Assembly Committee on Jobs, Economic Development and the Economy
AJR 13
Page 1
Date of Hearing: April 9, 2013
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
Jose Medina, Chair
ABPCA Bill Id: AJR 13 (Author:CCCampos) – As Amended: Ver: April 3, 2013
SUBJECT: Labor: Job Corps centers
SUMMARY: Memorializes the Legislature's support for Congressional action to reverse the suspension of new student enrollments in the Job Corps, to prevent any limits to student enrollment until other cost-saving measures have been exhausted, and to maintain the full range of educational and employment services provided by the Job Corps. Specifically, this bill:
1) Makes, among other declarations, that:
a) California serves 5,373 disadvantaged youth between 16 and 24 years of age through its seven Jobs Corps centers, making California's program the largest in the country. Combined economic activity stimulated by the Job Corps centers in California is $243,726,519, and 2,971 local jobs have been created.
b) Job Corps centers are a vital component of California’s workforce development system by providing high school diplomas, career technical education, and related social skills. Following their time in the Jobs Corps, graduates are ready to obtain and hold a job, enroll in advanced training, attend college, or enter the Armed Forces.
c) Recent studies demonstrate a significant economic gain from funds invested in dropout recovery programs by increasing employment, raising individual earnings, improving home and auto sales, increased job and economic growth, greater spending and investments, tax revenues, and significant reductions in health care costs, crime prevention and corrections expenditures, and other social services provided by California.
d) The United States Department of Labor (DOL) recently decided to suspend all new student enrollments to 125 Job Corps centers serving the nation, which would prevent as many as 30,000 otherwise eligible young men and women from receiving diplomas and job training.
e) The United States DOL’s decision appears to be inequitably balancing a budget shortfall on the backs of the disadvantaged youth it is entrusted to serve when other alternatives are available for closing the shortfall.
f) Seventy-one members of the U.S. House of Representatives and seventeen members of the U.S. Senate have sent a bipartisan letter asking the DOL to reverse the suspension of new student enrollments in order to protect the opportunities provided to the nation’s most disadvantaged youth and to prevent further economic damage to the communities served by the Job Corps.
2) Resolves that the Assembly and the Senate of the State of California urge U.S. congressional action to reverse the suspension of new student enrollments in the Job Corps, to prevent any limits to student enrollment until other cost-saving measures have been exhausted, and to maintain the full range of educational and employment services provided by the Job Corps.
FISCAL EFFECT: Unknown
COMMENTS:
1) Author's Purpose: According to the author, "On January 18, an administrator with the Employment Training Administration placed an abrupt freeze on enrollments. AJR 13 requests the California Congressional Delegation to redress this action to prevent the significant loss of jobs and opportunity for low income youth in the State of California.
Job Corps, administered by the United States DOL, is the nation's largest career technical training and education program for low income young people. The State of California serves the Nation’s largest proportion of Job Corps students with seven Job Corps centers serving 5,373 disadvantaged youth. Job Corps offers hands-on training in more than 100 career technical areas aligned with industry certifications."
The California Job Corps centers in partnership with public schools like SIATech have also resulted in over 8,000 young men and women earning a fully accredited public school diploma over the past 13 years. Studies confirm significant economic gain from dropout recovery and career training by increasing employment, as well as significantly reducing corrections and social service costs. The National Job Corps Association reports that the combined economic activity stimulated by the California Centers is $243,726,519 and that 2,971 local jobs are created by operation of the California Job Corps centers.
AJR 13 calls on our Congressional Delegation to take action to maintain the full range of educational and employment services provided by Job Corps and to prevent unnecessary limits to student enrollment."
2) Framing the Policy Issue: This resolution seeks state legislative support for federal advocacy to reverse the suspension of new student enrollments in the federal Job Corps. Having the largest program in the country and being one of the hardest hit states in the recession, California's opinion on the issue has particular merit in the national debate.
In making the case for state legislative engagement, the author cites the importance of the Jobs Corps to the overall California economy, the continuing need for effective workforce programs to support business development and growth in the post-recession economy, and the ability of the federal government to meet its fiscal obligation to reduce program costs through other means than restricting program access. Each of these issues is discussed in greater detail below.
3) Unemployment in California and Youth Unemployment: While California is officially considered to be out of the recession, certain areas of the state and groups of individuals continue to struggle in finding employment that covers basic financial needs. As of January 2013, the California unemployment rate was 9.8%, higher than the national average of 7.9%, though there is great variance between counties in different regions: San Mateo County (6.3%), Orange County (7.1%, Los Angeles County (10.9%), Riverside County (11.5%), Kern County (14.1%), Fresno County (16.0%), and Imperial County (25.8%).
