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; SB650 and HB740

SOURCES OF INFORMATION

LFC Files

Human Services Department

State Department of Education

Department of Labor

Economic Development Department analysis not provided

Lieutenant Governor analysis not provided

SUMMARY

Synopsis of Bill

In response to the federal Workforce Investment Act (Act),which is summarized in the "Other Substantive Issues" section below, Senate Bill 577 creates the Workforce Development Board (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 State 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.

Senate Bill 577 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 is not specified in Senate Bill 577; it requires instead that the Board consist of members as provided in the federal Act. The federal Act gives full appointment authority to the Governor, excepting the four members to be appointed by the Speaker of the House of Representatives and the President Pro Tempore of the Senate. Senate Bill 577 should be changed to reflect more legislative input into appointment authority, which is allowable under the federal Act.

The federal 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 federal 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 and House Bill 740 also create 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

In order to ensure the diverse needs of the population targeted by workforce investment dollars are met, language should be added to require Board membership be representative of the state's gender, ethnic and geographic diversity.

OTHER SUBSTANTIVE ISSUES

The State Department of Education included the following in their bill analysis of Senate Bill 577:

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:

Meetings are not held on a regular basis and are often canceled at the last minute

Meeting announcements are not mailed to allow adequate planning time

Action is taken on behalf of the Board without their being advised

The need for the Board to be adequately staffed and to ensure that the Board operates independently and with authority further supports the recommendation that a part-time executive director be hired to work with the Board and that funds necessary for the Board to operate be administered by DFA rather than a state agency that receives workforce development funds.

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.

RLB/gm