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States Want Control over WIA 'Set-Aside' Funds
U.S. governors look to reclaim larger piece of workforce-investment pie

By Bill Leonard  9/6/2013
When Congress returns to Capitol Hill on Sept. 9, 2013, from its monthlong August recess, the nation’s governors are hoping to join in the debate over reauthorization of the federal Workforce Investment Act (WIA). As many states seek to retrain their workforces and attract new businesses, governors say they know better than the U.S. government how to get the most out of dwindling workforce development resources.

“We know federal dollars have been cut, but what’s even worse is the fact that we now have less flexibility on how to spend the money in our own states,” said Iowa Gov. Terry Branstad, R, vice chairman of the National Governors Association’s (NGA) Education and Workforce Committee, in a written statement. “We, as governors, and our directors of workforce development are much more in tune with the labor force needs in our states than are people in Washington.”

Officials at the NGA claim that congressional leaders need state leaders’ input to ensure that any revamp of the WIA is done correctly.

Congress may reauthorize the act before the end of 2013. The House passed a reauthorization measure (H.R. 803) in March, and the Senate version of the bill (S. 1356) cleared the Health, Education, Labor and Pensions Committee at the end of July. The White House has indicated that President Obama is eager to sign a reauthorization bill into law.

Sources say a conference committee most likely will resolve the differences between the House and Senate versions. The Governors Association wants to play a major role in the congressional negotiations. In particular, NGA officials hope to restore a 15 percent set-aside of WIA funds that governors typically use to develop new workforce development programs. In 2011, Congress cut this set-aside allowance to 5 percent of the federal WIA funds that states receive.

The set-aside reduction has stifled innovation in state-based job programs and has forced state and municipal governments to compete directly for WIA funding, according to NGA officials.

“With the loss of those funds, we are seeing an elimination of services and a full halt to innovation,” Joan Wodiska, director of the NGA’s Education and Workforce Committee, said in a recent article in USAToday. “States are really behind the eight ball at a critical time when we need to be focused on continued economic recovery and job growth.”

The Connecticut Department of Labor’s June 2013 request for permission to set aside 15 percent illustrates just how dramatically the state’s reserve fund for workforce development programs has dropped. According to the document, the Connecticut governor’s reserve set-aside shrunk from approximately $4.3 million in 2010 to less than $1.4 million in 2012. The amount of money allocated to the Connecticut reserve fund for 2013 held steady from the previous year.

Several other states have filed for similar waivers, but the prospect of acquiring additional funds appears bleak as lawmakers on Capitol Hill look to slash federal spending further.

In the meantime, population growth, inflation and stubbornly high unemployment numbers in many states are pushing job training and workforce development programs to the limit. State governments would like to regain control of a larger slice of what is admittedly a shrinking pie of available resources.

Employers throughout the country have a vested interest in how the debate on retooling the Workforce Investment Act plays out. During the congressional fall session lawmakers on the Hill and the White House will be focusing on other key issues, such as crafting a budget deal and deciding on possible military intervention in Syria. However, sources familiar with the issue say that reauthorizing the WIA will also be a priority in Washington, since the Congress and the president are eager to take a positive step toward supporting job growth and improving the skill base of the U.S. workforce.

Bill Leonard is a senior writer for SHRM.

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