NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Room 416 of the State Capitol Building.

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB577; SB622, and SB650

SOURCES OF INFORMATION

LFC Files

Human Services Department

Economic Development Department

State Department of Education

Department of Labor

Lieutenant Governor analysis not provided

SUMMARY

Synopsis of HAFC Amendment

The House Appropriations and Finance Committee amended HB740 to add language requiring Board membership to reflect the gender, ethnicity and geographic diversity of the state and to protect local Board votes from conflicts of interest. The amendment also removes the requirement of the Board to approve workforce investment plans for state agencies that fall under its purview. The Board will still review those plans and performance outcomes will be reported to the legislature and the governor.

Synopsis of HGUAC Amendment

The House Government and Urban Affairs Committee amended HB740 to make the Board membership track more closely with the proposed federal regulations.

Synopsis of Bill

In response to the federal Workforce Investment Act (Act),which is summarized in the "Other Substantive Issues" section below, House Bill 740 creates the State Workforce Development Board (Board) consisting of the following members:

• •the secretaries of economic development, human services, and labor;
• •the superintendent of public instruction;
• •two representatives of business;
• •two representatives of organized labor;
• •two representatives with expertise in workforce investment activities, including one of a community college and one community based training organization;
• •the Speaker of the House of Representatives appoints two members;
• •the President Pro Tempore appoints two members; and
• •the balance of members must represent business and be of majority membership.

Individuals may represent more than one entity or category of membership. The governor appoints all members of the Board except those appointed by the Speaker of the House of Representatives and the President Pro Tempore. The Governor also appoints from the business representatives, the chair of the Board.

The Board is directed to assist the governor in the following activities:

• •developing a five-year state plan for the expenditure of workforce investment dollars;
• •developing and improving statewide activities to support the workforce investment system to ensure coordination and non-duplication among programs;
• •approving local workforce investment plans;
• •commenting annually on programs funded through the Carl D. Perkins Vocational and Applied Technology Education Act;
• •developing allocation formulas for adult and youth employment and training activity funds to local areas in accordance with the federal Act;
• •developing comprehensive state performance measures to assess the effectiveness of workforce investment activities;
• •designating local workforce development areas;
• •preparing reports and applications required for submission to the federal government;
• •reviewing and approving all workforce development activities conducted by state agencies except those governed by the Sate Board of Education and those administered pursuant to the Federal Rehabilitation Act of 1978;
• •developing linkages with the State Board of Education to ensure coordination and non-duplication of vocational education, apprenticeship, adult education and vocational rehabilitation programs with other workforce development and training programs;
• •reporting to the Legislature recommendations for modification, consolidation, initiation or elimination of workforce training and education programs in the state; and
• •providing policy advice regarding the application of federal and state law that pertains to workforce development.

House Bill 740 also creates local workforce development boards to work under the state Board. The local boards are to appoint a youth council as a subgroup.

Significant Issues

Membership on the Board must include two members of each chamber of the state legislature, to be appointed by the presiding officers of each chamber. This appointment authority differs from the Board currently in existence in that it takes away the unilateral authority of the governor to make appointments. However, because the Governor appoints all members to the Board except the four appointed by the Speaker and Pro Tempore, the Legislature lacks in Board representation. The federal Act does not require cabinet secretaries serve as members on the Board. The Act is written in such a way that the composition of the Board rests with representatives from the state rather than governmental agencies. The intent is to ensure that Board decisions are based on the needs of the state rather than the direction and influence of state administering agencies. Therefore, House Bill 740 should be changed to reflect more legislative input into Board appointments.

The Act encourages states to submit a unified plan for secondary vocational education and related activities. This plan, however, can only be submitted if approved by the legislature.

Because of the magnitude of the programs and their associated funding that will fall under the purview of the Board, it could prove beneficial to designate the Department of Finance and Administration as the fiscal agent for all workforce development funding. Having a neutral office acting as fiscal agent will ensure the directives from the Board are implemented.

FISCAL IMPLICATIONS

The most important provision of the federal Workforce Investment Act for legislators is the Schaffer/ Woolsey (Brown) Amendment. This amendment gives state legislatures the authority to appropriate the federal funds under the Act. By influencing the appropriations process, this amendment gives legislatures the authority to establish priorities, direct programs and otherwise influence the implementation of programs and services.

The total dollars that will fall under the Act in this state are unknown. However, LFC staff estimates they will be at least $45.0 - $50.0 million.

The bill provides for the use of funds, services, personnel and facilities from state and local public agencies. Therefore, no additional FTE or funding will be necessary.

