Updated September 1, 2009 WHAT S IN THE FY 2010 BUDGET FOR EMPLOYMENT AND TRAINING?

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1 An Affiliate of the Center on Budget and Policy Priorities 820 First Street NE, Suite 460 Washington, DC (202) Fax (202) Updated September 1, 2009 WHAT S IN THE BUDGET FOR EMPLOYMENT AND TRAINING? The Department of Employment Services is a major source of employment training programs for unemployed or underemployed District residents. 1 The Workforce Development program in DOES includes 11 activities, but most local funding is allocated to two activities: The Summer Youth Employment Program (SYEP) for District residents between the ages of 14 and 21. The Transitional Employment Program (TEP) for adults with employment barriers, including exoffenders. It provides short-term subsidized jobs designed to lead to unsubsidized employment. Summary of Mayor s Budget Proposal: Mayor Fenty s budget proposed $66 million in local funds for workforce development services. This is somewhat lower than the $75 million budgeted for workforce development in FY 2009, which included $23 million in supplemental funding for the 2009 summer jobs program. The proposed budget included a reduction in funding for SYEP, although the nature of this reduction is unclear because no program changes were proposed. The proposed budget also included cuts to other youth employment programs and all other locally funded workforce development programs. The proposed budget reflected an increase in federal funding, from $13 million to $21 million, due to the federal economic stimulus package. Even with the increase, however, federal funding will be notably lower than in FY SUMMARY MAYOR S PROPOSED BUDGET The proposed 2010 local funding for workforce development $66 million was 13 percent lower than the amended FY 2009 budget after adjusting for inflation. This reflected a reduction in funding for the Summer Youth Employment Program although no program changes were made. It also included cuts in local funding for all other workforce programs, such as the Transitional Employment Program. Stimulus funds will result in an increase in federal funds from $13 million in FY 2009 to $21 million in, primarily for additional training programs. COUNCIL COMMITTEE MARK-UP The Council cut $20 million from SYEP and used $6 million to supplement adult job training programs. (The remaining savings went to programs outside of workforce development.) FULL COUNCIL VOTE, MAY 12 The Council made no further changes to the budget for workforce development. AMENDED BUDGET VOTE, JULY 31 An amended budget was adopted as a result of a newly identified revenue shortfall. The amended budget reduced the Council s $6 million proposed expansion by $1.4 million. 1 A number of other DC agencies support workforce development services, such as the Depart of Human Services TANF programs. Those agencies do not isolate workforce development funding in their budgets, however. 1

2 Summary of the Council Committee Mark-up: The Committee on Workforce Development and Housing cut the proposed funding for the Summer Youth Employment Program by $20 million, to $23 million. The savings reflect shortening the length of the program to six weeks (which was the duration prior to 2008) and limiting enrollment to 21,000 youth, still a historically high level. Some $13 million of the savings was transferred to programs outside of the committee including $10 million to restore a FIGURE 1 LOCAL AND GROSS FUNDING FOR WORKFORCE DEVELOPMENT, FY cut in funding for charter school facilities and $2 million for adult literacy services and $6 million of the savings was used to increase other workforce development programs, including $5.4 million for adult job training. With the cut, local workforce development funding in would remain significantly lower than the amended FY 2009 budget $52 million vs. $75 million primarily due to the cut in SYEP funding. Summary of the Full Council Vote, May 12: The Committee of the Whole voted on the entire budget request on May 12, There were no further changes made to the funding level for workforce development. Summary of the Amended Budget Vote: As a result of a $150 million revenue shortfall for announced in June 2009, Mayor Fenty submitted an amended budget on July 17 th. It removed the $5.4 million increase for adult job training, the $600,000 increase for apprenticeships, and the $2 million increase for adult literacy. On July 31 st, the Council restored $4.6 million for adult job training (leaving a cut of $800,000) and accepted the other reductions. Local workforce development funding in is $50 million, modestly lower than the initially approved budget and well below the $75 million amended FY 2009 budget. Analysis of Workforce Development Funding The general fund budget for workforce development proposed by Mayor Fenty was $66 million (Figure 1). Of this, $50 million was for youth programs, $12 million for the Transitional Employment Program, and $3 million for other programs. (See Table 1.) 2

