Michigan New Jobs Training Program
INSTRUCTION FOR TEMPLATES
TAB 1: NEW JOBS ESTIMATOR WORKSHEET
Purpose:
· This is the spreadsheet that will help you estimate the size of the project/estimated training fund proceeds.
· You will use this when beginning conversations with a prospective company. The spreadsheet should include all of the associated new jobs, estimated wage rates, and withholding estimates.
Key Pieces of Information:
· The job titles for the new jobs being created.
o Note: “New job” is defined in the legislation as full-time, not a job of a recalled worker, a replacement job, or any other job that existed in the employer’s business within the 1-year period preceding the date of an agreement.
· The intended pay rate per hour.
o Note: The entry wage paid for the new jobs must equal to or exceeds 175% of the Michigan minimum wage ($7.40 per hour, for a minimum required wage of $12.95).
· The estimated allowable expenses, including the total financing interest expense.
o Note: To determine the total interest expense, you can use any loan calculator available online or the accompanying “Debt Sizing Template”.
To Use the Debt Sizing Template to Calculate Total Interest Expense (separate template):
· This is a basic loan amortizor, and it can be used to determine the interest expense in order to build it into the project costs. Enter following information:
o The total amount to be loaned (determined by the overall project size). This number is calculated using the New Jobs Estimator worksheet.
· Include the annual interest rate you’ll be paying. This will be determined by one of the following:
§ The lending institution;
§ Bonding agency; or
§ Current Michigan Department of Treasury rate if your institution is self-funding the project using fund balance. Colleges are permitted to charge one percentage point above the “adjusted prime rate” for self-funding the project. Treasury sets this rate periodically, and you can get the most current published interest rate at the Revenue Administrative Bulletin available online at http://www.michigan.gov/documents/taxes/RAB2010-3_320020_7.pdf. Revenue Administrative Bulleting 2010-3 establishes this rate at 4.25%.
· The number of payments to be made per year. Depends on how the debt is structured.
· Include any optional payments beyond the number previously specified.
· The starting date of the loan.
Ü Take the total amount of interest expense calculated using this Debt Sizing Template, then add it to the project estimator as an allowable expense for the project.
Lessons for Using the Job Estimator Worksheet:
· Use the entry pay rate/per hour for the first year in order to be conservative. Don’t make assumptions for salary increases in subsequent years. Size the projects according to the entry wage.
· At this point when estimating the project, you are not going to know what the actual withholding amounts will be for each new employee – you will know the withholding rate (currently 4.35%), but not the individual exemptions for the newly hired employees. So for the purposes of sizing/estimating the project, assume an average of 2 exemptions.
· Be clear about what other project expenses you are going to assign to this project (1% of the total project size to the MCCA, 14% administrative to the college, and the law allows for associated legal expenses, bond counsel expenses, and due diligence expenses).
TAB 2: TRAINING PLAN & BUDGET WORKSHEET
Purpose:
· This is the spreadsheet that can be used to specifically establish a training plan and associated budget.
· This budget cannot exceed the training proceeds amount initially estimated using the New Jobs Estimator worksheet in Tab 1.
Key Pieces of Information:
· List each planned training program, workshop, or seminar. Training program should be driven by the company’s needs.
· Estimated enrollment.
· Estimated start date/end date.
· Estimated costs.
Lessons for Using the Training Plan & Budget Worksheet:
· Document, document, document. Disciplined documentation of each training activity is critical for passing institutional and state audits.
· It will be important to match estimated costs with actual cost as the project progresses. Make sure that the actual training program costs don’t exceed the allocation estimate.
· It is appropriate to charge off associated travel costs, training equipment, training materials and supplies.
· Based upon the experience of Iowa, it’s advisable to take a conservative approach by having equipment purchased for training be retained by the company – unless stated by the company that the college should retain the equipment for future use.
TAB 3: JOB & REVENUE TRACKER WORKSHEET
Purpose:
· This spreadsheet is similar to the New Jobs Estimator worksheet, however it is different because you are going to enter actual employees, tracking individual jobs titles and pay, and actual exemptions.
· This worksheet will likely occupy the most of the college’s time, but it is essential to do so in order to pass audits to verify that you are receiving the revenues that you are entitled to, and companies are hiring the people they planned to hire, and that the new jobs are in fact being trained.
Key Pieces of Information:
· For each newly hired employee receiving training and for which withholding will be diverted to pay down the debt:
o Name;
o Social security number (if not possible, use another company designator);
o Job title;
o Employment start;
o Employment end date (if employee is terminated during the training contract period);
o Hours per week (must be 40 hours/week);
o Starting pay rate/per hour;
o Current pay rate/per hour;
o Gross annualized wage;
o Actual number of exemptions;
o New annual wage;
o Annual withholding amount;
o Actual period withholding.
Lessons for Using the Job & Revenue Tracker Worksheet:
· Follow each job title. People will come and go; track the name of the positions as they turn over, track each individual assigned to that position.
· Make sure that you note the actual pay rate and the associated changes.
· If you size the project conservatively (using entry wage – and not modeling increases in pay), it is likely that the revenue stream to the college will exceed the original estimates. If this is the case, this will allow the college to pay off the debt and close the project sooner.
TAB 4: BOARD COVER SHEET
Purpose:
· To provide the necessary data to the Board of Trustees so they can make an informed decision regarding proposed project.
Key Pieces of Information:
· Company name.
· Relevant notes regarding nature of company, business plan, positioning in the market etc.
· Due diligence findings.
· Suggested debt instrumentation.
· Starting and ending dates of the training contract.
· Any other relevant information the Board would need to make a decision regarding the project.
Lessons for Informing the Board of Trustees:
· Do not wait until the first project to educate your Board on how the program works.
· Run a simulated company with the Board so they understand the process.
· Establish any parameters early on (for instance, are there any industries/local economic development goals the Board is particularly interested in supporting; preferred financing mechanism etc).
· Air on the side of full disclosure; the Board does not want to be surprised.
Updated 05-11-2010 1