***Weekly Update***
From Legislative Committee Chair: Todd Kolden, Aberdeen Central Office
Week of July 16, 2007
HOUSE COMMITTEE APPROVED FY 2008 SPENDING BILL WOULD CUT WIA FUNDING BY AS MUCH AS $335 MILLION
• The House Committee on Appropriations last week approved the Labor, Health and Human Services (HHS) and Education spending bill with an amendment to rescind $335 million from training and employment funding, including Workforce Investment Act (WIA) state grants. The legislation is scheduled for consideration by the House this week. The amendment, offered by James Walsh (R-NY), would rescind $335 million in unobligated WIA balances (an estimate of balances as of October 1, 2007), including "recaptures and carryover" remaining from funds appropriated to the U.S. Department of Labor for fiscal years 2006 and prior years. The $335 million rescinded from WIA would be added to the appropriations for the Individuals with Disabilities Act (IDEA) program to fund the education of disabled children.
• The Congressional interpretation of the amendment is it would be drawn mostly from WIA carryover funding from program years 2005 and 2006 carried into program year 2007. Congressional staff members believe the $335 million can be rescinded from WIA in program years 2005 and 2006 as they have data showing states have approximately $761 million in unobligated funds at the end of fiscal year 2006. This large amount in unobligated funding may contradict information NASWA collected from a sample of states on WIA expenditures which showed that on average, states spend 70 percent of WIA grants in the first year and obligated nearly all of the remaining 30 percent with a small unobligated amount available for statewide contingencies.
• Over the past few years, the U.S. Department of Labor asserted states have consistently carried over large amounts (exceeding $1.2 billion) of unspent funding, not distinguishing between "unspent" and "unobligated" funds in their reports. The distinction with the $761 million figure provided from staff with the Congressional Budget Office (CBO) is that it accounts for unobligated funding only. This CBO data could make it difficult to convince Congress of state's spend down found from its sample study of states and require a fresh look at why Congressional data shows such a high level of unobligated WIA funds. Even though WIA gives states three years to spend WIA funds, Congress is not looking favorably on what they view as excessive unobligated carryover. Congressional staff said the funding needs of other programs which spend their full grant in a single year and consistently report large numbers of persons in need of services make a more compelling case for the need for additional appropriations.
• Overall and aside from the rescission to WIA funding, the Committee's fiscal year 2008 spending bill would fund workforce system programs largely at the same levels as were appropriated in fiscal year 2007. Total discretionary spending under the bill is $151.5 billion; 4.8 percent more than was appropriated under the fiscal year 2007 spending bill and $10.6 billion more than requested by President Bush in his fiscal year 2008 Budget.
• Notwithstanding the rescission, the bill would fund the WIA Adult, WIA Dislocated Worker and WIA Youth at $864 million, $1,471 million and $941 million respectively - the same levels appropriated in fiscal year 2007. Employment Service (ES) state allotments would be increased by $10 million from their fiscal year 2007 level for a total of $726 million. Unemployment Insurance (UI) state operations would be appropriated $2,551 million, the same amount requested by the Administration. The Veterans' Employment and Training Service (VETS) state grants would be increased by $5 million for a total appropriation of $228 million. The One-Stop/Labor Market Information line-item would be cut by approximately $3 million for a total appropriation of $53 million. A staff person with the House Labor, HHS and Education Appropriations Subcommittee indicated the bill will require the states receive the same levels for workforce information grants as allocated in fiscal years 2006 and 2007.
