(a) Reservations for State activities

(1) In general

The Governor of a State shall reserve not more than 15 percent of each of the amounts allotted to the State under section 2852(b)(1)(C) of this title and paragraphs (1)(B) and (2)(B) of section 2862(b) of this title for a fiscal year for statewide workforce investment activities.

(2) Use of funds

Regardless of whether the reserved amounts were allotted under section 2852(b)(1)(C) of this title, or under paragraph (1)(B) or (2)(B) of section 2862(b) of this title, the Governor may use the reserved amounts to carry out statewide youth activities described in section 2854(b) of this title or statewide employment and training activities, for adults or for dislocated workers, described in paragraph (2)(B) or (3) of section 2864(a) of this title.

(b) Within State allocation

(1) Methods

The Governor, acting in accordance with the State plan, and after consulting with chief elected officials in the local areas, shall allocate the funds that are allotted to the State for youth activities and statewide workforce investment activities under section 2852(b)(1)(C) of this title and are not reserved under subsection (a) of this section, in accordance with paragraph (2) or (3).

(2) Formula allocation

(A) Youth activities

(i) Allocation

In allocating the funds described in paragraph (1) to local areas, a State may allocate—

(I) 331/3 percent of the funds on the basis described in section 2852(b)(1)(C)(ii)(I) of this title;

(II) 331/3 percent of the funds on the basis described in section 2852(b)(1)(C)(ii)(II) of this title; and

(III) 331/3 percent of the funds on the basis described in clauses (ii)(III) and (iii) of section 2852(b)(1)(C) of this title.

(ii) Minimum percentage

Effective at the end of the second full fiscal year after the date on which a local area is designated under section 2831 of this title, the local area shall not receive an allocation percentage for a fiscal year that is less than 90 percent of the average allocation percentage of the local area for the 2 preceding fiscal years. Amounts necessary for increasing such allocations to local areas to comply with the preceding sentence shall be obtained by ratably reducing the allocations to be made to other local areas under this subparagraph.

(iii) Definition

The term “allocation percentage”, used with respect to fiscal year 2000 or a subsequent fiscal year, means a percentage of the funds referred to in clause (i), received through an allocation made under this subparagraph, for the fiscal year.

(B) Application

For purposes of carrying out subparagraph (A)—

(i) references in section 2852(b) of this title to a State shall be deemed to be references to a local area;

(ii) references in section 2852(b) of this title to all States shall be deemed to be references to all local areas in the State involved; and

(iii) except as described in clause (i), references in section 2852(b)(1) of this title to the term “excess number” shall be considered to be references to the term as defined in section 2852(b)(2) of this title.

(3) Youth discretionary allocation

In lieu of making the allocation described in paragraph (2)(A), in allocating the funds described in paragraph (1) to local areas, a State may distribute—

(A) a portion equal to not less than 70 percent of the funds in accordance with paragraph (2)(A); and

(B) the remaining portion of the funds on the basis of a formula that—

(i) incorporates additional factors (other than the factors described in paragraph (2)(A)) relating to—

(I) excess youth poverty in urban, rural, and suburban local areas; and

(II) excess unemployment above the State average in urban, rural, and suburban local areas; and

(ii) was developed by the State board and approved by the Secretary as part of the State plan.

(4) Limitation

(A) In general

Of the amount allocated to a local area under this subsection and section 2863(b) of this title for a fiscal year, not more than 10 percent of the amount may be used by the local board for the administrative cost of carrying out local workforce investment activities described in subsection (d) or (e) of section 2864 of this title or in section 2854(c) of this title.

(B) Use of funds

Funds made available for administrative costs under subparagraph (A) may be used for the administrative cost of any of the local workforce investment activities described in subsection (d) or (e) of section 2864 of this title or in section 2854(c) of this title, regardless of whether the funds were allocated under this subsection or section 2863(b) of this title.

The Secretary, after consulting with the Governors, shall develop and issue regulations that define the term “administrative cost” for purposes of this chapter. Such definition shall be consistent with generally accepted accounting principles.

(1) In general

The Governor may, in accordance with this subsection, reallocate to eligible local areas within the State amounts that are allocated under paragraph (2)(A) or (3) of subsection (b) of this section for youth activities and that are available for reallocation.

(2) Amount

The amount available for reallocation for a program year is equal to the amount by which the unobligated balance of the local area allocation under paragraph (2)(A) or (3) of subsection (b) of this section for such activities, at the end of the program year prior to the program year for which the determination under this paragraph is made exceeds 20 percent of such allocation for the prior program year.

(3) Reallocation

In making reallocations to eligible local areas of amounts available pursuant to paragraph (2) for a program year, the Governor shall allocate to each eligible local area within the State an amount based on the relative amount allocated to such local area under subsection (b)(3) of this section for such activities for the prior program year, as compared to the total amount allocated to all eligible local areas in the State under subsection (b)(3) of this section for such activities for such prior program year. For purposes of this paragraph, local areas that received allocations under subsection (b)(2)(A) of this section for the prior program year shall be treated as if the local areas received allocations under subsection (b)(3) of this section for such year.

(4) Eligibility

For purposes of this subsection, an eligible local area means a local area that has obligated at least 80 percent of the local area allocation under paragraph (2)(A) or (3) of subsection (b) of this section for such activities, for the program year prior to the program year for which the determination under paragraph (2) is made.