DOL Official Questioned About Misused Apprenticeship Funds

Employer-led apprenticeship rule scheduled for April 2020

Roy Maurer By Roy Maurer November 26, 2019
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​The Department of Labor's (DOL's) top job-training official told a Congressional committee that at least $1.1 million was "misapplied" from congressionally appropriated apprenticeship funding. He said the error has been corrected and won't happen again.

In testimony before the House Committee on Education and Labor, John Pallasch, head of the DOL's Employment and Training Administration, which oversees the federal government's apprenticeship programs, didn't shed much new light on the misappropriated funds or whether the agency was neglecting the nation's registered apprenticeship system in favor of the Trump administration's proposed industry-recognized apprenticeship programs (IRAPs).

The funds in question were earmarked for the DOL's registered apprenticeship system but were instead used to support activities related to the IRAPs, which are still in proposal stage and shouldn't receive any direct funding.

Committee Democrats repeatedly queried Pallasch about how the funds came to be misspent, whether additional funding was also misdirected, and for a breakdown of appropriated funds being distributed by his agency's Office of Apprenticeship.

Pallasch, who was confirmed in the role in July, told the committee that the funds were misused before he came onboard and that once he found out about it, he immediately took "appropriate corrective action." He had no substantive information to share about how funding is distributed within the agency, saying that it's difficult to calculate.

He did explain that while the agency's Training and Education Services funds can only be used for registered apprenticeships, there is more flexibility in using its Program Administration funding, which it has used on activities related to IRAPs.

Rep. Bobby Scott, D-Va., and other Democrats on the panel said they suspect that much more than $1.1 million was misdirected from registered apprenticeships.

"The department's most recent claim that it only misspent roughly $1 million on IRAPs is difficult to square with the substantial amount of work assigned to multiple contractors to advance this initiative, in contradiction to Congress' directive," Scott said. 

Democrats specifically want to know about contracts with consulting firm Maher & Maher to conduct industry research, marketing firm Edelman to come up with a promotional campaign and Booz Allen Hamilton to help create the apprenticeship.gov website.

The DOL's inspector general is currently investigating the appropriations issue, including the trio of contracts.

[SHRM members-only toolkit: Using Government and Other Resources for Employment and Training Programs]

Misplaced Priorities

Democrats view any reallocation of resources from the registered apprenticeship program to be detrimental to its success.

"Every dollar the department wasted on unproven industry-recognized apprenticeship programs is one less dollar that could have been invested in expanding registered apprenticeship programs, which have a proven record of creating good-paying jobs," Scott said.

Many Democrats brought up staffing issues. "Six out of DOL's 25 offices of apprenticeship in states across the country had no leadership for much of the past year, including Alabama, Tennessee, Nevada, Oklahoma, Idaho and Texas," said Rep. Susan Davis, D-Calif. "Vacancies within the federal Office of Apprenticeship have also prohibited crucial operations, like streamlining the registration process and even ensuring implementation of nondiscrimination apprenticeship regulations."

Davis went on to say that "under this administration, the Department of Labor is … disregarding its core responsibility to support registered apprenticeships, while irresponsibly moving forward on creating a separate and untested new program."

Pallasch responded that the DOL is indeed committed to supporting registered apprenticeships.

"This administration's commitment to growing the apprenticeship model cannot be disputed," he said. "In fiscal year 2018 alone, we added an all-time high of 238,000 new apprentices … we have already exceeded this record number of new apprentices in fiscal year 2019."

Pallasch added that DOL is working to encourage more employers to participate in registered apprenticeships by reducing the paperwork associated with the application from 65 pages to 12.

He said that only about nine out of 122 staff working in the Office of Apprenticeship are working part-time on IRAPs.

Several Democrats expressed concern that IRAPs will not have statutory provisions for program length, working conditions, apprentices' wage progression, and equal employment opportunity (EEO) requirements. "The national apprenticeship system is, simply put, our nation's most successful job training program," Davis said. "Registered apprenticeships provide hundreds of thousands of workers each year with access to paid, on-the-job learning opportunities in high-demand fields. Yet, the IRAP model, which has been developed with little input from states, employers or the public, eliminates [DOL] responsibility to protect the welfare of apprentices through quality standards and safeguards."

Pallasch responded that he couldn't discuss the rule while it's still being hammered out.

IRAPs would be available to certified industry groups, schools, nonprofits and unions and would be largely free from regulatory oversight. The expansion of employer-led apprenticeships does not change any requirements of the current DOL-regulated apprenticeship programs, which would exist alongside the industry-crafted channel.

"Registered apprenticeships are one tool we can use to strengthen the workforce, but it's important to give recognition to increasingly innovative and growing employer-led apprenticeships," said Rep. Lloyd Smucker, R-Pa., noting that employer-led apprenticeship programs already account for more than 80 percent of all apprenticeship programs.

"Employers know what skills their employees need to excel in the workplace, and Congress should encourage employer-led innovation in the apprenticeship space," he said. "That's why I support efforts to cut the regulatory red tape that prevents so many employers from revolutionizing the way we integrate the education system with the workforce development system."

One reason for the lack of involvement in registered apprenticeships is the frustration some employers report with the registration process. Critics contend that by replacing government oversight with industry-run accreditation groups, the untested program will lack the wage, safety and EEO protections of the registered apprenticeship system.

The DOL released its proposed rulemaking for IRAPs in July. The latest regulatory agenda released Nov. 20 shows that the department intends to release a final rule creating the program in April 2020.

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