Senate Appropriations Committee Recommends Funding WORK Act and for DOL to Finalize Valuation Regulations

The appropriation bill passed by the House lacks funding for state employee ownership offices authorized by the WORK Act, but the Senate Appropriations Committee is recommending an initial $2 million for 2025 to help fund them. The committee also urged the Department of Labor (DOL) to finalize its ESOP valuation regulations.

The WORK Act of 2022 directed the DOL to create an Employee Ownership Initiative office to provide education on employee ownership (which it has now done) and authorized $50 million in funding over five years, starting in fiscal year 2025, for state employee ownership outreach and education programs. Although the WORK Act authorized the expenditures for the state programs, funding comes through a separate appropriation process.

The House-passed appropriation bill for the DOL does not include funding for the state employee ownership offices authorized by the WORK Act. The House cut DOL spending by 11%, making any new expenditures even more difficult. The good news is that the Senate Appropriations Committee is recommending an initial $2 million for 2025 to help fund the state offices. The recommendation appears in the report language on the bill. Report language does not always make it into the final appropriation, but normally it does. If this appropriation is passed by the Senate, then a House-Senate conference committee would have to decide whether to retain it or not.

The WORK Act authorized $4 million for the first year of the program, increasing each year over five years. The $2 million would be a modest start but could lead to larger appropriations down the road.

The report language is below:

Employee Ownership Initiative.—The Committee recommendation includes $2,000,000 for grants authorized by section 346(d) of the SECURE 2.0 Act of 2022. Funds will be used to establish and expand employee ownership programs authorized by such section. The Committee expects the Employee Benefits Security Administration to provide subject matter assistance to ETA as it develops and administers this grant program.

Implementation of Employee Ownership Initiative.—Within available resources, the Committee expects EBSA to continue its efforts to create and widely disseminate educational materials focused on promoting best practices in employee ownership through the Employee Ownership Initiative authorized by section 346 of the SECURE 2.0 Act of 2022. The Committee also includes $2,000,000 within ETA for the grant program authorized by such section to help establish and expand employee ownership programs. The Committee expects EBSA to provide subject matter assistance to ETA as it develops and administers this grant program.

The report also urges the DOL to finalize its ESOP valuation regulations:

Adequate Consideration Guidance.—The Committee notes that the SECURE 2.0 Act of 2022 also directs the Department to issue formal guidance on the adequate consideration exemption, as defined in section 407(d)(6) of ERISA. The Committee is disappointed that EBSA failed to achieve the latest regulatory agenda goal of issuing an adequate consideration notice of proposed rulemaking in March of this year. The Committee urges the Department to prioritize a timely, formal notice and comment rulemaking on the adequate consideration exemption that ensures taxpayers benefit from stakeholder input and experience, consistent with congressional intent.