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F I S C A L I M P A C T R E P O R T

SPONSOR Varela

DATE TYPED 3/16/2005 HB 98/aHAFC/aSFL#1

SHORT TITLE Office of Workforce Training and Development

SB

ANALYST Dunbar

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$23,830.1

$22,166.9

In HB2

Recurring Federal Funds

$700.0

$700.0

In HB2

Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to HB 7, the General Appropriation Act.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Office of Workforce Training and Development (OWTD)

Department of Labor (DOL)

New Mexico Association of Community Colleges (NMACC)

Energy Minerals and Natural Resources Department (EMNRD)

Div. of Vocational Rehabilitation (DVR)

SUMMARY

Synopsis of SFL Amendment #1

The Senate Floor amendment # 1 provides for:

•

Approval of the board when OWTD establishes standards by rule.

•

Approval of the governor when the OWTD issues corrective action orders to enforce

compliance, including orders that suspend funding for training programs or that transfer

programs to another agency.

•

The Governor to designate OWTD as the single state agency for the administration of

employment and training programs only and removes language referencing public assis-

tance programs. This amendment makes clear that the focus of OWTD is related to em-

ployment and training programs.

House Bill 98/aHAFC/aSFL#1 -- Page 2

Synopsis of HAFC Amendment

The House Appropriation and Finance Committee amendment to House Bill 98 inserts language

prohibiting the OWTD from administering the unemployment compensation program and other

programs currently administered by the labor department.

Synopsis of Original Bill

House Bill 98 codifies Executive Order 2004-04 of January 22, 2004 transferring responsibility

for administration of federal Workforce Investment Act funds from the New Mexico Department

of Labor to a new Office of Workforce Training and Development. It changes current statutes of

the Labor Department and State Workforce Development Act and provides an opportunity for

greater coordination and performance outcomes for employment and training programs. It also

establishes a “coordination and oversight” committee for the State Workforce Development

Board made up of the secretaries of Labor, Human Services, Economic Development, Public

Education and Higher Education to develop joint comprehensive goals and a strategic plan.

HB 98 also transfers responsibility for administration of the Individual Development Account

Act from the Department of Finance and Administration to the new Office of Workforce Train-

ing and Development.

The bill contains an emergency clause.

Significant Issues

(1)

Whether New Mexico’s implementation of the federal Workforce Investment Act

(WIA) can be improved sufficiently to bring it into compliance with the Workforce

Investment Act by transferring to a new office the administration of the WIA pro-

gram and by mandating that the new office improve coordination among state agen-

cies that carry out employment and training services.

(2)

Whether this oversight and coordination function in a new office is sufficient to en-

sure that the 17 required partners, including the Labor Department which also serves

as a one-stop operator, will integrate their services into one-stop career centers as re-

quired by federal law.

(3)

Whether establishment of a “coordination and oversight” committee to develop

common strategic goals will result in alignment of workforce development programs

with economic development and education policies.

EMNRD notes that the bill is unclear as to the extent of authority OWTD will have over other

workforce employment and training programs and how this authority will be implemented. In

addition, it does not specifically identify which programs are considered workforce employment

and training programs.

However, the Office of Workforce Training and Development has clarified for the Energy, Min-

erals and Natural Resources Department (EMNRD) that the bill applies to all state and local

agencies whether federally, locally or state funded. In addition, it has advised EMNRD that

standards to evaluate the performance of workforce development activities and the process for

House Bill 98/aHAFC/aSFL#1 -- Page 3

coordination will be developed in consultation with the state and local agencies that administer

employment-training programs.

The Public Education Department (PED) currently administers the Carl D. Perkins Vocational

and Technical Education Act of 1998 in New Mexico. The bill continues to authorize the Work-

force Development Board to comment annually on the accountability measures required under

the Perkins Act. Also, according to the OWTD, the Workforce Investment Act of 1998 requires

coordination of programs under that act with other workforce activities including postsecondary

activities under the Perkins Act.

