This guidance supersedes the Office of Career, Technical, and Adult Education (OCTAE) Program Memorandum (PM) 20-2, published February 6, 2020, and developed jointly by the U.S. Departments of Labor and Education (the Departments). Through this updated guidance, the Departments: (1) Revise their approach to using the statistical adjustment model for the purpose of assessing state performance; (2) Clarify the implementation of potential financial sanctions for consecutive performance failures occurring across multiple State Plan periods; and (3) Clarify that states can be sanctioned up to 10 percent of the Governor's Reserve Allotment if there is consecutive performance failure and a failure to report for the same program year. This guidance also continues to delineate the process for negotiating levels of performance, as required by section 116(b)(3)(A)(iv) of the Workforce Innovation and Opportunity Act (WIOA) and explains the two instances in which a state may be sanctioned, namely for performance failure or for failure to report (section 116(f) of WIOA).