Budget includes Walsh proposal to stop
state from taking money from Job Development Fund
STATE HOUSE – The budget approved today by the House of
Representatives includes a proposal Rep. Donna M. Walsh introduced earlier this
year to stop the state from taking a 10-percent cut from the employer-paid Job
Development Fund for the General Fund.
The Job Development Fund, which is meant to fund workforce
training, is subject to a 10-percent “indirect cost recoveries” charge that
most of the state’s restricted-receipt accounts pay to the general fund.
Representative Walsh’s bill (2014-H
7244), which she submitted last year as well, would create an exception for
the fund so it wouldn’t be subject to indirect cost recovery. That proposal was
written into the budget bill (2014-H
7133Aaa), so it will be enacted when the budget becomes law.
At a time when Rhode Island has the highest unemployment
rate in the nation and has a well-identified “skills gap” between the skills
the workforce has the skills employers need, the state should be putting every
available penny toward worker training, said Representative Walsh.
“We need every dollar we have for workforce training to go to training. We have too many out-of-work and underemployed Rhode Islanders who need this help to be taking money out of this fund,” said Representative Walsh, a Democrat who represents District 36 in Charlestown, New Shoreham, South Kingstown and Westerly. “As it is, the state isn’t dedicating any of its own money to direct workforce training. The only money we’re using comes from the federal government, and from the Job Development Fund, which is paid for by employers. At the very least, we could stop skimming some from off the top of that fund and use it all for its intended purpose – helping our workforce succeed.”
The Job Development Fund is funded by an assessment of
.51 percent on the first $19,600 of each employee’s salary, paid by their
employers. About 60 percent of the money from the fund is currently being used
by the state to pay off federal loans the state borrowed for its high
unemployment insurance costs, to the tune of about $18 million a year. That
leaves about $11 million for the Governor’s Workforce Board for worker training
programs. The assessment will be reduced to .21 percent once the loans are paid
off in November.
The Governor’s Workforce Board has asked for the change
Representative Walsh has proposed, saying it would provide $1.29 million in
additional funds for training. The state allows over 70 other
restricted-receipt accounts such exceptions to the indirect cost recoveries
charge.