ADMINISTRATION'S FY 2007 BUDGET REQUEST PROPOSES CUTS TO WORKFORCE SYSTEM AND NEW REFORMS
Download NASWA Budget Comparison Chart
Outlined in the Bush Administration's FY 2007 Budget request this week are reductions to workforce program spending and a new proposal to consolidate at the federal level a number of state grants to create Career Advancement Accounts (CAA). Release of the Administration's Budget request occurs the first Monday in February of each year. It is preceded by the State of the Union Address the week before and marked by a flurry of press announcements.
U.S. Secretary of Labor Elaine Chao's press briefing focused on the CAA proposal and she highlighted it as an innovative approach to ensuring more workers receive training. The CAA proposal would save over $500 million from FY 2006 enacted levels according to an Office of Management and Budget (OMB) document released yesterday. The document also lists the America's Job Bank (AJB) as a program proposed to be terminated in FY 2007. The AJB program was appropriated $15 million in FY 2006. The following information summarizes portions of the Employment and Training Administration's (ETA) FY 2007 Budget request. Also, a table comparing FY 2005 actual appropriations to FY 2006 estimated appropriations and the FY 2007 Budget request is provided as an attachment.
Workforce Investment Act Programs
ETA's FY 2007 Budget request would shift a majority of funds authorized under the Workforce Investment Act (WIA) and Wagner-Peyser Act program totaling $3.4 billion to new CAAs. The CAA proposal would consolidate the WIA Adult, WIA Dislocated Worker, WIA Youth, Work Opportunity Tax Credit, Labor Market Information and Employment Service state grants into a single state grant. ETA says the new accounts would be used to pay for expenses directly related to education and training and could be used by states to pay for basic employment services including career assessment, workforce information and job search assistance. Legislation to authorize this proposal is expected to be offered later this year. Congressional staff were first informed of the CAA proposal last week.
ETA Assistant Secretary Emily DeRocco indicated the CAA proposal would not derail efforts made already in the House and Senate to reauthorize the Workforce Investment Act (WIA). Rather, she said the Administration's CAA proposal would compliment House WIA reauthorization legislation (H.R. 27) approved last March, though she acknowledged some changes to the House bill would be required. The House proposal would consolidate at the federal level the WIA Adult, WIA Dislocated Worker and ES programs. The WIA reauthorization legislation approved by the Senate HELP Committee approved last May would not consolidate WIA programs at the federal level.
Regardless of whether the Administration is successful in acquiring legislative approval to consolidate some WIA programs and create CAAs, its FY 2007 Budget request would reduce by over $500 million those programs CAAs would consolidate. The FY 2007 Budget request of $712 million for the WIA Adult program is $145 million less than was appropriated in FY 2006. The WIA Adult program was appropriated $950 million in FY 2001. The FY 2007 Budget request would reduce the WIA Dislocated Worker and WIA Youth programs by $243 million and $100 million, respectively, from their FY 2006 appropriated levels. The request for the Employment Service (ES) program is $27 million less than was requested in FY 2006 for a total of $689 million. The ES program was appropriated $762 million in FY 2002 - the same level it was appropriated in each of the eight years before.
ETA's FY 2007 Budget continues to promote the President's High Growth Job Training Initiative and Community-Based Job Training Grants. The High Growth Job Training Initiative is an effort focused on engaging business, education and the workforce system to work together. This initiative invests in national models and demonstrations of workforce solutions. The Community-Based Job Training Grants is aimed at strengthening community colleges role in training workers for professions most in demand. Both initiatives are funded by the Secretary of Labor's discretionary funds.
Veterans' Employment and Training Services (VETS)
Appropriations requested for VETS programs in FY 2007 are nearly the same as levels appropriated in FY 2006. The Administration requests FY 2007 appropriations that would restore the one-percent reductions imposed on nearly all spending in FY 2006 in the FY 2006 Defense appropriations bill (P.L. 109-148). The Administration's CAA proposal unlike its WIA-Plus Consolidated Grant program proposed last year, would not give Governors the option to consolidate additional federal job training programs including VETS.
Unemployment Insurance (UI) Program
Grants to states for administration of the unemployment insurance (UI) program total $2,640 billion. This is $142 million more than was appropriated in FY 2006. ETA requests $30 million in addition to the $10 million appropriated in FY2006 to expand Re-employment and Eligibility Assessments (REAs) for a total of $40 million in FY 2007. Additionally, ETA requests $10 million of the UI state operations budget to prevent and detect fraudulent unemployment benefit claims filed using personal information stolen from workers. This proposal is projected by OMB to result in savings of as much as $77 million in the first year.
The Administration renewed its effort in its FY 2007 Budget request to improve UI program integrity in a number of legislative proposals. Its proposals include: authorizing states to use a small amount of overpayments collected and delinquent taxes recovered to reduce improper payments and ensure tax integrity; requiring states impose a 15 percent penalty on individuals who obtain UI benefits from fraudulent collection; and requiring employers to include a "start work" date on new hire reports to improve information stored in state directories of new hires and the National Directory of New Hires (NDNH). The OMB estimates these proposals will save the federal government $1.7 billion through 2011.
Labor Market Information (LMI) and the Bureau of Labor Statistics (BLS)
The Administration's FY 2007 Budget proposes to reduce the One-Stop/LMI appropriation by approximately $17 million for a total request of $64 million. Of this amount, approximately $39 million is proposed to be consolidated as part of the Administration's CAA initiative. The remaining $25 million is proposed to be spent on workforce information, national electronic tools and system building. The Bureau of Labor Statistics (BLS) issued LMI Administrative Memorandum S-06-03 on February 7, 2006 to inform state agencies on how it would apply the one-percent across-the-board cut. BLS will apply $2.1 million of its total cut to the Labor Force Statistics programs including BLS Employment and Unemployment Statistics and BLS-LMI.
America's Job Bank
The Administration proposes to eliminate America's Job Bank in its FY 2007 Budget. It justifies the elimination of this $15 million program on increasing use by workers and businesses of privately sponsored and state-run internet-based job search engines.
Additional information on the FY 2007 Budget request will be provided over the next week. Questions regarding the numbers provided in this article and the attached table should be directed to Curt Harris, NASWA Congressional and Intergovernmental Affairs Director, by calling 202.434.8020.