Saturday, February 5, 2011

Jobs program needs more oversight


Small enough?

Though numerous reports have raised questions about the job training program, the state says it doesn't have enough staff to address them. The Iowa Department of Economic Development said it doesn't have enough staff or systems to ensure accountability and address issues flagged by the state auditor in 2009.
Yet some elected officials continue to call for "smaller government." Just how small is small enough?
The Iowa Industrial New Jobs Training Program, also known as 260E, is good for businesses. Taxpayers pick up the tab for training their workers. The program is good for community colleges, which are paid to provide some of that training. It's good for students who learn new skills.

But that doesn't mean the program is the best use of millions of dollars in public money.

If lawmakers are truly focused on "job creation," they cannot continue to turn a blind eye to a program that several reports have shown needs a closer look. At the very least, lawmakers must require more oversight. Better yet, they should rethink how the program is financed and tighten requirements on how training money can be used.
In the Des Moines Sunday Register, reporter Jennifer Jacobs revealed the details about the program's complicated financing and lack of oversight.

First, it's expensive. And the money to pay for it is raised by issuing revenue bonds. That adds to the expense because it means paying interest costs.

The state borrowed $51 million, or about $10,000 per worker, to pay for job training in 2009. The state pays the debt service on the 10-year bonds used to fund the program. It uses a portion of the new employees' payroll taxes to make the payments. Those taxes would normally go into the general fund. Lawmakers do not make direct appropriations - and they don't have the latitude to cut the payments in difficult economic times.
Ending the borrowing would save the state up to $30 million a year. Iowa would have more money to spend on training or perhaps dedicate to other priorities - such as human services or courts.

State reports have revealed the program's failure to deliver thousands of promised jobs, while allowing great latitude in how participating companies can spend the money.

"The program is very flexible, paying for most types of training, including the purchase of equipment by the company for in-house training," according to last year's economic development report.
There are good uses for the money, like updating workers' skills in manufacturing. But there are also questionable uses. One lawmaker said the program provided dollars to meat-packing companies to train workers to sharpen knives; it helped a company teach employees to properly unload trucks.

It's doubtful this is what Iowans have in mind when they think about the best way to spend public money for job creation, retraining workers and economic development.
Many Iowans are already concerned about new government endeavors to "attract businesses." And that concern is legitimate - because it usually involves cutting taxes for businesses at the expense of public programs or more government spending.

But concerns are intensified when we find out existing programs have too little oversight and apparently lax rules about how public dollars can be used. That shakes faith in government.

Iowa should do all it can to ensure there is a well-trained work-force for employers. Yet the public must also have assurances these programs aren't just creative ways to funnel money to the private sector.
There must be accountability and oversight of what amounts to subsidies for businesses. And there must be evidence the "investment" in job training actually works.