Monday, July 22, 2019

It'll take more than funding apprenticeships to close Wisconsin's "skills gap"

As the Fiscal Year draws to a close, we usually get a list of items where money has to be moved around among various funding sources in a state department to make all of the books balance. The net effect of this is usually $0 for the time being, but it can give a good indication about what needs are becoming ore prominent, and which ones are perhaps being overfunded.

With that in mind, the Joint Finance Committee will have their first post-budget meeting tomorrow, and one of the items they will look at is a request by the Evers Administration to fully fund the state’s youth apprenticeship grant program. The number of enrollees in the program has more than doubled since 2015, reflecting moves made at that time to expand the program and the ability of the Department of Workforce Development to get the money out the door under the state’s Fast Forward program.

Prior to 2015 Wisconsin Act 348, the youth apprenticeship grant program was funded from the Department's annual local youth apprenticeship grants GPR appropriation with base funding of $2,233,700. Act 348 consolidated previously separate GPR appropriations for apprenticeship completion awards, local youth apprenticeship grants, employment transit assistance grants, and youth summer jobs programs into DWD's Fast Forward continuing appropriation. Under Act 348, Page 2 base funding from each previously separate appropriation was added to the base funding level of the Department's workforce training grants appropriation. Increased funding, expanded grant-making authority, and the consolidation of several appropriations into a single continuing appropriation all provided additional flexibility for DWD to fund a variety of programs at the discretion of the administration. In particular, the expanded funding and flexibility of having a consolidated, continuing appropriation permitted the Department to fund the youth apprenticeship grant program at an amount that exceeded the program's prior base funding level of $2,233,700.
The problem is that Wisconsin Republicans and Governor Walker changed this last December with Act 370 (aka the Lame Duck Laws), which earmarked and limited the money for Fast Forward’s specific programs , and now there’s a shortfall.
2017 Wisconsin Act 370 reversed several provisions of Act 348 and split DWD's Fast Forward continuing appropriation into eight separate annual GPR appropriations. The first column in Table 1 shows 2018-19 base funding for the consolidated Fast Forward continuing appropriation prior to Act 370, while the second column shows 2018-19 base funding amounts for each separate annual appropriation, as provided in Act 370. As shown in the table, the Department was given the same total appropriation authority under Act 370 as in prior law ($13,595,900). However, because the workforce training grants and services appropriation was changed from a single continuing appropriation to eight separate annual appropriations, DWD's flexibility to reallocate funding among programs is eliminated and any amount not expended or encumbered from each new annual appropriation account by the end of the fiscal year lapses to the balance of the general fund ….

Starting with the 2018-19 fiscal year, during which Act 370 began to limit the program to an annual amount established by the Legislature, base-level funding of $2,233,700 leaves an estimated funding shortfall of $3,030,900. The 2019-21 biennial budget (2019 Wisconsin Act 9) increases base level funding for the Department's youth apprenticeship grants annual appropriation by $2,766,300 GPR annually for total funding of $5,000,000 GPR. Despite the additional base funding provided under Act 9, the 2018-19 funding gap would remain, should the program continue funding a school year's allocation with appropriations from the preceding fiscal year.
So you’re telling me that when the gerrymandered GOP Legislature slammed through the Lame Duck Laws to remove flexibility from the incoming Evers Administration, and it led to unintended consequences that now need fixing? NOOOO!
The Department has encumbered the entire $2,233,700 amount of 2018-19 state fiscal year base funding for the 2019-20 school year grants, leaving an unfunded balance of $3,030,900. Provision of $3,030,900 in one-time funding, as requested by the Department, would fully fund local youth apprenticeship grants for the 2019-20 school year and provide the full $900-per-student grant amount. If the request is not approved and no additional one-time funding is provided, the Department could prorate the per-student grant amounts. In this scenario, the per-student rate would decrease from $900 per student to an estimated $382 per student, or a decrease of 58%. This option would likely create budget shortfalls for participating local youth apprenticeship consortia, which planned for 2019-20 school year program budgets based on the $900-per-student grant reimbursement rate.

The Department could avoid prorating grant awards by instead encumbering 2019-20 fiscal year appropriations to fund award requests for the 2019-20 school year. While this strategy would fully fund the program in the current year, the Department, beginning in early 2021 for grants in the 2021-22 school year, would be in a position of considering funding requests while 2021-23 budget deliberations are ongoing and the Legislature is determining program funding.
Not funding apprenticeships seems like an especially bad strategy given that employers already are having problems finding skilled labor, and that the gap is projected to grow over the next decade.
All 50 states will have a shortage of workers with at least a bachelor’s degree by 2029. California will face a deficit of over one million workers, while New York will have a shortage of 868,000 workers. For Illinois, the shortfall will reach 522,000.

Same goes for workers with associate degrees or some college, according to AAF. There will be a significant shortage of these workers in New York in 10 years (181,000), Ohio (169,000), and Michigan (170,000). States with the least amount of shortages include Montana (3,000), Wyoming (5,000), South Dakota (5,000). Delaware won’t have any worker shortages among those with at least an associate degree, says AAF [the American Action Forum]….

In total, the U.S. will face a shortage of about 765,000 workers with skills gained from acquiring at least an associate degree or some college. There’s a shortfall of 8.62 million workers, among those with at least a bachelor’s degree. AAF estimates that these figures add up to about 5.6% of the estimated labor force in 10 years.

If left unaddressed, the AAF estimates these massive worker shortages will cost the U.S. $1.2 trillion in economic output.
Wisconsin is among those states that are projected to fall short in workers with both 2–year (55,000) and 4-year (192,000) degrees over the next 10 years.

Let’s not forget to mention that another way to deal with this skills gap is to pay a competitive wage. After the last 8 years of union-busting and wage suppression, and despite (or because of) major tax cuts to manufacturers, Wisconsin has consistently had the lowest manufacturing wages in the Midwest, as shown by the “gold standard” Quarterly Census of Employment and Wages (QCEW).



In addition, Wisconsin Republicans have spent the 2010s deinvesting from public schools and environmental protections that used to make the state a more appealing place to educated workers that have options on where they would like to live. And what a surprise, now we can’t find enough of these individuals to grow companies to our potential. Both the low wages and lower quality of life are trends that need to be reversed if we are going to adequately compete for talent and have our economy grow in the 2020s.

Those efforts go beyond making sure we have enough money to make sure all students can get a grant to help pay for their apprenticeship We have a lot of work to make up for how we fell behind in this decade, we can’t afford to go further into the hole in the coming years.

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