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

SPONSOR SEC

ORIGINAL DATE

LAST UPDATED

3/13/07

HB

SHORT TITLE Summer Youth Employment Program

SB 294/SECS

ANALYST Lucero

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$5,000.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to Relates to HB 419

Relates to Appropriation in the General Appropriation Act

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$250.0 $250.0

$500.0 Recurring General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Office of Workforce Training and Development (OWTD)

Children, Youth and Families Department (CYFD)

Youth Conservation Corps (YCC)

SUMMARY

Synopsis of Bill

Senate Bill 294 appropriates five million ($5,000,000) from the general fund to Office of

Workforce Training and Development for fiscal year 2007 and 2008 to fund a statewide summer

youth employment pilot program. The pilot shall be administered by the local boards established

in accordance with the federal Workforce Investment Act of 1998. There is an emergency clause

attached to this bill.

Senate Bill 294/SECS – Page

2

FISCAL IMPLICATIONS

The appropriation five million ($5,000,000) contained in this bill is a recurring expense to the

general fund. Any unexpended or unencumbered balance remaining at the end of fiscal year

2008 shall revert to the general fund. There is an emergency clause attached to this bill.

If enacted, the appropriation and the program would be administered by OWTD. This would

entail executing award agreements with the Local Area Boards as provided in the bill; processing

payment requests for funding under the programs; monitoring and overseeing the programs; and

ensuring that rules and regulations are adhered to in the administration of the program.

The amount of funding indicated as “additional fiscal impact" ($500,000) represents five percent

of the appropriation. This amount could be deducted from the appropriation amount or could be

appropriated above the current proposed $5.0 million appropriation. OWTD does not currently

have general fund supporting the administrative costs to administer a program of this magnitude.

A five percent administrative cost is considered the minimum amount required to administer the

program and report on its outcomes.

The proposed appropriation contained in this bill is related to the $2.5 million recommended in

the Governor’s Executive Budget Recommendation as part of the FY08 OWTD operating budget

for a year-round youth employment program. The recommended appropriation is one of the

Governor’s initiatives for OWTD during Fiscal Year 2008.

SIGNIFICANT ISSUES

As reported by the United States Department of Labor (USDOL) August 25, 2006, the youth

labor force of 16-24 olds working or actively looking for work grows sharply between April and

July of each year. During these months, large numbers of youth take or search for summer jobs

and many graduates enter the labor market to look for or begin permanent employment. This

past summer the youth labor force grew by 3.2 million to a total of 24.7 million in July. In July

2006, 2.8 million youth were unemployed. The youth unemployment rate (11.2%) was about the

same in July 2005. These numbers support the need for additional youth employment

opportunities.

This information, compounded by future labor market trends, provide strong indications for the

need to expose and prepare the youth of New Mexico to the world of work and career-oriented

employment through the provision of work experience employment activity training and

services. OWTD supports the proposed bill to provide summer employment opportunities to the

youth of Northern New Mexico.

The federal Office of Juvenile Justice and Delinquency Prevention (OJJDP) has identified

“alternative activities,’ notably including summer and after-school employment opportunities for

older youth, as a key strategy for preventing and dissociating gang involvement and for reducing

youth-involved property crime.

PERFORMANCE IMPLICATIONS

Enacting the proposed legislation will substantially increase the number of youth employed in

the summer months. Passage of this bill would increase the need to monitor the successful

completion of the work assignments and the quality of the assigned work sites.

Senate Bill 294/SECS – Page

3

ADMINISTRATIVE IMPLICATIONS

Although not specified, it is anticipated that OWTD would retain up to five percent of the

appropriation for administrative costs to support the activities associated with administering the

program, including fiscal administration and compliance monitoring.

Administratively, OWTD would be required to develop new rules to comply with the proposed

legislation. The new rules would mirror existing rules addressing youth employment, but they

will apply only to the “Summer Youth Employment Program".

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

This bill is related to SB 294.

TECHNICAL ISSUES

If enacted, the appropriation and the program would mark the first time that the WIA Local Area

Boards would be administering a non-WIA program. However, it is not beyond the capabilities

of the Local Area Boards to administer State programs, although the Local Board accounting

practices would be required to accommodate fund tracking for the State appropriations separate

from that of the WIA funds currently administered by the Boards.

OTHER SUBSTANTIVE ISSUES

Senate Bill 294 provides $5,000,000 for a Summer Youth Employment Initiative that started in

FY06/07 at the request of Governor Richardson. At that time the Youth Conservation Corps

(YCC) program provided $131,457 towards the Summer Youth Employment Initiative and

employed 27 individuals. Four projects were located at Heron Lake State Park, Coyote Creek

State Park, Sugarite Canyon State Park and Storrie Lake State Park. The non-profit Rocky

Mountain Youth Corps (RMYC) sponsored two projects employing 20 individuals with projects

at Wagon Mound and Springer. Funding for RMYC’s projects came from OWTD and New

Mexico Commission on Community Volunteerism (NMCCV). OWTD transferred $50,000 to

NMCCV and NMCCV then added $25,000.

The Youth Conservation Corps (YCC) provides statewide jobs to New Mexico youth between

the ages of 14 to 25. In the program year just completed, YCC employed over 700 youth in 35

projects; at least 3/4 of these youth were employed through the summer months. The YCC Act

requires that the projects be of lasting value and are designed to improve New Mexico’s natural,

historical, and cultural resources. Local citizens recognized the contributions made by these

youth to the overall health and well being of their community. Nothing can replace the feelings

of pride generated in these youth by being recognized in their community for a job well done.

ALTERNATIVES

YCC has an overhead cost of 5-8% and is an effective and efficient youth employment program.

The program was implemented in 1992 and is an established model for youth employment in

New Mexico. The OWTD could partner with YCC or use the YCC model to distribute the funds.

Senate Bill 294/SECS – Page

4

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Summer employment opportunities for the youth of New Mexico will continue to be limited to

existing summer jobs.

DL/nt