imperative that these centers are supported with knowledgeable staff, government funding, and technical resources to serve job seekers and employers.
Leveraging MOUs to Enhance Service Delivery
WDBs should first define the training needs of their region. The MOU can identify the services and resources needed to meet training needs. MOUs clarify functions and responsibilities of all AJC partner agencies. They help WDBs and AJC partners work together to create a unified service delivery system that best meets the needs of their shared customers. By working together, the WDB and partners can identify areas of duplication of services and more importantly, potential service gaps.
As identified in the MOU, One-Stop Partners agree to provide services and participate in joint activities that result in improved services and efficient leveraging of resources to better serve clients. By working together, partners collaborate to serve more clients by:
- Analyzing current services to identify and rectify duplication
- Identifying gaps in services
- Developing shared intake and referrals
- Facilitating joint case management
- Aligning assessment tools
- Coordinating client job readiness and job placement activities, resulting in more clients serviced
- Sharing employment services, which will result in more client placements
- Developing career pathways that meet the needs of employer and client interests
- Targeting services to priority populations and ensuring partner agencies have access
The MOU's Role in One-Stop Certification
MOUs are a critical part of the One-Stop Certification process. The MOU establishes what services the partners will provide, how they will be carried out, and it also outlines financial support for Center operations.
Research shows that WIOA performs a meaningful role in stabilizing short-term income by accelerating job placement rates for participants, with the law's strongest outcomes associated with the provision of intensive, staff-assisted services such as job counseling, career navigation, and skills assessments. For best practices relating to One-Stop Certification, check out EDSI's previously published blog on the recertification process, which breaks down how American Job Centers ensure quality services through the certification process mandated by WIOA.
The Review and Update Cycle
MOUs are required to be reviewed and updated every three years. The Infrastructure Funding Agreements (IFA) and budgets should be reviewed annually. This annual review allows Local WDBs to make necessary changes to the IFA based upon annual budget allocations, and new or lost partner agencies. States also provide guidance in the development process of a MOU. The guidance addresses the coordination and collaboration among AJC partners. It also addresses how to sustain the unified system through resource sharing and joint cost funding. This lays the groundwork for Local WDBs to execute MOUs in order to meet DOL requirements and include the key elements of a MOU as outlined in TEGL 16-16.
Understanding Infrastructure Funding Agreements and Budgeting
The IFA contains the infrastructure cost budget for AJCs. The budget applies to non-personnel costs associated with the operations of the One-Stop Center. These costs include rental of facilities, utilities, maintenance, equipment which can include assessment-related products, assistive technology for individuals with disabilities, and technology to facilitate access to the One-Stop Center as well as technology associated with the Center's planning and outreach activities. These costs can also apply to vendors.
The operating budget of AJCs involves a financial plan needed to achieve the goals of delivering services in a local area. It establishes the terms and conditions of how the shared costs of operations and key services of the Center will be funded. These types of costs may include but are not limited to office/facility supplies, printing, marketing, outreach, memberships, subscriptions, communications, and equipment leases.
Navigating Partner Agency Requirements
20 CFR₴ 678.400 defines the mandated partners who are required to support One-Stop operations and delivery of services. These required partners are responsible for administrating the following programs:
- Wagner- Peyser
- Adult Literacy
- Vocational Rehabilitation
- Carl D. Perkins (CTCs)
- Trade Act
- Community Services Block Grant
- HUD
- Second Chance Programs
- TANF
These partners help deliver program services under Title-I WOIA that include:
- Adult Services
- Dislocated Workers
- Youth
- Job Corps
- Youth Build
- Native American Programs
- Migrant and Seasonal Farmworker Programs
Partner agencies may also be required to share in the costs associated with the One-Stop Operator, greeter/receptionist, and security guard positions.
