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Labor and Job Training

WorkNotes

July/August 1998

Analysis of the Workforce Investment Act of 1998
New STW Director Named
New NCSL Publication

WorkNotes Archive

The Workforce Investment Act of 1998:
A History and Analysis
By David Shreve

The Workforce Investment Act (PL 105-220) of 1998 is the culmination of four years of research and debate in Congress and represents the first significant reform of the federal-state job training partnership in 15 years.

Despite indications to the contrary from members of Congress and the administration, PL 105-220 is not a revolutionary departure from existing law. Like most policy changes, it is a step in an evolutionary process. It does not set up block grants and authority for federal work force training programs to the states, but it does combine the summer youth and year round programs now operated under the Job Training Partnership Act (JTPA). It does not break down all barriers to the coordination of federal and state programs, but it substantially reduces them. It does not require all federally funded programs in a state to submit to joint planning, but it allows states the flexibility and waiver authority to do so. It does not fundamentally alter the federally created state and sub-state administrative system. However, it does present an unparalleled opportunity for states to develop a coherent, rational and comprehensive system for worker training and retraining services and for state legislatures to be a key player in that effort.

A perspective on over 30 years of federal human resource policy is needed to fully understand the Workforce Investment Act of 1998. Federal involvement in education dates back less than 100 years to the Smith Hughes Vocational Education Act, passed after soldiers returned from World War I. Prior to that, education and training were absent from the federal agenda. It was not until 1962 that the federal government initiated a nationwide program, the Manpower Development and Training Act (MDTA), to address the issues of displaced workers and structural unemployment.

Driving MDTA was the fear that automation would displace thousands of workers and lead to massive unemployment. It was designed and implemented as a top-down federal program. Federal employees determined training needs and initiated grants to the state with provisos targeting the trainees, service provider and training to be conducted. With states restricted to acting as a pass-through, the program operated as an extension of the U.S. Department of Labor. The Economic Opportunity Act of 1964 strengthened the program and expanded it to include a residential program for youth, the Job Corps, which to this day remains the nation’s most comprehensive education and training effort. It is also one of the few programs to survive as a federally administered entity. The 1960s also witnessed the first attempt to coordinate the growing alphabet-soup of federally funded programs through the creation of the President’s Commission on Manpower. It was to be the beginning of a 30-year effort to bring efficiency and rationale to the programs.

By 1973, federal programs had been created to prevent and ameliorate the economic effects of the disadvantaged; to provide better access to existing jobs; and to create jobs through public service employment (PSE), a fully subsidized job in government and the nonprofit sector. The programs became so extensive that a new law was passed to consolidate them under the umbrella of the Comprehensive Employment and Training Act (CETA). Block grants were issued to units of local government with populations over 100,000, and to those rural states where the population was less concentrated. Local governments gradually became the administrative agents for the programs.

Presidents Nixon, Ford and Carter responded to the economic downturns of the 1970s with a dramatic expansion of the CETA program and a subsequent exposure of its weaknesses. Funding doubled between 1976 and 1980 and peaked at over $10 billion. (or about $20 billion in today’s dollars – about five times current appropriations) PSEs accounted for more than half of that, but received the bulk of the public criticism. Critics of program activities characterized public service employment as ‘make-work’ projects leading nowhere. The huge increase in funding led to fiscal abuses that held no specific government entity accountable. Combined with the political rhetoric of the time, these criticisms led to the changes brought about by the Job Training Partnership Act of 1982 (JTPA).

It outlawed PSEs, required funds to pass to localities through the state government (while guaranteeing localities of at least 200,000 population a share), emphasized training, required a state advisory council, and required the creation of local administrative units called private industry councils (PICs), which would have at least 51 percent business membership.

JTPA encouraged "coordination" between training activities and the existing system of education, vocational education and the labor market, but unfortunately provided few incentives or sanctions for failure to do so. The act, like its predecessors, often used the terms "state" and "governor" interchangeably, defaulting administration of the program to the executive branch and leaving legislatures with limited input. Another of its weaknesses was the multitude of federal programs in human resource development operating under the system. Critics of JTPA referred to it as a series of "funding streams", each generating its own bureaucratic structure and each replicating its service delivery processes at the state administrative level. A series of Government Accounting Office reports in 1994 found more than 100 of such programs in existence.