Week of July 23, 2007
WIA ON HOLD IN THE SENATE WHILE THE HOUSE SCHEDULES ITS SECOND HEARING ON JULY 24
• Legislation to reauthorize the Workforce Investment Act (WIA) is reported to have stalled in the Senate over an intra-party dispute because the draft bill under development does not go far enough in ensuring only merit-based staff administer Wagner-Peyser program services. According to workforce system advocates on Capitol Hill, there is concern among some in the Senate Majority that if the Congress approves legislation to reauthorize WIA without strengthening the Wagner-Peyser connection to merit-based staffing, the Bush Administration could loosen the requirement when developing WIA regulations. Concern over this issue has effectively placed a hold on introduction of the bill in the Senate with Senator Edward Kennedy (D-MA) unwilling to advance the bill. In addition to the dispute over merit-based staffing, Senator Kennedy's Health, Education, Labor and Pensions Committee has numerous other priorities that are likely to take all available time through the end of the year, making it difficult for WIA to advance until at least next year. Meanwhile, the House is scheduled to hold its second hearing on WIA reauthorization on July 24, 2007, and is expected to move forward with introduction of its bill later this year.
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Week of July 30, 2007
HOUSE PANEL HOLDS SECOND HEARING ON WIA FOCUSED ON PROGRAM ADMINISTRATION
• The House Subcommittee on Higher Education, Lifelong Learning and Competitiveness held its second and likely final hearing on reauthorization of the Workforce Investment Act (WIA) last week. Unlike the focus of the first Subcommittee's hearing to listen predominately from those groups that receive assistance through the workforce system, the hearing this week allowed local, regional and state administrators the opportunity to share what should be done to improve the system. Subcommittee Chairman Ruben Hinojosa (D-TX) in his introductory remarks said the workforce system must develop the talents of all workers, especially those with disabilities, individuals with low levels of literacy and lack a high school credential. Setting the tone for what was a non-partisan and collegial event, Subcommittee Ranking Member Ric Keller (R-FL) said he is looking forward to working with his colleagues on both sides of the aisle to craft the WIA bill and reflected that there is significant work ahead in preparing the legislation. Many on Capitol Hill do not expect the House Subcommittee Chairman to introduce his bill to reauthorize WIA until late this year or even early next year.
• Charles Ware, Chair of the National Association of State Workforce Board Chairs communicated states' WIA reauthorization priorities using the jointly developed National Governors' Association (NGA) and NASWA policy letter sent to Congress last week as his foundation. Mr. Ware said it is the evolution of our economy from a manufacturing-base to a service-base, coupled with advances in technology and the productivity it brings that requires the workforce system to adjust training opportunities and the way it interacts with businesses to ensure the nation remains competitive globally. He cited a recent nationwide public opinion poll on behalf of the nation's governors conducted by Dr. Frank Luntz that showed 9 out of 10 Americans believe that if our nation fails to innovate, our children and our economy will be left behind. Mr. Ware summarized the NGA/NASWA request noting it is based on the following four principles: (1) enhance program coordination and flexibility; (2) align workforce, education and economic development needs and strengths; (3) enhance training services to workers while creating more transparent accountability systems; and (4) reduce administrative costs.
• Representing the American Federation of State, County and Municipal Employees (AFSCME), Mason Petit, a Employment and Training Counselor for Washington State Employment Security said WIA has accelerated the process of shrinking federal leadership in workforce policy in favor of devolution. Further, Mr. Petit said the voice of workers has been almost silenced, the positive contributions of labor unions have been ignored and publicly administered systems have been neglected in favor of various publicly-funded but privately-provided services. Agreeing with the recently approved House Committee on Appropriations report for the Labor, Health and Human Services (HHS) and Education spending bill (H.R. 3043), Mr. Petit said labor exchange activities provided by state employment security agencies should be the primary source of core services, enabling WIA funds to focus on providing intensive and training services. He said the benefits of a publicly-operated statewide labor exchange is it provides early intervention for rapid response, job matching and career counseling, assistance in filing for unemployment insurance (UI) and trade adjustment assistance (TAA) benefits and other services. Mr. Petit concluded by stating it is counterproductive for WIA and Wagner-Peyser programs to compete.
• A number of Subcommittee Members questioned panelists about the provision to rescind $335 million from WIA funding in the House approved fiscal year 2008 Labor, HHS and Education spending bill. Panelists were universal in expressing concern over the proposed cut, noting it would have a direct impact on services for workers and businesses. A number of panelists also reflected on the importance of Labor Market Information (LMI) in assisting local, regional and state leaders to direct limited resources to services most in need.
