Public Funding for Job Training at the State and Local Level: An Examination of Massachusetts, Texas, and Washington

R E S E A R C H R E P O R T Public Funding for Job Training at the State and Local Level An Examination of Massachusetts, Texas, and Washington Kelly S. Mikelson Ian Hecker June 2018 I N C O M E A N D B E N E F I T S P O L I C Y C E N T E R A B O U T THE U R B A N I N S T I T U T E The nonprofit Urban Institute is a leading research organization dedicated to developing evidence-based insights that improve people’s lives and strengthen communities. For 50 years, Urban has been the trusted source for rigorous analysis of complex social and economic issues; strategic advice to policymakers, philanthropists, and practitioners; and new, promising ideas that expand opportunities for all. Our work inspires effective decisions that advance fairness and enhance the well-being of people and places. Copyright © June 2018. Urban Institute. Permission is granted for reproduction of this file, with attribution to the Urban Institute. Cover image by Tim Meko. Contents Acknowledgments iv Executive Summary v Public Funding for Job Training at the State and Local Level 1 Federal DOL ETA Job Training Expenditures 6 State Funding for Job Training 14 Strategies for Managing Funding 32 Conclusions and Implications 53 Appendix A. Interviews Conducted 55 Notes 58 References 63 About the Authors 65 Statement of Independence 66 IV A C K N O W L E D G M E N T S Acknowledgments This report was funded by a grant from JPMorgan Chase. We are grateful to them and to all our funders, who make it possible for Urban to advance its mission. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Funders do not determine research findings or the insights and recommendations of Urban experts. Further information on the Urban Institute’s funding principles is available at urban.org/fundingprinciples. The authors thank the many people who made this report possible. We thank the administrators from Massachusetts, Texas, and Washington listed in Appendix A who provided data and information for this paper. We thank Elizabeth Forney, David Hinson, and Serena Lei for their assistance with editing, and Pamela Loprest, Demetra Smith Nightingale, and Shayne Spaulding for their support, expert advice, and review of this work. Finally, we thank Jennie Sparandara, Sarah Steinberg, Jacob Clark, and Linda Rodriguez at JPMorgan Chase for their comments and support of this work. E X E C U T I V E S U M M A R Y V Executive Summary To remain competitive in an increasingly global economy, we must invest in our workers and give them the training and skills to succeed. Federal, state, and local job training programs are a crucial part of that investment. But the landscape of public funding for job training is complex with multiple funding sources and streams, controlled by a variety of actors, and used differently across geographic areas. To provide a more complete picture of federal, state, and local investments in job training, this report describes public expenditures for three states—Massachusetts, Texas, and Washington—and five metropolitan statistical areas (MSAs) in those states—Austin, Boston, Houston, Seattle, and Worcester. Compared with funding under the Workforce Innovation and Opportunity Act (WIOA) of 2014, state and local investments in workforce training and related services is substantial, in some cases surpassing federal funding. We identified six strategies that states and localities use to manage and supplement funding for job training programs: seeking diverse revenue sources, leveraging public- and private-funding sources, braiding and blending funding, using dedicated fees to fund training, funding sector-based training initiatives, and collaborating and coordinating with other agencies to fill training gaps. This report aims to provide information to state and local workforce development entities, including local workforce development boards (WDBs) and training providers, to help in their funding and training decisionmaking. Federal Job Training Expenditures The US Department of Labor’s (DOL) Employment and Training Administration funds many different job training programs. We focus here on DOL’s largest job training programs.  Mandatory funding. The majority of DOL training programs are funded through mandatory formula grants to states. These noncompetitive grants are allocated using statistical criteria, such as the unemployment rate. States then use a formula to distribute this funding to local areas. For program year 2017, the largest DOL-funded mandatory job training programs amounted to $5.27 billion. WIOA, the largest of these programs, accounted for 51 percent of this funding. VI E X E C U T I V E S U M M A R Y  Discretionary grants. Discretionary grants programs award competitive grants to state or local organizations. These programs, such as the American Apprenticeship Grants program, allow the federal government to ta