3 TABLE 1 LOCAL FUNDING FOR DOES WORKFORCE DEVELOPMENT FUNDING BY ACTIVITY (FIGURES IN THOUSANDS) FY 2009 Revised* Proposed The proposed local budget for represented a decline from the revised FY 2009 budget of $75 million. The decline is attributable in part to reduced funding for the Summer Youth Employment Program although the new budget did not propose any program changes as well as to cuts in local funding for all other employment programs. Youth Employment Programs Full Council (May 12) Amended (July 31) Total $75,326 $65,509 $51,931 $49,853 Senior Services $3 $0 $0 $0 Program Performance Monitoring $2,146 $1,945 $1,945 $1,945 Office of Apprenticeship Info & Training $1,334 $888 $1,487 $888 Transitional Employment $14,391 $12,090 $11,799 $11,799 Employer Services $1,115 $421 $421 $421 One-stop Operations $0 $0 $0 $0 Labor Market Information $0 $0 $0 $0 Youth Programs, Total $56,335 $50,165 $30,165 $30,165 Summer Youth Employment $42,874 $22,874 $22,874 Year-Round Employment $6,408 $6,408 $6,408 Mayor s Youth Leadership Institute $883 $883 $883 Adult Job Training $5,420 $4,635 * FY 2009 figures are adjusted for inflation to equal 2010 dollars. This includes supplemental funding for the Summer Youth Employment Program in FY 2009 The proposed budget for youth programs in was $50 million, compared with $56 million in the revised FY 2009 budget. The reduction reflects both the Summer Youth Employment program and other youth employment programs. SYEP represented $43 million of the proposed $50 million proposed budget for youth employment. This is somewhat lower than the amended FY 2009 budget of $45 million for the summer jobs program. The FY 2009 budget included a $21 million initial appropriation, as well as supplemental funding of $23 million approved in July 2009, allowing the program to serve an estimated 25,000 participants. The nature of the decline is unclear, because the budget did not propose any program modifications. The proposed budget appeared to cut funding for other youth programs, including the year-round employment program and the Mayor s Youth Leadership Institute. Proposed funding for these programs in was $7.3 million, compared with an estimated funding level of $11.6 3

4 million in FY (Until, all youth programs, including SYEP and the year-round program, were combined in one line item.) Full Council Vote, May 12: The Committee on Housing and Workforce Development cut SYEP by $20 million, to $23 million, which would be accomplished by shortening the program to 6 weeks, which was the duration prior to 2008, and by limiting participation to 21,000. Even at this level, the program would be far larger than in years prior to The full DC Council supported this change when it approved the final budget on May 12. Amended Budget Vote, July 31: Mayor Fenty proposed restoring $20 million in funding to SYEP, but this was rejected by the Council. As a result, the amended budget for youth programs remained at the same level $23 million as in the budget adopted by the Council on May 12. Other Workforce Development Programs Transitional Employment Program: TEP provides work-readiness training and short-term subsidized employment that is designed to lead to unsubsidized employment. The proposed FY 2010 budget for the Transitional Employment Program was $12.1 million, or more than $2 million below the FY 2009 budget of $14.2 million. 3 The proposed budget for TEP also represents a cut since FY 2008, when $15 million was spent on this program. Apprenticeship Office: The Office of Apprenticeships faces a local funding reduction of more than one-third, from $1.3 million in FY 2009 to $888,000 in FY2010. Employer Services: Proposed local funding for Employer Services is $400,000, compared with $1.1 million in FY This cut in local funding would be offset by an increase in federal funding. Program Performance Monitoring: This set of services, which includes an adult training program, would see its local funding cut from $2.1 million to $1.9 million. Council Actions: The Committee on Housing and Workforce Development increased funding for adult job training by $5.4 million. It is not clear whether this would supplement an existing program or fund a new program. The Committee also provided a $600,000 increase the Mayor s proposed funding for apprenticeships. This put funding for apprenticeships at roughly the same level as in FY 2009 budget. The Committee cut the Transitional Employment program by nearly $300,000. (The Committee also devoted $342,000 to the Wage and Hour division within DOES, a program outside of workforce development). The full DC Council supported these changes when it approved the final budget on May The FY funding level for these programs is not identified in budget documents. Total funding for all youth programs is $32.6 million, and media coverage of SYEP suggested that it represented $21 million of this total. This would mean that other youth employment programs had FY 2009 funding of $11.6 million. 3 According to budget documents, the TEP budget for 2009 is $12.1 million, but it is not clear how or when the program s budget was revised. 4

