Maryland Governor’s Workforce Investment Board

1. Maryland Governor’s Workforce Investment Board March 14, 2012

2. Our Vision We seek an America that grows its economy by investing in its people, so that every worker and every industry has the skills to compete and prosper.

3. Our Mission • We organize broad-based coalitions seeking to raise the skills of America’s workers across a range of industries. • We advocate for public policies that invest in what works, as informed by our members’ real-world expertise. • And we communicate these goals to an American public seeking a vision for a strong U.S. economy that allows everyone to be part of its success.

4. New Year, Same Old, uh, Stuff • Overarching political focus still on deficit reduction • Any policy discussion driven by this debate • Budget / Appropriations process being used for policy change

5. Reminder: What’s Happened So Far (Appropriations) • FY 2011 House passed HR 1, $4B in cuts (including elimination of WIA)—eventually cut $1B • FY 2012 similar dynamic. House proposed more than $2B in cuts to DOL + $44B in Pell cuts

6. Reminder: What’s Happened So Far (Budget Control Act) • Debt ceiling deal • $1T in cuts through new spending caps • Created “super committee” to develop another $1.2T in cuts • Included sequestration trigger if super committee failed

7. Let’s Talk about Sequestration! • Sequestration is simply the process by which automatic cuts are made • Written into law as part of the BCA • Triggered by super committee failure • Goes into effect January 2013

8. But What Does Sequestration Actually Do? • Automatic cuts each year, 2013 through 2021 • $109B, equally divided between “national defense” and all other (non-defense) programs

9. How Do the Cuts Work? • Non-defense cuts include both mandatory and discretionary programs • But many mandatory programs exempt • Social Security, SNAP, child nutrition, SSIA, EITC and child tax credit, etc. • Exempt mandatory programs means discretionary program must absorb more of the cuts

10. An Exception to the Rule • Sequestration functions differently in 2013 than in other years • About $16B in non-defense cuts from mandatory programs, another $38.7B from across-the-board discretionary programs (estimated 9.1%)

11. FY 2013 Budget and Appropriations • President’s budget released today • Starts year-long process on the Hill • Budget resolution (April 15) • Appropriations (June-September) • Sequestration (December-January)

12. Overview: Department of Labor • “American Jobs Act”: expanded version of September proposal • Discretionary programs largely level funded, but some cuts • New direction signaled for dislocated workers, but few details

13. American Jobs Act (New Budget Proposal) • $12.5B “Pathways Back to Work Fund”—targets low-income and other unemployed • $10 B for subsidized jobs and other local training strategies; • $2.5 B for summer youth • $4B “Reemployment NOW” Fund—targets long-term unemployed • $8B “Community College to Career Fund”—Split between DOL and DOEd over 3 years. Supports partnerships between community colleges, states, and employers

14. Key Takeaways • Major new investments – but only if Congress passes supporting legislation • Sustains existing system, but no new resources • Hints of consolidation argument taking hold (DW proposal)

15. What Does All of This Mean? • Regular appropriations process will move forward • We expect the House will propose deep cuts again • Senate will likely oppose, but something has got to give • Sequestration follows behind that with additional cuts

16. Process on Auto-Pilot • All the “easy” cuts have been made at this point—no more low-hanging fruit • But additional cuts *must* be made (by law) and debate is not around undoing previous cuts or even preventing additional cuts—just where those cuts will fall

17. All Policy Discussion Derives From Budget Debate • Policy conversation is entirely within the context of fiscal austerity and smaller government • Policy change primarily implemented now through budget and appropriations

18. Workforce 2012 – New Reality • 2003-2010—No WIA reauthorization, but general agreement that an appropriate (if shrinking) federal investment • 2011—New reality: • Fiscal challenges – FY 2011, 2012 efforts in House to gut workforce funding • Political challenges – GAO report (“47 programs…”) puts consolidation on the front burner.

19. New Focus on WIA Reauthorization • To protect the workforce system, reauthorization critical vehicle for reform (only way to preserve funding) • To eliminate system, reauthorization a vehicle for cuts (via consolidation)

20. WIA Reauthorization – Shifting Debate • Summer 2011 – Minor tweaks: Senate draft bill/McKeon bill. • December 2011 – New reality: Foxx/Heck bills, consolidation focus • March/April 2012 – House markup?

21. Foxx Bill (HR 3610) • Consolidates 33 existing programs into 4 funding streams • Workforce Investment Fund ($4.3B) • State Youth WIF ($1.9B) • Veterans WIF ($218B) • Targeted Populations WIF ($581B) • Funding authorized at FY 2011 combined levels

22. Foxx Bill (continued) • Greater state authority; 2/3 business representation on state boards • “Unified Plans” – can cover TAA, CTE, TANF, etc. • Eliminates Wagner-Peyser Employment Service • Does not address Title II alignment

23. McKeon Bill (HR 2295) • Similar to HR 27 (2005) • Largely maintains current Title I, Title II infrastructure • Consolidates Adult/DW/ES funding • Maintains ITAs, merges core and intensive services

24. Heck Bill (HR 3611) • Increases business representation on local boards • Greater emphasis on labor market analysis, business engagement • Minimum training percentage

25. WIA’s Future… • Final House R bill likely to adopt Foxx funding structure, McKeon infrastructure, Heck local business focus • Without viable alternative, becomes de facto starting point • Harkin “middle-class” bill – shift in Senate emphasis, attention?

26. New Reality Even Impacts Victories • TAA reauthorization • Mostly retained expanded eligibility, funding levels; BUT not as robust as ARRA, very heavy lift even with changes • American Jobs Act • Major training components, new investments (Pathways Back to Work, UI reforms) BUT no legislative progress

27. Success at the Message Level... The message about a skills gap resonates—lots of policymakers are adopting this language

28. …But not Translating to Policy “I am no fan of the federal government being involved in education. And I use the word education, because I don’t like the word training when it comes to human beings. You train animals….you educate people. If I had my way, there wouldn’t be any federal job training programs,” –Rep. Virginia Foxx (R-NC)

29. December 21, 2012 (The Mayans Were Right) Everything leads to December: • Presidential/ Congressional elections • Bush-era tax cuts expire • Debt ceiling likely to be reached • Sequestration begins January 2013

30. Building the Strongest Argument All of the debate around investing in skills are stepping stones on a path toward the decisions that must be made in December

31. What This Means for Workforce… • There will be cuts – the only question is how much • Will depend on how lawmakers—even allies—weigh workforce against other key priorities • We cannot be the least bad option—must reinforce importance of skills to economic prosperity, growth

32. Stay Connected • Visit us our website. • Sign up for our member email list. • Follow us on:

33. Contact Rachel Gragg Federal Policy Director rachelg@nationalskillscoalition.org 202-223-8991, ext. 102