ADMINISTRATIVE IMPLICATIONS

The passage of this bill will have little, if any administrative impact on the agencies involved.

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

Senate Bill 353 also creates the Workforce Development Board.

House Bill 622 and Senate Bill 650 make appropriations to the Office of the Lieutenant Governor for funding to provide administrative support to the Board.

TECHNICAL ISSUES

The Board does not include membership from CYFD. Because CYFD is a lead cabinet agency and provides child care to low-income working persons their membership should be included, if only as ex-officio.

Due to the diverse needs of the populations that are served by workforce investment activities the Board membership should be required to reflect the state's gender ethnic and geographic diversity.

OTHER SUBSTANTIVE ISSUES

The State Department of Education included the following in their bill analysis of House Bill 740:

Governor Johnson, by Executive Order, created the state workforce development board in 1996. The board has met several times each year since that time. At its meeting on Friday, February 19[th,] board members expressed dissatisfaction with the management of the board by the Department of Labor. Board concerns included the following:

That the Department of Labor has acted on its own imitative in conducting activities relating to the board rather than responding to action taken by the board. Board members cited as an example the fact that the board took action in October to require that the Department of Labor revise the proposed workforce development board legislation to comply with the requirements of the Workforce Investment Act of 1998 and to correct governance conflicts and to present the proposed revision to the board prior to the session for their review and approval. Rather than following the action taken by the board, Department of Labor staff made revisions to the proposed legislation and arranged a bill sponsor to introduce a bill without prior notice and approval of the board. A similar incident occurred with the development of a strategic plan. The Department of Labor was directed to work with a subcommittee to revise the draft plan. Rather than follow the action of the board, department staff revised the plan without the involvement of board members.

That scheduled meetings are canceled at the last minute and notices sent out the week before meetings are scheduled. Board members find it necessary to rearrange schedules or be absent from the meetings due to failure to receive advance notice.

Synopsis of Federal Workforce Investment Act

The federal Workforce Investment Act of 1998 (Act) rewrites current federal statutes governing programs of job training, adult education and literacy, and vocational rehabilitation, replacing them with streamlined and more flexible components of workforce development systems. For the most part, the Act maintains funding silos around the individual programs of Adults, Dislocated Workers, and Youth; the only programs consolidated are the summer and year-round youth programs currently operated under the Job Training Partnership Act (JTPA). The emphasis of the legislation is to improve coordination between the workforce investment system and the adult education, literacy and vocational rehabilitation programs.

The Act links these programs in several ways:

• •State Board. A state Workforce Development Board is created and develops the plan to coordinate federally funded programs. The Board advises the Governor on system development and monitoring the statewide system.



• •Local Investment Boards and Areas. Area Workforce Investment Boards are established to work in partnership with local elected officials to create a five-year strategic plan to coordinate workforce investment systems. The local partnerships will design and oversee job training for adults, youth and dislocated workers.



• •One-stop Systems. The Local Workforce Investment Areas will establish a one-stop delivery system for workforce development services. These one-stop centers must provide core services and access to intensive training services.
• •Unified State Plan. In order to receive federal funds, the state Board must submit a state plan outlining the integration of federal funds over a five-year period.
• •Shared Accountability. The Act includes performance standards and measures that can lead to incentive grants for high performance and sanctions for low performance.



• •Common Terms. Performance measures will be developed between local and state elected officials which are then negotiated with the federal Secretary of Labor.

Beyond coordination of workforce delivery systems, a second major emphasis of the Act is a work first approach. This is accomplished by requiring the use of the labor market to evaluate the pool of workers seeking employment and training assistance.

President Clinton has already signed this bill but states are not required to implement the workforce provisions until July 1, 2000. However, state Secretaries of Labor and Education are authorized to use up to two percent of current funds to pay for transition activities.

Summary of the New Funding Streams. The new funding streams are in three individual silos: Adults, Dislocated Workers and Youth. They are designed as follows:

• •Adults. 85 percent of the funds are allocated to local areas; fifteen percent are reserved for statewide activities that must include incentive grants, technical assistance, MIS, evaluation and one-stop system building.

• •Dislocated Workers. 60 percent of funds are allocated to local areas. 40 percent may be reserved by the state, or, fifteen percent can be reserved for statewide activities and 25 percent reserved for rapid response activities.

• •Youth. 85 percent of funds are allocated to local areas. Fifteen percent are reserved for statewide activities.

Of the above funding streams, the state's fifteen percent reserve amounts from each stream may be merged to carry out statewide activities.

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