5 TABLE 2 GROSS FUNDING FOR WORKFORCE DEVELOPMENT SERVICES, FY 2009 & FY 2009* Local FY 2009* Federal FY 2009 * Total Local Federal Total Total $75,326 $13,130 $88,456 $49,853 $20,716 $70,569 Senior Services $ Program Performance Monitoring 2, ,146 $1,945 3,354 5,299 Apprenticeship Info & Training 1, ,334 $ Transitional Employment 14, ,391 $11, ,799 Employer Services 1,115 2,353 3,368 $421 3,462 3,883 One-stop Operations 0 6,385 6,385 $0 9,550 9,550 Labor Market Information $ Youth Programs, Total 56,335 2,957 59,292 $30,165 2,480 32,645 Adult Job Training 4, ,635 * Dollar amounts are adjusted for inflation to equal 2010 dollars. Amended Budget Vote, July 31: Mayor Fenty proposed eliminating the $5.4 million enhancement to adult training, but the final amended budget adopted by the Council included a cut of only $800,000. The amended budget also eliminated the $600,000 increase in funding for apprenticeships. DC s Workforce Development Budget Has Increased Substantially Since the Early 2000s Although local funding for workforce development represents a decline from FY 2009, there is a longer-term trend of increased funding. Local funding for these programs totaled just $6 million in FY 2004, for example. The increase since then is the result of substantial expansion in funding for youth programs and for the Transitional Employment Program. These programs now reflect the vast majority of the local workforce development budget. The local budget for youth programs rose from $2.2 million in FY 2004 to $18 million in FY 2007 and $31 million in. The program, which had served 11,000 youth in 2005, expanded to serve more than 21,000 students in FY 2008, and the program was expanded from six weeks to ten weeks. The Transitional Employment Program had no local appropriation in FY It first received local funding in local funding in FY 2006 $8.4 million. Funding rose to $15 million in FY 2008, before being cut to $11.8 million for. Even with the recent cuts, the funding level for this program is higher than amounts budgeted prior to Federal Funding for Workforce Development Programs Will Grow in Due to Stimulus Funding Proposed federal funding for DOES s workforce development programs in is $20.7 million, a substantial increase from the $13 million in federal funds in FY The increase stems 5

6 largely from funds provided under the federal stimulus package adopted in February. The District will use the federal funds as follows: FIGURE 2: FEDERAL FUNDING FOR WORKFORCE DEVELOPMENT, FY Federal funding for the program performance monitoring activity will be $3.4 million in. While the DOES budget notes that this activity serves an oversight function, DOES officials note that it also funds adult employment training services. The program received no federal funding in FY 2009, when it relied solely on local funding. Federal funding for employer services will rise from $2.3 million in FY 2009 to $3.5 million in. DC s One-Stop employment centers, which provide job search assistance and funding for training, are funded entirely with federal funds. The proposed federal funding for the One-Stops is $9.6 million, compared with $6.3 million in FY Table 2 shows total funding for workforce development programs, including both local and federal funds, in FY 2009 and. Longer-Term Trends Shows Drop in Federal Funding for Workforce Development Federal funding for DC s workforce development programs has declined notably in recent years (Figure 2). Even with the increase, federal funding in $21 million will be more than one third lower than federal funding in FY2004 which stood at $32 million. The cuts include Workforce Investment Act funds for adults, dislocated workers, and youth. In addition, the District s FY 2004 budget reflected $8 million in funds from the federal Youth Opportunity Grant. DC no longer receives any YOG funds. While the decline in federal funding has been offset by substantial increases in local funds, the increases have not replaced the types of programs that were affected by the federal funding cuts. The cuts largely affected training programs, while the local funding increases have been concentrated in the summer jobs program and the subsidized job program (TEP), neither of which offers longterm, intensive job skills training. Performance Measures in the Budget The budget for each government agency includes a number of performance measures, tied to specific agency objectives. The performance measures are intended to provide an indication of how well the agencies are using funds to meet their goals. Unfortunately, the quality of performance 6

7 measures in the District s uneven. In many cases, performance measures are unclear or cover aspects of an agency s functions that do not seem tied to the agency s core functions. 4 The proposed DOES budget for has three broad objectives, one of which relates to workforce development: Foster the development of a prepared workforce by increased and focused provision of comprehensive workforce development services and offering access to userfriendly business, labor market, and training information. (A second objective addresses the Unemployment Compensation program, and the third objective addresses workplace safety and the Worker s Compensation program.) There are eight performance measures for the workforce development objective, as well as two indicators of the job climate in the District. The quality of these measures varies greatly. For example, one measure is the share of TEP participants who move from subsidized employment to unsubsidized employment, which seems to be a good indicator of the program s success. The goal for this measure is 45 percent, however, with no explanation as to why the target is to have fewer than half of the participants move to unsubsidized employment. While this may be reasonable, given the work barriers faced by the program s participants, this is not explained. In addition, there is no information on the number of participants expected to be served or of the quality of the jobs they get, such as wages and benefits. Some measures are not very clear. For example, one measure is the percent of unemployed adult customers placed in full-time unsubsidized jobs, with a performance rate of nearly 80 percent in 2007 and a goal of 74 percent in This measure does not explain the universe of adult customers, the services they receive, or how they are placed in jobs. It is a relatively meaningless measure. There are only two measures for the Summer Youth Employment program, one on the share of applicants referred to employment and a second on timely payment to participants. While these are reasonable measures particularly in light of payment problems that occurred in 2008 these measures offer little insight into the quality of the Summer Youth Employment Program. 4 The issues related to DC s performance measurement are discussed further in a DCFPI 2009 report, Ten Ways to Improve the Transparency of the DC Budget. 7