Memo

To:          GWDC Members

From:     Kathy Sweeney, Luke Weisberg, and Koryn Zewers

CC:         Interested Parties

Date:      July 10, 2003

In April, we provided the GWDC with a narrative and accompanying spreadsheet outlining state budget issues for the primary workforce development programs and selected other state-funded activities that impact the Preeminence Minnesota challenges and solutions identified in our Preeminence Minnesota 2003 Portfolio Report.  This memo provides a high-level update on the legislative outcomes for key items raised in the April memo and spreadsheet.

Assignments to the GWDC

• The GWDC is asked to study the current configuration of the state’s Workforce Service Areas (WSAs), ask whether the efficiency or quality of service delivery could be improved by changing the boundaries and/or reducing the number of WSAs.  The GWDC is also asked to make recommendations to clarify and improve the governance role and capability of Local Workforce Councils.  The GWDC is required to consult with a wide variety of stakeholders in completing the study.
• The GWDC is asked to study the Dislocated Worker Program and make recommendations to improve the efficiency and effectiveness of the program. The GWDC is required to consult with a wide variety of stakeholders in completing the study. 

Workforce Development / Welfare Programs and Funding

• Effective January 2004, the “workforce enhancement fee” increases from .09 to .12 percent on taxable wages.  The additional revenue (minus a portion for the unemployment insurance technology initiative account) goes into the workforce development fund and is to be used primarily for the state Dislocated Worker Program.  The law also allows the Commissioner of the Department of Employment and Economic Development (DEED) to raise the fee to .14 percent if the need for services under the dislocated worker program substantially exceeds the resources that will be available for that program.

• The MN Job Skills Partnership (MJSP) now has authority to use up to 25% of an individual MJSP grant toward pre-employment training.  The MJSP also has authority to use its funds to train prospective or incumbent workers (a broadened scope from previous legislative authority) and also to use training funds for people at or below 200% of the federal poverty line.  These changes give the MJSP more flexibility in training a variety of incumbent and prospective workers.
• Several policy changes were made to the Minnesota Family Investment Program (Minnesota’s welfare program that uses federal funds from the Temporary Assistance to Needy Families program) including:

o       A work-first focus to emphasize that all families are expected to work. At the front-end, families will get the services they need to move immediately into employment.   Families that don’t comply with provisions of the program are sanctioned 100% (lose all assistance)

o       Diversion program: When families first apply for assistance, they enter a four-month, intensive program that focuses on going to work before going on assistance.

o       MFIP participants may still receive some education and training assistance, but must also work 20 hours a week while receiving cash assistance.

·        The budget consolidated funding to counties, now delivering two block grants to counties: one for MFIP and an assortment of other supportive services; and one specifically for services to children.  In the consolidation, funding for MFIP and other services was funded at the base level.  Counties will have more flexibility (and pressure to spend fewer dollars) in how they support low-income working adults and MFIP participants. 

Economic Development / Job Creation efforts

• The Governor’s Job Opportunity Building Zones (JOBZ) initiative was passed into law  authorizing the Commissioner of the Department of Employment and Economic Development (DEED) to designate up to 10 job opportunity building zones in economically distressed rural areas.  These zones could be divided up into separate noncontiguous subzones, located in one or more local government units.  Qualifying businesses operating in the zones are exempt from sales, income, and property taxes and a refundable jobs credit is available for the portion of increased payroll that exceeds $30,000 per FTE. 
• The Minnesota Investment Fund now includes assistance to communities for “job enhancement” which is defined as improvements in the quality of existing jobs as measured by the wages, skills, or education associated with those jobs.

Other Relevant Legislation

• Child care assistance for working families was reduced by a total of $97 million for the biennium.
• Changes were made to the General Assistance Medical Care program and the MinnesotaCare program that reduce the availability of coverage and/or increase cost of coverage for certain low-income individuals.