Youth employment was hit particularly hard by the recession and has been slow to recover; the unemployment rate for persons age 16-19 and age 20-24 are substantially higher than those of other age groups nationally at 23.4% and 14.2%, respectively.
4) Federal Job Corps Program: The Job Corps is a federally-operated $1.7 billion residential training program for at-risk youths, ages 16-24. It provides education, training, and support services for approximately 60,000 underserved youths a year by providing housing, education, and vocational training. Recent budget shortfalls have dropped current enrollment to approximately 39,000 youth, with enrollment dropping by an average of 1,000 youth per week, due to program completions and the enrollment freeze.
There are 125 Job Corps centers nationwide, under the oversight of the DOL. Twenty-eight Job Corps centers are operated by the U.S. Department of Agriculture’s Forest Services, with the remaining 98 centers operated by private contractors. The Job Corps has traditionally been a successful program; in 2011, Job Corps helped 58.4% of its students find a job and 15% enter college.
On January 28, 2013, Job Corps instructed all centers to temporarily suspend all enrollments, except for runaway, homeless, and foster care candidates, due to a budgetary shortfall of $61 million. The suspension of enrollments was instituted as a cost-savings measure and is unrelated to sequestration.
5) Job Corps in California: There are currently seven Job Corps centers in California located in the cities of San Francisco, San Jose, Sacramento, Long Beach, Los Angeles, San Bernardino, and San Diego. These centers can serve a total of 3,382 under-privileged youth when at full capacity. Traditionally, these centers have been some the best performing Job Corps centers in the nation, with the Treasure Island (San Francisco), San Diego, and Inland Empire (San Bernardino) centers ranked among the top 6 in 2012.
6) Causes of Job Corps Enrollment Suspension: Beginning in 2011, Job Corps has suffered severe financial pressures due to a growth in expenditures and, primarily, institutional weaknesses in Job Corps’ contracting procedures.
The growth in expenditures came from multiple factors. The delay in the opening of three new Job Corps centers in 2010 and 2011 caused a loss of funding for operating these centers, and when they opened, the Job Corps’ administration failed to plan for the additional costs. An expansion of the Job Corps program, while successful, also increased expenditures.
However, the Job Corps’ lack of contract oversight is the primary factor that led to the budget shortfalls. Job Corps operates largely through cost-reimbursement contracts, and these require constant oversight in order to manage or predict the costs, while providing little protection from cost over runs. In the most recent quarters additional fiscal oversight has fixed most of the issues. The DOL has stated, however, that the savings found through administrative fixes cannot be immediately applied to the reopening of Job Corps enrollment because of the continued unpredictability of contractor cost overruns.
Recent audits by the Office of Inspector General (OIG), an independent entity within the DOL, found numerous areas of concern with the 97 privately-contracted Job Corps centers regarding program performance, procurement activity, and student and staff health and safety. The majority of these problems were the result of a deficiency in program monitoring tools and control protocols regarding contractual spending trends. As suggested by recent audits, the Job Corps has instituted a number of changes to increase savings and fiscal oversight. This includes the addition of financial officers to provide oversight of Job Corps procurement, strict and frequent financial reporting, a reduction in student stipends, and renegotiations with current contractors. Investigation by the OIG is still ongoing and is scheduled to be complete in May 2013.
In considering the appropriateness of legislative engagement, Members may wish to consider whether prospective clients should suffer for administrative failures. To the extent that the program is now on a sustainable financial track, requiring at-risk young adults to wait for training while a rebalancing of the program's books occurs seems poor public policy. AJR 13 proposes the Legislature advocate for the immediate training needs of potential Jobs Corps clients.
7) Current Status of the Job Corps Enrollment Suspension: As of March 26, 2013, new enrollment into the Job Corps was still suspended. Committee staff contacted the DOL and was informed that the suspension is tentatively scheduled to continue through June 30, 2013.
According to the National Job Corps, if the suspension continues as planned, as many as 30,000 youth nationwide will be denied access to critical education and training and an estimated 10,000 staff jobs will be lost.
REGISTERED SUPPORT / OPPOSITION:
Support
California Federation of Teachers (joint sponsor)
Horizon Youth Services (joint sponsor)
School for Integrated Academics and Technologies (joint sponsor)
California Manufacturers and Technology Association
Opposition
None received
Analysis Prepared by: Toni Symonds and Zachary Hutsell/ J., E.D. & E. / (916) 319-2090