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SPONSOR: |
Lujan |
DATE TYPED: |
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HB |
8/aHBIC/aHAFC |
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SHORT TITLE: |
In-Plant Training |
SB |
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ANALYST: |
Collard |
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APPROPRIATION
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Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
FY03 |
FY04 |
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See
Narrative |
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(Parenthesis
( ) Indicate Expenditure Decreases)
Relates to HB 15
Relates
to Appropriation in the General Appropriation Act
Responses
Received From
Economic
Development Department
Commission
on Higher Education
SUMMARY
Synopsis
of HAFC Amendment
The House Appropriations and Finance Committee
amendment to House Bill 8 begins with the deletion of all HBIC amendments. The amendment then strikes the appropriation,
and provides for distribution of the In-Plant Training dollars. The amendment requires one-third of the money
to be spent in rural areas and two-thirds of the money to be spent in urban communities. The amendment provides definitions for
“non-urban community” and “urban community.”
Finally, the amendment allows $50.0 of the In-Plant Training money to be
used by the Economic Development Department for administration purposes.
Synopsis
of HBIC Amendment
The House Business and Industry Committee
amendment ensures that $5,000.0 of the total $15,000.0 appropriated to the
development training fund will be expended in non-urban communities in the
state.
Significant
Issues
Again, the Economic Development Department
indicates a need for an administrative appropriation. The department notes the legislature’s desire
to expend this appropriation in non-urban communities, and indicates the
administrative money will be used to continue funding a term position that is
currently working in the non-urban communities of the state.
The Commission on Higher Education indicates an
administrative impact as the commission’s executive director is a member of the
Industrial Development Training Board and he and his staff serve on the
proposal review team. The commission staff
notes they can assist the Economic Development Department with the participation
if the program is expanded.
TECHNICAL
ISSUES
The Economic Development Department suggests the
following amendments:
·
In Subsection C(1) and (2) change “urban
community” and “non-urban community” to “urban company” and “non-urban company”
as the program does not serve communities, it serves companies;
·
In Subsection B, change the word
“expended” to “allocated” as the board allocates the dollars when the board
approves funding requests; and
·
“Encourage” the program coordinators to
use the dollars in non-urban communities, rather than “require” an amount be
spent in non-urban communities because opportunities to acquire new businesses
may be lost and non-urban community money may sit idle with restrictions on the
appropriation.
Synopsis
of Original Bill
House Bill 8
appropriates $15 million from the general fund to the development training fund
for Economic Development Department to provide classroom and in-plant training
for certain new or expanding industries and businesses in the state. This bill has an emergency clause.
FISCAL IMPLICATIONS
The appropriation of $15,000.0
contained in this bill is a recurring expense to the general fund since the
legislature considers requests for funding this program each year. The funds are appropriated to the development
training fund. Any unexpended or unencumbered balance remaining at the end of FY03
shall not revert to the general fund.
The industrial
development fund currently has a balance of $15,159.3 and $10,000.3 of this
total is unencumbered. This balance is
from the following sources: FY03
appropriated funding, company reversions, due to the recent downturn in the
economy, and Temporary Assistance for Needy Families funds.
ADMINISTRATIVE IMPLICATIONS
The Economic
Development Department indicates there is not an appropriation for administration
of the program and there has not been an appropriation since 1999, when it
received $160.0. The agency indicates
that those funds will be depleted by the end of FY03.
RELATIONSHIP
This bill relates to
House Bill 15, which appropriates $20 million to the In-Plant training program.
OTHER SUBSTANTIVE ISSUES
The Economic
Development Department indicates the consequences of not enacting this bill
would result in the loss of
There
have been issues regarding the kinds of companies that are funded through this program, especially in the low-wage telemarketing arena. For
example,
Stream International has been
awarded four
contracts since its opening
in 2000. The company has been awarded $4,544.0 in training funds and they have expended $2,391.1. Including
Stream International’s
current allotment to train 200
employees,
the in-plant training
program has
funded training for
approximately 653 FTE*. Stream International housed 626 FTE as of November 2002. In-Plant
funding has
trained approximately 27 more FTE
than the company employs. The Economic
Development Department indicates the high turnover rate is
due to Stream International’s strict attendance policy and the company’s turnover rate is not higher than the call center industry average.
POSSIBLE QUESTIONS
1. Would companies that
were funded have
come to New Mexico
without this incentive ?
2. What can be done about high turnover rates ?
*This
number is based on
pro-rated figures.