Four Major Areas of Federal Concern as the calendar year gets underway

• Federal Fiscal Year 2003 Budget
• Federal Fiscal Year 2004 Budget
• Reauthorization of Major Federal Legislation impacting workforce policy and programs
• President’s Economic Stimulus Package

Federal Fiscal Year 2003 Budget

Congress concluded the 107th session (last year) leaving 10 major spending bills undone. Included in that are the appropriations bills, which provide funding for workforce programs through the US Departments of Labor, Education and Health & Human Services. Since the federal budget year beings on October 1st, all programs are operating on what is known as “continuing resolution”. Congress just authorized continued spending authority through the end of January.

The Administration’s Budget for FY 03 for WIA proposed a $655 million cut in overall funding; this would translate in New York State to a reduction of New York’s WIA allocation of about 9%. The cuts would vary across the state depending on local economic data.

Current discussions indicate that the Senate and House have reached agreement on a target number for increased overall expenditure on the FY 03 appropriation bills remaining. That number is much smaller than included in the Senate bill passed prior to conclusion of the 107th session, suggesting that programs will most likely be funded at levels proposed by the Administration or with very small increases. Congress has indicated it hopes to complete work on all remaining appropriation bills by the end of January. The closer we get to program start dates without any figures, the more difficult planning becomes.

Federal Fiscal Year 2004 Budget

The President will release his FY 04 Budget on February 2, 2003. Completion of the FY 03 Budget could be simultaneous with the release of the FY 04 budget proposal. Early indications are that the Administration’s FY 04 budget will propose some substantial changes to permit states more flexibility in the use of employment and training funds under both the WIA program and the Wagner-Peyser program. Funding for the Perkins program, which supports vocational education at the secondary and post-secondary levels, remains unclear. No information has been released as to funding levels for vocational rehabilitation programs.

Reauthorization of Major Federal Legislation Impacting Workforce Policy and Programs

It could be a very busy year for Congress as work left undone last year has now been added to this year’s list of agenda items:

• TANF: Congress did not reach agreement last year on a TANF reauthorization bill. The Administration’s proposal had very stringent work requirements which virtually all states expressed concern about, especially given the economic situation in which most economies are operating. How this legislation is shaped will impact many other parts of workforce systems. Congressman Boehner from Ohio, who chairs the key committee in the House, has indicated that he hopes to get agreement on TANF done early in the session. He used very strong language in saying he expected a final bill would require the integration of TANF employment and training services into the one-stop system and that he was opposed to paying for duplicate infrastructure costs related to employment activities. Many members of Congress and the GAO have called for stronger ties between WIA and TANF.

  Many small and medium sized businesses in New York State made great use of TANF dollars to help upgrade their low wage and low skilled workers. Several successful models have really provided businesses with a way to see return on their tax dollar investment simultaneous with individual successes as workers moved up the career ladder. TANF funds helped train individuals in an array of industries including the health care sector (nursing homes, home health care agencies, hospitals), retail, manufacturing, and the service industry. If TANF is reauthorized at a greatly reduced funding level, with more stringent work participation rates, these types of funds will not be available to help businesses train their low wage low skilled workers.

• WIA: USDOL has indicated that the President’s proposal for WIA reauthorization will be out shortly after the budget, no later than the end of February. Early indications are that the legislation will be tweaked, but not overhauled. The President’s focus will be on streamlining governance (lessening the number of public employees who sit on these boards) and performance requirements, and advancing ways to strengthen business participation and input.

  Congress has indicated that key to their vision of any WIA reauthorization will be how WIA has been used to help business. Members have identified 5 key points :

  1. business needs in the district (this will be different from state to state)
  2. business leadership of local boards
  3. laid off workers in the district and what’s being done for them
  4. local economy
  5. how our current system fixes problems that were encountered with the old system (WIA vs. JTPA)

  The State Board adopted WIA Principles for Reauthorization at its last meeting; we are now assimilating these principles into the 5 points to ensure we have a consistent message across the state. Additionally, the WIA Annual Report took a whole focus at how local systems were trying to meet business needs. Some areas are doing a great job; others need lots of work. Business input remains key!

• Higher Education Act Reauthorization: Congressman Boehner has indicated that they will not get underway on this until after the July recess, so there is still time to scrutinize how changes and program alignment can better assist business outcomes. Of key interest to business should be the need for flexibility in some of the financial aid programs authorized under this Act. It is very difficult for working adults to qualify for some of the federal aid programs because they are unable to enroll at a half-time level and maintain employment and family obligations. As lifelong learning becomes more and more critical, especially in our state as we have an aging workforce, we need to ensure that federal policy adjusts to support the upgrading of the incumbent worker and that he is not precluded from assistance because of these types of requirements.

President’s Economic Stimulus Package

In response to continued high unemployment, the President has proposed to include $3.6 billion over 2 years for states to begin offering ‘personal reemployment accounts’ for unemployed workers who are determined to be in jeopardy of exhausting their UI benefits, or who have exhausted their benefits within 3 months prior to the effective date of the program. These accounts would provide up to $3,000 to each eligible individual for training, child care, and transportation to get them back to work. Recipients would be allowed to keep leftover money as an incentive, if they find employment within a 13 week period. This is proposed to serve as an incentive for individuals to find work quickly. This would be in addition to any regular unemployment benefits.

Legislation is needed to implement this aspect of the Stimulus Plan; USDOL has indicated this will be proposed as an amendment to the WIA statute and funded out of general revenues.