Saturday, January 24, 2015

Is "added workforce investment" merely taking money from MKE?

One item that grabbed headlines this week involved Scott Walker’s call for programs and funding in workforce development and training. Among these is a provision in the Department of Children and Families known as the Transitional Jobs program, which evolved out of the state’s Transform Milwaukee program. A look at the DCF’s Informational Paper from the Wisconsin Legislative Fiscal Bureau helps to explain how the current Transform Milwaukee program works, and I’ll add a bit more explanation in italics.
The Transform Milwaukee program, which was created under 2013 Act 20 (the state budget bill) and took effect on July 1, 2013, provides employers in the City of Milwaukee with financial subsidies if they hire eligible low-income individuals. In contrast with W-2, childless individuals may qualify for the Transform Milwaukee program, and the income eligibility limit is higher. The program is a public-private partnership focusing on the area of Milwaukee encompassed by West Silver Spring Drive, West Mitchell Street, North Sherman Boulevard, and Highway 43 (which entails most of the poorest areas of Milwaukee). A total of 587 participants were placed in Transform Milwaukee jobs in 2014.

Under the program, DCF may reimburse an employer or contractor for a minimum of 20 hours per week for any of the following costs that are attributable to the employment of an eligible individual: (a) a wage subsidy equal to the amount of wages paid to the individual for hours actually worked, not to exceed 40 hours per week at the applicable federal or state minimum wage; (b) federal social security and Medicare taxes; (c) state and federal unemployment taxes; and (d) worker's compensation insurance premiums. An employer or, subject to DCF's approval, a contractor, may pay a participant an amount that exceeds the wage subsidy. Participants can work in the program for a maximum of 1,040 hours.
Basically it reduces the cost to those employers in that part of Milwaukee that hire people at or near the poverty line.

Now those 587 people that got placed through Transform Milwaukee may sound like a lot, but it’s really not, especially when compared to how the program was sold, which was an outgrowth of a $100 million package that Walker announced in April 2012 (just weeks before the 2012 recall election). News reports at the time quoted Walker as saying 2,000 jobs would be created in construction and other industries, which seems like a whole lot more than 587 often-temporary jobs. But maybe other areas are being touched by the program and it’s going OK.

With that in mind, here’s what the release from the Governor’s Office has to say about the plans for that program in the next state budget.
Transform Milwaukee Jobs Program – Invests $5 million annually, and extends to high-need rural areas of the state, including Racine and Kenosha, at $3 million over the biennium.
Sounds good on the face, as certainly there are other high-need areas with underemployed skilled workers throughout the state, not just in Milwaukee.

But here comes the part that made me stop and become suspicious. A sizable amount of those 587 people listed as being placed through Transform Milwaukee may not have taken that job, or started work after July 1, 2014, so the expenses didn’t show up in the 2014 Fiscal Year. But even so, Transform Milwaukee paid less than 3% of the money that was set aside in the 2014 budget. These figures from Page 43 of the DCF Informational Paper.

Transform Milwaukee/Transitional Jobs funding
2013-14 Budget $3,750,000
2013-14 Actual Expenditures $103,900
2014-15 Budget $5,716,100

And the ability to expand the Transform Milwaukee/ Transitional Jobs program has already been put into law, as also noted in the DCF paper.
Transitional Jobs Program. Subsequent to the enactment of the Transform Milwaukee program, 2013 Act 113 authorized DCF to establish a similar program in areas outside Milwaukee, to the extent funding is available. DCF must give priority to areas having relatively high rates of unemployment and childhood poverty. The same eligibility and program requirements apply to both programs. To date, the program has not been expanded beyond Milwaukee.
So is the press release that Walker’s office sent out saying that he will “invest” in the Transform Milwaukee program merely mean that he will continue to ask for DCF to keep getting $5.7 million a year, while diverting a sizable amount of that funding away from Milwaukee (the $3 million "extended to other high-need areas in the state")? In other words, there would be no change at all, other than possibly designating the Transitional Jobs funds to areas outside of the City of Milwaukee. Or are they merely going to carry over the left-over funding from this budget and apply it to the next one, to make it look like an "added" investment?

It sure makes me wonder if there’s something beyond the press release that the Governor’s office doesn’t want to reveal until after the budget is released on Feb. 3. And it would certainly go with the cynical way this administration has operated, as the press release is designed to make the state and national media believe Gov Walker is doing some “innovative and bold” in this budget. In reality, he may simply be clarifying details of funding that already exists, and not adding or changing a thing. Sneaky, sneaky there Scotty!

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