The policy discussions of the last four years focused on amending JTPA, adult education, literacy and vocational rehabilitation to promote consolidation and to address:

• Encouraging a stronger state role in the integration of programs into the states’ overall human resource policy.
• Recognizing that labor markets were not necessarily limited to areas of 200,000 population.
• Redefining the sub-state system of service delivery areas and PICs into work force development areas and work force development boards.
• Requiring local boards to develop a one-stop delivery system integrating job search, work preparation and career development services.
• Offering states waiver authority from federal administrative regulation.
• Developing an accountability system based on program performance and state standards.
• Offering clients a choice of training providers by screening providers, evaluating performance and publishing results.

The Workforce Investment Act is the latest step in a 40-year process that began with direct federal intervention and has moved inexorably toward federally funded but state administered programs. Furthermore, the act requires reauthorization in five years (instead of JTPA’s permanent authorization), guaranteeing that there will be continued discussion of flexible state block grants.

Legislatures will find progress made toward re-establishing their constitutional role in state policy formation. The training dollars in the legislation must now be appropriated by the legislature. In states where the executive branch administered the programs unilaterally, this means that a deliberate and open discussion in the legislature regarding program operation and implementation can occur.

Legislative leaders will appoint two members from each chamber to serve on the state board that initially usurped legislative authority for policy determination (known in most states as the Human Resource Investment Council) rather than allowing the governor unilateral authority to make those appointments. Those legislatures that have already passed sweeping state reforms in the operation of the training system will be gratified to find their actions grandfathered by the federal law.

The following side-by-side chart, as developed by NCSL, highlights the major victories won for state legislatures in the new law and contrasts each point with the parallel provisions in the now obsolete work force legislation. Our analysis is narrowly focused on how provisions in the bill affect state legislatures, but other breakdowns of the bill offer a broader view of the new work force legislation:

• The summary and analysis composed by the National Governor's Association attends to the various ways in which states are affected by the provisions of this bill.
• For a thorough review of PL 105-220, we recommend the Department of Labor's generic side-by-side chart, which highlights the major points of the bill.

The National School-to-Work Office has a new director, Stephanie Powers. A longtime resident of Keene, New Hampshire, she spent most of her professional career in the state, managing a nonprofit office that placed workers with severe disabilities in private industry jobs. She also designed and managed training programs for schoolteachers and parents of children with disabilities in the areas of inclusive education and school-to-work transition.

Powers joined the Employment and Training Administration (ETA) of the Department of Labor in 1993 as special assistant to Assistant Secretary Doug Ross and then became chief-of-staff to Assistant Secretary Timothy Barnicle. Her most recent job with the department was director of communication and public affairs for the ETA. Powers is filling the vacancy left by J.D. Hoye in January 1998.

Programs in California, Nevada, Oregon, Pennsylvania, Texas and Utah participated in the study, Funding and Sustaining School-to-Work Strategies for Dropouts, recently published by NCSL. The programs highlight the option of using state per-pupil funds for dropouts to provide an alternative education incorporating school-to-work.

The case studies are a follow-up to a 1996 NCSL research report, State Education Funding Policies and School-to-Work Transitions for Dropouts and At-Risk Students, which focused on state per-pupil funding "following" the student into alternative learning environments. This funding method has become an important option as states look for ways to pay for school-to-work systems after the federal money is gone. The NCSL Funding Policies report found no state laws requiring or prohibiting the use of per-pupil funds for alternative programs.

This report finds that some state laws and regulations – like the independent study regulations in California, the charter school legislation in Texas and the alternative education laws in Oregon – can make it easier to transfer per-pupil funds. In most situations, however, it is up to the school district to choose the funding option, tally the students in the school membership count and transfer the money to the outside educational program.

For a copy of this report please send an e-mail to Tracy Schmidt with your mailing address for a hard copy or note that you would like an electronic copy. Schmidt also can be reached at 202-624-5400. To download an electronic copy of the 1996 report click here.

Labor and Job Training

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