Take Action--Local WIBs: Check your WIA State Plan!

From: NAWB [nawb@nawb.org]
Sent: Wednesday, June 28, 2006 1:16 PM
To: Vonnegut, Kit (Partner)
Subject: Update: Congressional Appropriations

June 28, 2006

Update: Congressional Appropriations

House and Senate Appropriations Update
This week, the Senate Appropriations Committee started its deliberations of several spending bills: Foreign Operations, Interior, Homeland Security, and Energy. The Labor-HHS-Education spending bill is expected to be taken up in July; it is typically the last bill to be finalized. Chairman Thad Cochran ( R-MS) indicates he intends to finish all spending bills by the August recess.
On the House side, the successful amendment to increase the minimum wage (from $5.15 per hour to $7.25 per hour) in the full Committee’s mark-up on June 14 forced GOP leaders to pull the bill from the floor schedule last week, reducing the possibility of a final vote on the measure before the July 4th recess. Republican leaders and business interests oppose the increase as harmful to the restaurant industry and other small businesses they say are creating jobs. This is the bill that contains the $325 million rescission of USDOL/ETA programs’ FY’06 funds. The measure is not expected to be taken up this week.
House Appropriations Chairman Lewis was trying to move all 11 spending bills through the House chamber by the July Fourth but the Labor-HHS-Education bill will now be taken up in sometime in July.
WIB June 19th “Call to Action” Continues
WIBs are urged to continue contacting their Congressional representatives over the next two weeks to relay information about the potential impacts of the proposed rescission of PY’06 funds on services to job seekers and employers. When the House reconvenes July 10th, it is likely the Leadership of the House will vote on the Labor-HHS-Education spending measure.
Background
For the past six years, the US Department of Labor Administration has argued that funding cuts could be made to the Workforce Investment Act (WIA) system without impacting the delivery of services because of carryover in WIA formula funds at the state and local level. The President’s proposed FY’07 budget contained over $680 million in cuts to training and employment service budgets, and according to the DOL "a substantial funding reduction would not impact the WIA system with $1.2 billion in unspent resources being carried over year after year."
Based on this assumption, the House Appropriations Committee in its Labor-HHS-Education bill mark-up on June 14 approved a one-time rescission of $325 million in FY 2006, to be taken from the Training and Employment accounts, presumably from WIA system carryover. Click here to view the Congressional Research Services proposed rescissions by State.
Call to Action Continues
NAWB thanks WIBs who have already responded to the previous June 19th Workforce Alert. In order for a strong collective message to be heard by the House of Representatives in time for the expected July vote, it is imperative that every WIB determine the impact of losing carry-over funds and communicate the impacts to Congressional Representatives. If your WIB has not developed an impact statement yet, do so immediately and communicate the information to your Congressional Representatives. Also, please send the information to NAWB at nawb@nawb.org as we are preparing information to share with Congressional staff here in Washington. Call NAWB CEO Stephanie Powers at (703)778-7900, x113 for any assistance in undertaking this very critical task.
Guidance for Preparing Impact Statements
For Local WIBS: prepare an estimate of the impact of losing WIA carryover funds based on the following two scenarios:
1. What would happen to your customers at the end of this program year (June 30) – if all of your carryover were to be taken away? This calculation should be done in terms of:
  numbers of trainees being terminated
  training programs that would be affected and how
  the numbers of employer relationships that would be impacted
  the number of job seekers who would not be able to be served
  number of youth not receiving services
  business services strategies that would have to be halted, etc.
2. What would happen to your customers at the end of this program year (June 30) - if 1/3 of your carryover were taken away (close to the actual rescission amount)?
  Think in terms of service delivery; not just loss of infrastructure and staff layoffs!
For State WIBs: Based on the attached CRS rescission estimates for your State, what would be the impact (in dollars and service delivery) of the proposed $325 million rescission, contained in the House Appropriations-reported bill, on your workforce system? (Note: the CRS numbers are estimates for the aggregate for Adult, Dislocated Worker and Youth programs. )
Talking Points for WIB Communications with House Representatives

Carryover was an intentional spending strategy built into WIA as a planned management strategy to assure proper and consistent operation of the workforce system.
The WIA system must respond to economic events such as unanticipated plant closings, mass layoffs, or disaster relief for which some funds must be held in reserve to enable immediate response. The system also provides training for jobseekers that spans more than a single Program Year -- at the point in time when carryover is determined (June 30 of each program year), many workers are midway through training, which appears as “carryover” even those funds are already legally obligated.
Since PY 2000 (July 2000-June 2001), WIA’s unexpended balances have decreased each year from $1.74 billion to $1.14 billion for PY 2004, more than a one-third reduction. As a percentage of total funds available for expenditure, carryover has declined even more, from 43% to 27% of funds available.
Most states are now exceeding the proposed “accrued expenditure rates” proposed in both the House and Senate WIA reauthorization bills and signed off on by DOL.
WIA provides its business-led workforce boards with multiple years to spend formula funds, allowing for long-term planning to meet the training needs of their states and local economies.
The GAO examined this issue in 2002 to determine whether there was indeed a large amount of carryover in WIA programs. The GAO called into question many of the Administration's claims:
First, they found virtually all states spending their funding within their federally authorized time frame –
“Our analysis of Labor’s data shows that states are rapidly spending their funds—in fact, nationwide, states have spent 90 percent within 2 years, much of it often within the first year the funds were available. This pace of spending has occurred even though the law allows states 3 years to spend the funds.” (Workforce Investment Act: States’ Spending Is on Track, but Better Guidance Would Improve Financial Reporting, GAO-03-239, November 2002, page 29.)

Second, GAO found that the Department of Labor’s (DOL) own calculation of WIA carryover created a mistaken impression of excess unspent balances available for spending. GAO contends that much of these unspent balances have already been “obligated” or committed contractually and therefore are not available for new spending purposes.

The GAO found that the Administration’s WIA carryover data reflected inaccurate and insufficient collection of spending data the Administration collected
from the states-
“Labor’s data on obligations do not consistently reflect local commitments; therefore, Labor relies on expenditure data to estimate available funds. In doing so, Labor overestimates the amount states have available to spend.” For 3 of the 4 states that report local obligations, the amount of funds the state has available is much smaller when local obligations are taken into account along with expenditures. For example, for New York, available funds are cut almost by a third, and in California and Washington, available funds essentially disappear—-decreasing from 40 percent to 7 percent, and 33 percent to 2 percent, respectively.” (Workforce Investment Act: States’ Spending Is on Track, but Better Guidance Would Improve Financial Reporting, GAO-03-239, November 2002, page 18.)

If you have any comments or questions, contact NAWB CEO Stephanie Powers at: powerss@nawb.org

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