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Maryland Workforce Development Association

Karen Sitnick, President March 2006 Eric Seleznow, Vice-President B.J. Corbin, Treasurer Laurie Holden, Secretary WHITE PAPER: MWDA Members IMPACT OF PRESIDENT’S BUDGET & CAREER ADVANCEMENT Anne Arundel County Anne Arundel Workforce Development Corporation ACCOUNT PROPOSALS ON MARYLAND’S WORKFORCE

Baltimore City DEVELOPMENT SYSTEM Mayor’s Office of Employment Development

Baltimore County The Maryland Workforce Development Association (MWDA) is deeply Baltimore County Office of Employment and Training concerned about the President’s fiscal 2007 budget proposal, which will

Frederick County drastically alter the state’s workforce development system. The President’s Frederick County Workforce Services plan would consolidate the separate Adult, Dislocated Worker and Youth Lower Shore (Wicomico, Worcester, & programs that exist in the current workforce investment system with the Somerset Counties) Lower Shore Workforce Alliance Wagner-Peyser program into a single block grant, reduce overall funding by

Mid-Maryland over $600 million and create self-managed vouchers called Career (Carroll & Howard Counties) Howard County Employment & Training, Advancement Accounts (CAAs). Individuals in need of employment Carroll County Business & Employment Resource Center assistance would have a $ 3,000 limit in their CAA to pay for all the education

Montgomery County and training services they need to get and keep a job. Montgomery County Department of Economic Development, Division of Workforce Investment Services The Maryland Workforce Development Association is a coalition of the Prince George’s County Prince George’s County Economic directors of Maryland’s twelve workforce investment areas. These Development Corporation, Division of Workforce Services administrators oversee the state’s local workforce development system and

Southern Maryland provide direction to its network of thirty-five one-stop career centers, which (Calvert, Charles, & St. Mary’s Counties) are part of the national employment and training system of over 3,000 one- Southern Maryland WorkSource stops. The focal point for service delivery to both job seekers and the business Susquehanna Region (Cecil & Hartford Counties) community, one-stops offer a broad menu of services ranging from job search Susquehanna Workforce Network, Inc. assistance and labor market information to career workshops and state of the Upper Shore (Kent, Queen Anne’s, Talbot, Caroline, & art training. Last year there were more than 316,000 visits to Maryland’s one- Dorchester Counties) Upper Shore Workforce Investment stops. Closely linked to its one-stops are Maryland’s twelve business-led local Board workforce investment boards, which provide strategic direction to each local Western Maryland (Garrett, Allegany, & area’s workforce delivery system. Washington Counties) Western Maryland Consortium The Maryland Workforce Development Association believes that nothing is more crucial to Maryland’s economic strength in today’s global economy than investing in a skilled and competitive workforce. However, efforts to address the workforce investment system’s shortcomings can best be dealt with through an informed and inclusive process to reauthorize the Workforce 1 9801 BrokenInvestment Land Parkway Act (WIA).  Suite Dismantling 105  Columbia, the locally Maryland driven workforce 21046 (410) 290-9072 www.mwda.org strategy is both unwarranted and unwise.

The President’s FY 2007 budget proposal cuts U.S. Department of Labor funding for workforce development by fifteen percent when compared to FY 2006 levels and continues a five-year trend that will leave workforce development programs $1 billion below FY 2000 funding levels. Workforce Investment Act funds are critical at the local level to sustain basic services for job seekers and to provide customized training services to the business sector, whose demand for highly skilled workers continues to grow. However, if the President’s budget is enacted, the nation’s local workforce investment areas will have $597 million less in WIA formula funds with which to prepare current and future American workers for high- growth occupations in the global economy. Maryland’s federal WIA allocations have already dropped by as much as sixty-five percent in some local workforce investment areas and by nearly forty percent overall since 2003. If the President’s budget is enacted, Maryland’s local areas will be forced to close many of their one-stops, and key business services would be curtailed if not entirely eliminated.

Equally disturbing to MWDA is the fact that the President’s proposal would combine the presently separate WIA Adult, Dislocated Worker and Youth formula programs into a state block grant to support CAAs for workers, an entirely untested workforce development strategy. The Department of Labor would require states to use seventy-five percent of their block grants to provide CAAs to individuals in need of employment assistance, including low-income adults, dislocated and incumbent workers, and out-of-school youth. Individuals would use their accounts to pay for expenses directly related to education and training. This would leave only twenty-five percent of the funds to support all basic employment and labor exchange services, with only three percent allowable to cover administrative costs.

The impacts of the CAA proposal are hard to ignore. It does not fully take into account the cost of educating and upgrading the skills of the nation’s existing and emerging (youth) workforce. Further, it overlooks local economic and workforce development realities and does not take into consideration the characteristics of the populations that one-stops are obliged to serve.

A $3,000 CAA will not cover the cost of most entry-level skill certification courses, such as Certified Nursing Assistant or Geriatric Nursing Aide, much less the cost of a college education or incumbent worker skills upgrade training. Additionally, CAAs are self-managed accounts that do not address the need that many low-wage job seekers and dislocated workers have for a network of support services to be delivered concurrent to training. As well, the CAA proposal presumes that the reading and math skill levels of America’s job seekers and workers are proficient, which is contrary to recent data on U.S. adult literacy rates.

Additionally, the CAA proposal would effectively eliminate youth workforce development from the local workforce development arena. Since there will be no separate Youth funding

2 9801 Broken Land Parkway  Suite 105  Columbia, Maryland 21046 (410) 290-9072 www.mwda.org stream, CAAs will be the training venue for developing future workers. While some young people may benefit from a CAA, it is very unlikely that our most at risk, out-of-school, out-of- work youth will succeed without a more comprehensive menu of wrap around support services. This also holds true for low-wage, low-literacy, low-skilled adults. Without professional career assessment, employment and workplace counseling job readiness/soft skills training, and job retention guidance, many adult and youth CAA participants will, quite simply, fail to gain a training credential. In short, given the demographic and educational characteristics of the populations that one-stops are obligated to serve, it is hard to grasp how self-managed CAAs “will enable America’s current and future workers to gain the skills needed to successfully enter, navigate and advance in 21st century jobs”, their declared purpose.

In summary, the President’s plan replaces locally designed, demand driven workforce systems comprised of comprehensive one-stop career centers, employer focused training services and business-led advisory boards with vouchers. Thousands of Maryland job seekers will be left behind. This does not make any sense. The impact of this proposal and its associated budget will devastate Maryland’s workforce system, forcing the closure of many one-stops across the state and seriously inhibiting the ability of local areas to target declining federal resources on services specifically crafted to meet the demand needs of their businesses and citizens.

For additional information, contact:

Karen L. Sitnick President Maryland Workforce Development Association 410/396-1910 [email protected]

3 9801 Broken Land Parkway  Suite 105  Columbia, Maryland 21046 (410) 290-9072 www.mwda.org