Cuts to the Left of Us, Reductions to the Right

Residents of the District of Columbia – particularly those who are part of the DC advocacy community – are awaiting anxiously the Friday, April 1, release of Mayor Vincent Gray’s proposed budget for FY2012. The budget is expected to be challenging. With the District facing a projected shortfall of $322 million, no program is likely to be spared completely. That includes workforce development, job readiness, adult literacy, and related supportive services.

The FY2011 budget for the DC Department of Employment Services (DOES) includes a total of $75 million in general (non-federal) funds. Of that, approximately $41 million is dedicated to workforce development, which includes adult job training, the Summer Youth Employment Program, year-round youth job training and placement programs, and other related services. From that $41 million total, rumor has it that DOES was required to cut more than $5.2 million for the FY2012 budget – a cut of more than 10 percent. While not catastrophic all by itself, this cut will be painful.

Unfortunately, the bad news does not end there.

As you may remember, the US House of Representatives passed HR 1 in February, which proposed drastic cuts to a broad range of federal program. HR 1 cut federal funding for job training in the current fiscal year – FY2011 – to zero. The continuing resolutions passed since HR 1, while slightly less draconian, also slash spending for job training.

The US Senate is expected propose a lower level of cuts to job training, but it is clear that the final picture will be grim.

In the District of Columbia, as in many other jurisdictions, federal funding supports One-Stop Career Centers, probably the single most accessible source of assistance for people who need to file for unemployment, find jobs, and connect with job training programs. The DC Works! Career Centers – our One-Stops -- are funded entirely with federal monies. If the federal cuts are as large as it appears they may be, that resource will become much less available to DC residents as soon as July.

To recap -- we are facing federal funding cuts to job training programs for the balance of FY2011 – cuts which will likely extend through FY2012. Those cuts will be followed by significant cuts to local funding for job training for FY2012.

If you’re scared, you are not alone. But you are not powerless. You have a voice regarding the District’s budget.

The Council of the District of Columbia will hold hearings to address the Mayor’s budget beginning in early April. The hearing on the DOES budget is set for Tuesday, April 12, at 1:00 pm, before the Committee on Housing & Workforce Development. The committee will meet in Room 500 of the John A. Wilson Building, 1350 Pennsylvania Ave NW. If you wish to testify, please contact Drew Hubbard, Clerk of the Committee, at dhubbard (at) dccouncil.us or (202) 724-8198. While you will be limited to 3 minutes of oral testimony, your written testimony becomes part of the official record in full.

With an unemployment rate in excess of 9 percent in the District, It is critical that we preserve and strengthen our city’s workforce development system. A strong system will ensure the long-term viability of the District’s economy, and help ensure that all of its citizens have the opportunity to participate. With sufficient resources devoted to job training, workforce readiness, adult literacy, and supportive services, we can, in a sense, create tens of thousands of taxpayers. These taxpayers, in turn, will contribute to the District’s coffers and those of their neighborhoods, climb the ladder to self-sufficiency, and help prepare themselves and their children for good jobs in a growing economy.

We’ll see you at the hearing on April 12.

First, Let’s Fix First Source

Here is an interesting fact to ponder: approximately 70 percent of jobs in the District are held by people who do not live in the District.

This imbalance is problematic. One reason it is problematic is that the income earned by that 70 percent goes home to be taxed in Maryland or Virginia. The District's Chief Financial Officer has estimated the lost revenues at $34 out of every $100 earned.

In a time of tight budgets, we need to address this leakage of potential revenue from DC into the suburbs.

But how do we change the percentage? How do we get DC residents back to work?

The answer to that question is complex. We need to help long-term unemployed residents address many of the serious challenges and barriers they face. But we also need to ensure that qualified DC residents have access to job opportunities.

One tool to help ensure such access is the First Source law.

Our tax dollars support many projects that create jobs. Look around the city – there is a good chance that the building going up in the construction site across from your office is partially funded by the taxpayer-funded DC government.

Support can be direct – in the form of a contract to erect a building for a District agency, for example, or to provide job training or some other service. It can also be indirect. DC, like every other city in the nation, offers businesses a variety of tax and other incentives to encourage them to build buildings or open stores and restaurants here.

The District's First Source Act is intended to ensure that when our taxpayer dollars are invested in these projects, they increase employment opportunities for District residents.

The law requires nearly all employers that receive contracts or other forms of government assistance worth $100,000 or more to give priority for new jobs and apprenticeship opportunities to residents of the District.

Priority here means that employers must use the DC Department of Employment Services (DOES) as the "first source" for recruitment, referrals and placements for projects in which District taxpayers have made some kind of investment, financial or otherwise.

This process is supposed to result in the hiring of DC residents for at least 51 percent of all new jobs created by the publicly-supported project and at least 35 percent of apprenticeship hours.

Unfortunately, the First Source law has not been terribly successful in generating jobs for DC residents.

There are two primary reasons the law has not worked well.

First, the First Source law has not been effectively enforced. Last year, the DC Auditor reported that only one-fourth of the projects reviewed met the 51 percent goal, mainly because DOES was not sufficiently staffed to monitor them appropriately. As a result, the District and its residents lost more than $14 million in job revenues.

And last year was not an anomaly. There is no record of any employer ever having been fined for noncompliance with the First Source law. And it was enacted in 1984.

A second equally important reason is that the First Source law has major weaknesses that allow District contractors to legally avoid compliance with the law. For example, they can comply with the law by proving they made a "good faith effort" to hire DC residents, but were unable to find suitable candidates.

This may seem reasonable, but the law sets the bar pretty low in defining what constitutes "good faith." All employers have to do is show that they ran an ad in the classified section of the paper of record (in DC, that’s the Washington Post) and posted a notice on the District's online career center.

A broad coalition of local organizations, including the DC Jobs Council, recently produced a brief that recommended a new structure to address these weaknesses. It offers an alternative to the current DOES referral process—an independent "workforce intermediary" that would serve as a broker between covered employers and local training providers.

With a workforce intermediary to complement current First Source requirements, job seekers would get training tailored specifically to jobs the employer expects to create. The employer would get qualified candidates who had been pre-screened and directly referred by the intermediary.

And the District would have more residents working in good jobs—and paying taxes.

DC Council Chairman Kwame Brown, joined by Councilmembers Michael Brown and Harry Thomas, Jr., has introduced a bill – the “District of Columbia Workforce Intermediary Establishment and Reform of First Source and Living Wage Amendment Act of 2011” -- that would establish such an intermediary. Among other provisions, the bill also closes – at least partially -- some of the loopholes that allow employers to comply with the letter, but not the spirit of the law.

The bill is no silver bullet, and we believe it could be improved in several specific ways, but it is a good start.

I will be presenting testimony on the bill at a hearing of the Council of the District of Columbia’s Committee on Housing and Workforce Development on Monday, March 14, beginning at 10:00 am. My testimony will be posted on the DC Jobs Council website by COB on Monday.

In addition, I am scheduled tentatively to talk with News Talk host Bruce DePuyt on Friday, March 11 at 10:00 am. You can watch it on News Channel 8 or online at www.tbd.com/tv. The show reruns at 4:00 pm and again at 6:00 pm.