PERSPECTIVE ON THE HOUSE APPROVED FY 2008 SPENDING BILL
• In continuing discussions with Congressional staff over the justification and application of the $335 million rescission approved by the House last week in its fiscal year 2008 Labor, Health and Human Services and Education spending bill (H.R. 3043), questions are being raised over the availability of unobligated WIA funds. The House spending bill would rescind $335 million from the Training and Employment Services (TES) budget function, with WIA grants comprising the largest share, and is based on a Congressional Budget Office (CBO) estimate from the beginning of fiscal year 2007 (October 1, 2006) that states have approximately $761 million in unspent and unobligated WIA carryover. However, this estimate, now 10 months old combined with the likelihood the bill will be approved late in 2007, means the states will have obligated or spent much more of the money than was estimated by CBO. Further, data provided to Congressional staff by the U.S. Department of Labor reveals states spend approximately 60 percent of their WIA grant in the first year, 95 percent in the second and all WIA grant funds by year three. These data support Government Accountability Office (GAO) and NASWA data.
• Later this year when Members of the House and Senate negotiate the final fiscal year 2008 spending bill, they will need to reconcile differences and find another method to offset spending if unobligated WIA balances cannot be rescinded. The Congress could decide to cut WIA state grants for fiscal year 2008 if large balances of unobligated grants do not exist. This outcome would be even worse than a rescission as it would lower base funding moving forward. Before approval of the labor program spending bill last week, the Congress approved another amendment to cut $49 million to the TES budget function for fiscal year 2008. It is unclear how this cut would be applied or if it would survive conference negotiations, but it is likely to be taken at least in part from WIA state grants. This action highlights the importance for states to share with Members of Congress the impact of the rescission and $49 million cut would have if enacted. With the Senate set to consider the bill sometime in September or October, most communications should be directed to the Senate.
FINANCE COMMITTEE CHAIR INTRODUCES TAA LEGISLATION
• Chairman of the Senate Committee on Finance, Max Baucus (D-MT) this week introduced the Trade and Globalization Adjustment Assistance Act of 2007 (S.1848). The new legislation would reauthorize the trade adjustment assistance (TAA) program, scheduled to expire on September 30, 2007. In addition to extending TAA, the bill addresses the impact of globalization and expands trade adjustment assistance coverage to service workers. Senators Baucus (D-MT) and Snowe (R-ME), on introducing the bill, noted the open trade system that has evolved over the past 50 years has created new markets for American ingenuity. But for some Americans, trade-related economic change has not always been smooth. The Trade and Globalization Adjustment Assistance Act of 2007 would invest in America's workers and firms, farmers, and communities.
• Senator Baucus noted TAA is a lifeline to American workers reentering an increasingly global labor market. He indicated the new Trade and Globalization Adjustment Assistance Act would authorize a more fair, flexible, and relevant program. Senator Baucus said globalization does not adhere to any trade agreement. The bill would end discrimination, by covering any workers whose jobs move offshore, regardless of whether our nations have a trade agreement in force.
• Senator Snowe said trade liberalization that sacrifices foundational domestic industries is the chosen policy of government and we therefore have an obligation to ensure that the costs are not borne by these most vulnerable workers alone. Senator Snowe indicated the bill would expand the TAA program to cover new groups of Americans who have been adversely affected by trade liberalization with World Trade Organization members, such as China. Senator Snowe said the legislation would create a program to address economic dislocation in entire communities affected negatively by international trade and provide readjustment assistance to such communities.
• Components of the bill would eliminate the requirement that workers forfeit training if they opt for wage insurance. Workers could choose this assistance either with training, without training, or after successfully completing training. Wage insurance should supplement, not supplant, TAA benefits. The bill would double the cap on training funds, as well as include a trigger to automatically raise the cap to respond to unanticipated training demands. In addition the bill would create a new TAA for Communities program to help communities uniquely challenged by trade to plan for the future and to access grant funding.
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