A run-down of the Governor’s workforce development budget recommendations

Minnesota’s unemployment rate stands at a dismal 6.9%, as of December (January unemployment stats will be out on February 26, check DEED’s website). On a personal level, we can probably all name at least one friend or family member whose job has been hurt by this economy. Sufficed to say, workers in Minnesota could use some support. Enter the state, which already invests in a number of services intended to promote a strong state economy and workforce. Most of these services are run through the Department of Employment and Economic Development, or DEED.

How would the Governor approach workforce and economic development programs in his FY 2010-11 budget? Well, overall, the Governor would cut DEED funding by 10%, or nearly $9 million for the FY 2010-11 biennium. Below are his major proposals (read his budget recommendations for the details), excluding his proposed business tax cuts and credits, which we’ll blog about separately:

More money for:

  • Directs $6 million in funds from the Workforce Development Fund (WDF) to new “re-employment servicesthat would be run out of WorkForce Centers. The state has a system of WorkForce Centers, located in communities across the state, where qualified job seekers can go to get career counseling, resume writing, training assistance, etc. The training programs in particular are funded largely by money from the WDF and provide services for qualified job seekers. Not surprisingly, demand for their services is up. The Governor would take $6 million from the WDF, and put it towards hiring new “re-employment specialists” who would be placed at WorkForce centers to counsel job seekers who don’t qualify for existing state and federal programs. This move is not without controversy, because the re-directed WDF funds could have been used by existing Workforce Centers to address the growing demand for services.
  • Provides a new one-time appropriation of $200,000 over the budget biennium to the BioBusiness Alliance of Minnesota, a “business-led nonprofit”, to “support its strategic implementation of its Destination 2025 roadmap of how our state will compete in bioscience sectors.” Currently the Alliance does not receive any state funding, though it did get a one-time grant of $1.8 million in FY 2008.

Less (or zero) money for:

  • Eliminates several state grants funded by the general fund, including the Rural Policy and Development Center, Entrepreneurs and Small Business Grants, and the Minnesota Inventors Congress. The Governor’s recommendations note these are good programs, but not core to the agency’s mission and hopefully they can make up the lost funding somewhere else.
  • Eliminates $2 million grant for the Minnesota Alliance of Boys and Girls Clubs funded by the Workforce Development Fund. Once again, good program…not core to the mission.
  • Cuts money for job training of low-income workers – base funding for the Job Skills Partnership Program is cut by one-third, or $4.5 million in FY 2010-11. This is sort of balanced out by the $6 million going to re-employment services, although that funding came at the expense of bumping up funding for existing programs.
  • Several cuts in services helping people with disabilities get job training and find work.
  • Reductions in pass-through grants to nonprofits serving low-income, minority and other vulnerable populations, including Opportunities Industrialization Centers, Women Venture, Metropolitan Economic Development Association and Lifetrack Resources.
  • Significantly decreases funding to several youth programs that help youth with job training and job placement. For example, the St. Paul and Minneapolis Summer Youth programs would be cut 17% and 25%, respectively. Youthbuild would be cut $150,000, while the Minnesota Youth Program and the Youth Intervention Program do not receive any cuts to base funding.
  • Cuts funding to employment and interpreter services for the deaf.

The whole picture: Beyond the services discussed here, many workers go back to school to retrain in economic hard times. Unfortunately, the Governor would state funding for public higher education by 10% – (see my recent blog on the subject). Working parents also pursue job training through the Minnesota Family Investment Program, our state welfare-to-work program. Unfortunately, the Governor’s proposals would make it harder for parents to pursue education and training by imposing additional work requirements – at a time of record unemployment.

And besides state services to help people find and get jobs, what the federal government does matters a lot: The federal government actually spends more money on workforce development services in Minnesota than the state does. So in the months ahead, pay attention to what happens in Washington D.C. just as much as St. Paul.

-Katherine Blauvelt

About Katherine Blauvelt

Katherine Blauvelt served as the Minnesota Budget Project’s policy analyst from 2007 to 2009.
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