The MOU must define the method of allocation of funds to each partner program. It should be based upon each partner’s proportionate use of the One-Stop system and relative benefits received consistent with 2 CFR part 200. Even though a One-Stop partner may not be physically present in a One-Stop site, they must provide access to their programs via the One-Stop system and still contribute to infrastructure costs 20 CFR 678.420*. There are various allocation methods that can be used and are based upon the best measures benefits received by partners. Additionally, there can be rent-only contributors. Often, state’s provide guidance on how to define these costs.
Identifying Allowable Funding Sources
AJC partners must be in compliance with their authorizing federal statute as well as WIOA Joint Rule Section 678.720. This legislation stipulates the types of funds certain partners are allowed to use towards their proportionate share under the local funding mechanism. The limitations include the following:
WIOA Title I – Infrastructure costs can be paid as program and/or administrative costs.
WIOA Title II – Infrastructure costs can only be paid from funds available for local administrative expenses or from non-federal resources that are cash, in-kind, or third-party contributions.
WIOA Title III – As the regulations did not specify a funding source for Title III, any available funds may be utilized for infrastructure costs.
WIOA Title IV – Infrastructure costs are paid from administrative costs.
Career and Technical Education – Infrastructure costs must be paid from funds available for local administration of postsecondary level programs and activities to eligible recipients, or a consortium of eligible recipients, and may be paid from funds made available by the state or non-federal resources that are cash, in-kind, or third-party contributions.
MOUs as Tools for Continuous Improvement
MOUs are multi-faceted and can be used as effective tools in promoting continuous improvement of the AJCs. They help to encourage Local Boards and partner agencies to work together and review service offerings and activities with the centers. Data on activities of the Center can be utilized to understand what is working, missing, or not being utilized in program services and offerings. The Operator can pull data on:
- Foot traffic
- Enrollment by program (Title I, Wagner Peyser, Youth, TANF)
- Business services
- Trainings
- Workshops
- Customer satisfaction
- Job placement
- Labor market data
- Employer engagement
Local Boards and partner agencies can use the MOU and annual review of IFAs as tools to complete a review of the existing service offering and identify gaps in program offerings. Under the guidance of the board and partner agencies, the Operator can reach out to the community to recruit new service providers and potential new One-Stop partners to the AJCs. Consideration should be given to working with all partner agencies to complete a review of current service offerings and the providers that are delivering those services.
Completing a Value Stream Map (VSM) of services, including who does what, will provide a flowchart which will illustrate, analyze and help identify the steps required to improve and deliver a product or service. A VSM reviews the flow of process steps and information from origin to delivery to the customer. VSM is an especially useful tool to find and eliminate inefficiencies. Items are mapped as adding value or not adding value from the customer’s standpoint, with the purpose of phasing out items that don’t add value.
Below is a simplified VSM that shows Phase I of a participant's journey through a career center.
Upon completion of the VSM, partners can then identify and agree upon a more effective and efficient flow of services. This can be accomplished by completing process flow models. Process flow models identify the key steps needed to more effectively serve clients.
Aligning MOUs with WIOA's Five Core Principles
Local boards can use MOUs as a tool to organize the operations of the AJCs as well as a planning tool for the development of new programs and services in the local area, in support of the five key WIOA principles, which are:
- Integration of services
- Strategy & Planning
- Regional Economic Development
- High Quality Services
- Accountability & Transparency
These principles guide how workforce development boards structure their partnerships, allocate resources, and measure success. By aligning MOU development with these core WIOA principles, local boards ensure their American Job Centers operate as truly integrated systems that meet both jobseeker and employer needs while maintaining fiscal responsibility and transparency.
EDSI has extensive experience working with workforce development boards across the country to develop, implement, and optimize MOUs and One-Stop operations. Our consultants bring deep knowledge of WIOA regulations, best practices in partner collaboration, and practical strategies for continuous improvement. Whether you need support facilitating the MOU development process, preparing for One-Stop recertification, or enhancing your service delivery model, our team is here to help you build a stronger, more effective workforce system.
To learn more about MOUs and how we can assist in facilitating the process or helping with One-Stop recertification, visit EDSI's Workforce Development services page or fill out the information form below and one of our consultants will reach out to you.