PERFORMANCE IMPLICATIONS

NMACC indicates the state needs to develop more comprehensive and uniform state perform-

ance measures and benchmarks across workforce training agencies and organizations to assess

the effectiveness of workforce investment activities (and thus potential future funding) and the

effectiveness of any state plan for workforce training that is developed.

FISCAL IMPLICATIONS

The bill does not contain an appropriation. The appropriations are reflected in the proposed

GAA. However, the OWTD budget for the following fiscal years is described below:

For FY05, the OWTD budget consists of $18,165,100 in current year federal funds, as well as

$5,665,000 in prior year federal funds for Workforce Investment Act programs statewide. The

final amount of prior year federal WIA funds available will depend upon final local board ex-

penditures. In addition, $700,000 of General Fund has been appropriated for FY05 for the state-

wide At-Risk Youth Programs.

For FY06, HB 2 contains $18,165,100 in federal funds for the next funding period, as well as

$4,001,800 in projected prior year federal funds for Workforce Investment Act programs state-

wide and $700,000 of General Fund for the At-Risk Youth Program. These amounts were con-

sistent with the agency request. HB 7, as introduced, includes the funding for OWTD within the

appropriation for the New Mexico Department of Labor, although the LFC recommended a sepa-

rate appropriation for OWTD.

The Governor’s budget recommendation for FY06 contains the same amounts of federal funds

for the WIA Program and the same amount of General Fund for the At-Risk Youth Program as

the LFC recommendation. However, the Governor recommends the addition of $9,300,000 from

the General Fund for transferring of TANF Works program funds to OWTD so that the funds can

be expended in conjunction with the WIA program.

HB 98 also would move the Individual Development Account Program to OWTD from the DFA

Local Government Division. This would entail transfer of the funding for the program.

ADMINISTRATIVE IMPLICATIONS

OWTD has 38.0 FTE. The Individual Development Account Act program has 0.5 FTE. No ad-

ditional FTE needed.

House Bill 98/aHAFC/aSFL#1 -- Page 4

The bill creates yet another office involved with workforce training with separate administration

and funding streams which helps create more coordination difficulties unless the right structure

and oversight is put in place. Increased coordination requires a commitment of time and energy

of the leaders and staff from the various agencies to make it happen.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

The bill relates to HB 7, the General Appropriation Act.

TECHNICAL ISSUES

DOL proposes adding language that clarifies OWTD does not have the authority to administer

programs, particularly NMDOL’s Wagner-Peyser, Unemployment Insurance and other NMDOL

programs. The DOL amendment would limit the OWTD to monitoring and compliance func-

tions.

DVR recommends amending the hard –to-employ definition as follows:

‘

Hard-to-Employ Persons’ individuals for whom traditional training, education, employment ser-

vices have not result in employment outcomes; and/or individuals who will need multiple ser-

vices over an extended period of time; and/or individuals who have physical or mental impair-

ments which limit one or more functional capacities in terms of an employment outcome. This

definition is not affected by other factors inclusive of residency duration, type of disability, age,

race, gender, color, or national origin; source of referral; the need for specific services or antici-

pated costs of services required by the individual; or the income level of an individual or an indi-

vidual’s family.”

OTHER SUBSTANTIVE ISSUES

The challenge of oversight and coordination could be the most substantive issue. A significant

workforce training program, the Job Training Incentive Program with EDD, is not addressed in

this plan. Also not well addressed is the development and support of accurate and timely work

force analyses that communities, boards and educational institutions can depend upon for devel-

opment of effective workforce training programs. Finally, it is critical that the CIO office facili-

tate the development of a “data warehousing” plan encompassing all agencies that have a work-

force training mission so that the state can track student and employee performance and progress

and provide better performance outcomes.

AMENDMENTS

Page 11, line 23, after the word education insert “and transitions to postsecondary education”.

EMNRD suggest and amendment to specifically identify which existing programs are consid-

ered workforce employment and training programs and define specific coordination and inspec-

tion standards for such programs.

BD/lg:yr