Issue

What reforms are necessary to prepare the workforce to meet the economic needs of Minnesota businesses?

Policy

Financing: The Minnesota Chamber of Commerce supports eliminating the 0.12-percent payroll tax and advocates financing the Workforce Development Fund with general fund revenues.  Financing workforce development through the general fund will solve two problems:

• It will make workforce development programs compete with all other general fund programs for financing.  Legislative review of, and competition for, funding better serves constituents and helps guarantee efficient and responsive programs. 
• General fund revenue can be scaled to more closely match program needs.  With a payroll tax, available funds are greatest when the economy is strong and lowest when the economy is weak.

Maximize employer input: The Governor’s Workforce Development Council membership should include 51-percent business representation in compliance with the 1998 federal Workforce Investment Act. Business representation should reflect the state’s economy, industry sector and geography.  Employers are the main customers of the workforce development system.  Therefore, their input should be the top priority. 

Focus on employer needs: Department of Employment and Economic Development employees should first refer job-seekers to train for local companies most in need of workers.  Second, refer job-seekers to train for regional industries in highest demand.  If the two previous concerns have been met, refer job-seekers to train for industries in the highest demand statewide.  If job-seekers reject these priorities, they forfeit state assistance and will be responsible for their own retraining. 

After job-seekers have received training and have been placed, workforce centers should conduct follow-up surveys with employers.  Based on employer feedback, workforce centers can better meet the needs of future job-seekers who require skills training important to the local economy. 

The goal of the workforce training programs – i.e. Jobs Skills Partnership – should be to help businesses that do not have the financial resources to provide training rather than facilitate the growth of businesses that can afford to finance their own training.  This will result in a better allocation of limited state resources. 

Efficiency and Simplicity: Duplicative programs should be eliminated. 

• The Legislature should consider recommendations from the 2010 legislative auditor report on the effectiveness and duplication of the state’s workforce development programs.  The Chamber supports recommendations that increase efficiency, reduce costs and capitalize federal revenue sources.  For example, Minnesota Job Bank, Iseek, Career One Stop and Workforce3one are all Web sites centered on employers and job-seekers.  They should be consolidated into one site that serves the entire state.  The single site should be well publicized, easily accessible and an effective tool so educators, job-seekers, businesses and job placement personnel routinely use it. 
• Minnesota’s education and workforce training services should work together to create a more streamlined process and reduce remedial costs.  For example, K-12 graduation requirements should be aligned with higher education entrance expectations.  Furthermore, higher education should produce graduates with two- and four-year degrees that match the skills needed to compete in a global economy.  In a well functioning system, when job-seekers reach a workforce center, the focus should be on further training recommendations or updating of existing skills, not remedial education.  

Accountability: In accordance with the federal Workforce Investment Act, the Governor’s Workforce Development Council should develop performance measures for workforce programs, evaluate their effectiveness and prepare an annual report.  The report should be used by the council to make funding recommendations to the Legislature.  Only effective programs should be funded.

In addition, the Department of Employment and Economic Development should evaluate the success of workforce centers. Annual evaluations should measure training provided in high demand skills and industries, success of job placements, the level of business satisfaction and use of the services provided. Results should be reported to the public, and improvements should be made within a reasonable time when workforce services are not fulfilling their purpose.  If improvements are not made in ample time (i.e. two years), the local council and Legislature should terminate the center and eliminate its funding.

Business Impact

Eliminating the payroll tax would have saved employers $43 million in FY 2007. Restructuring the Governor’s Workforce Development Council so 51 percent of its membership comes from the business community should make the state's main advisory body for workforce policy more focused on business needs.  Clarifying the priorities of workforce development centers should make certain that local employer needs are being served.  The elimination of duplicative programs will reduce costs, which are paid in part by business, and reduce disorder for businesses seeking workforce services.  Finally, a system of accountability should make a more transparent system so resources for ineffective or unnecessary programs can be eliminated or reallocated to services that businesses use.