WSD25-04 lowers California’s minimum Out-of-School Youth expenditure share from 75% to 50% for PY 2026 and PY 2027. The waiver gives Local Boards room to invest more in In-School Youth when local need supports it. It does not make 50% the recommended target and it does not change the separate 20% Youth work-experience expenditure requirement.
Source + trust record
Source checked as of September 18, 2026. Primary authority: EDD Active Directives · WSD25-04.
Check result: WSD25-04 remains active California guidance for the PY 2026 and PY 2027 Out-of-School Youth waiver. The statutory 75% OSY expenditure baseline may be reduced to 50% where the approved waiver applies. The 20% Youth work-experience expenditure requirement and the 14 Youth program elements remain separate requirements. This AI-assisted brief does not receive human legal or compliance review. Official sources control.
WDB decision strip
| Status | Action | Primary owner | Current timing | Impact |
|---|---|---|---|---|
| FINAL · ACTIVE WAIVER GUIDANCE | REBALANCE ONLY IF STRATEGY SUPPORTS IT | Youth Program + Fiscal Leadership | PY 2026 and PY 2027 | OSY/ISY mix · Youth spending · WEX · Provider strategy |
The bottom line
The waiver creates a strategic choice, not a spending target.
A Board may continue spending well above 50% on OSY when disconnected youth remain the stronger local need. The useful question is whether shifting some resources toward ISY would improve prevention, career exposure, work experience, postsecondary transition, or another local youth outcome without weakening OSY service capacity.
What changed and what did not
| Requirement | Federal baseline | California waiver |
|---|---|---|
| OSY expenditure share | At least 75% of applicable local Youth formula expenditures | May be reduced to 50% for PY 2026 and PY 2027 |
| Youth work-experience expenditure | At least 20% of applicable nonadministrative Youth funds | Unchanged |
| 14 Youth program elements | Access based on participant need | Unchanged |
| OSY strategic emphasis | Strong WIOA priority | Still important; waiver adds local flexibility rather than removing the priority |
The local decision test
- Measure unmet need. Compare OSY and ISY populations, referrals, waiting lists, school partnerships, and service gaps.
- Define the outcome you want. Additional ISY spending should solve a specific problem such as dropout prevention, career exposure, work experience, or transition to postsecondary education/training.
- Forecast both expenditure rules. Track the OSY share and the separate 20% WEX requirement throughout the year.
- Protect OSY capacity. Model whether a shift would reduce outreach, case management, training, or supportive services for disconnected youth.
- Align provider contracts. Recruitment targets, scopes, budgets, and performance expectations should reflect the intended mix.
A simple planning dashboard
| Track separately | Why |
|---|---|
| OSY expenditures / applicable Youth expenditures | Shows compliance with the 50% waiver minimum. |
| WEX expenditures / applicable nonadministrative Youth funds | Shows compliance with the unchanged 20% WEX requirement. |
| OSY and ISY enrollment / service mix | Shows whether spending changes are changing whom the program serves. |
| Outcomes by school status | Tests whether the revised strategy is producing better participant results rather than only shifting dollars. |
Operational considerations for WDBs
- Update local Youth policy and fiscal monitoring to reflect the waiver years.
- Decide explicitly whether the Board intends to use the flexibility or continue a higher OSY share.
- Make the 20% WEX requirement visible on the same management dashboard.
- Align provider contracts and outreach strategy with any planned shift in the OSY/ISY mix.
- Revisit the decision during the year if expenditure pace or youth demand changes.
Watch out
- 50% is a minimum permitted by the waiver, not a required target.
- Do not reduce OSY investment simply because the waiver allows it.
- Do not confuse the OSY share with the separate 20% WEX expenditure requirement.
- Do not move funding without changing recruitment and provider operations when necessary.
Source authority
Primary source: EDD WSD25-04 — WIOA Waiver Guidance: Out-of-School Youth.
Status: EDD lists WSD25-04 as active guidance implementing California’s approved PY 2026–27 waiver. The strategy and dashboard recommendations above are WPU implementation aids. Status checked September 16, 2026.
Responses
[…] translated federal waiver authority into local flexibility through guidance such as WSD25-03 and WSD25-04. Those directives are the local operating layer; TEGL 05-25 explains the broader federal policy […]
[…] foundational state guidance includes WSD17-07 · WIOA Youth Program Requirements. More recently, WSD25-04 explains California’s current federal waiver flexibility related to the out-of-school youth […]