Training fund needs lawmakers’ OK

In 1996, the Legislature passed a bill that created a $7.5 million fund to provide training for employees of existing Louisiana businesses. The legislation’s intent was to encourage businesses already in Louisiana to expand their operations by training their workers to accommodate the growth.†

The fund is administered through the Incumbent Worker Training Program (IWTP).†It comes from monies that would otherwise go into the state’s Unemployment Compensation (UC) trust fund for use in paying benefits to unemployed workers.†These dollars are collected through payroll taxes paid only by businesses operating in Louisiana.†The level at which the IWTP is funded depends on the UC trust fund’s level.

Over the objections of some employers, in 1999 the IWTP fund was increased to $50 million.†This made it the largest fund of its kind in the country, exceeding those of states having far greater populations.†

There was serious concern within the business community that such an amount would be difficult to administer.†It was recommended that the funding amount gradually ramp up over a period of years to assure better management.†

This advice went unheeded and, not surprisingly, problems occurred.

The IWTP fund sunsets this year and must be reauthorized by the Legislature, if it is to continue.†Louisiana’s business community is generally supportive of the reauthorization, but with some caveats.†

First, the program should operate at a more modest $35 million level.†This is the level at which the IWTP is currently funded based on the level of our UC trust fund.†The business community believes that $35 million is a more appropriate amount for the IWTP, given the size of our state’s workforce, and it will be much easier to manage effectively.

Another caveat is that the IWTP not be funded whenever Louisiana’s UC trust fund falls below $1 billion.†

Presently, that fund is over $1.3 billion.†This is remarkable, because the unemployment that resulted from the 2005 hurricanes took almost $1 billion out of this fund.†It is only because the fund was over $1.5 billion when the storms hit and Congress authorized $400 million from the federal unemployment fund to help shore it up that our fund remains in such good shape.†

Nevertheless, Louisiana’s employers know that the two most significant hits to our fund so far — the 2005 hurricanes and the 1980’s recession — cost close to $1 billion.

Both of these elements have been factored into the reauthorization bill filed this session.†Also, the legislation retains an element that enhances the IWTP’s value to small businesses.

When the Legislature last reauthorized the IWTP in 2003, it made one significant improvement in the program to make it more small business friendly.†As originally created, it was difficult for small businesses to participate in the IWTP.†A substantial hurdle for most small employers was the requirement that at least 15 employees comprise a training class.†

The 2003 reauthorization earmarked $1 million for small business grants to pay for “off the shelf” training.†This will continue to be an important part of the IWTP.

This year, there will be further efforts to legislatively streamline and better target the IWTP.†This must happen for businesses to be confident that their tax dollars are being well used.†Improving the quality of our existing workforce is critical to Louisiana’s economic recovery.†However, unless Louisiana’s employers are comfortable that the IWTP is the right size for our state and that the state’s UC trust fund will always be able to handle the next massive wave of unemployment claims, support for the program will be hard to come by.

Jim Patterson, vice president and Council director for LABI’s Employee Relations Council, contributed significantly to this column.