Skills Development vs. Private Enterprise Incentives

See CPPP's policy page [PDF]

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Today, the Center for Public Policy Priorities (CPPP) released a new policy page on how the Senate wants to shift money away from the successful Skills Development Fund (SDF) to the controversial Texas Entreprise Fund (TEF) [PDF] for job training. Basically, it would take Texas tax dollars away from paying for current jobs to be used to attract currently out-of-state business through the TEF.

The policy page also includes a brief on SB 1177, by Sen. Todd Staples (R-Palestine). Contigent on the passage of SB 1177, SB 1 would transfer another $10.2 million to the SDF from the Smart Jobs Holding Fund, which would be re-named the Skills Development Holding Fund. SB 1177 would assign 0.1% of employers’ unemployment insurance tax to the new holding fund, as assessed by Texas Workforce Commission.

Other key findings by the page include:

Over the past three years, the Skills Development Fund has financed training programs for 15,559 new jobs and 28,832 incumbent jobs ... The economic impact of the Skills Development Fund amounts to an additional $72 million in statewide payroll.

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Currently, the biennial appropriation for the Skills Development Fund is $24.5 million. Included in TWC's Legislative Appropriations Request (LAR) was a proposal to
nearly double the Skills Development Fund appropriation level to $49.5 million for 2006-2007.

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Despite the overwhelming demand for skills development, the Senate version of the 2006-07 state budget (SB 1) would reduce the SDF appropriation to $9.9 million per biennium. With a 60% reduction, TWC would only be able to train approximately 6,000 workers per year, compared to about 15,000 workers with current funding. The House budget committee’s proposal would appropriate $20 million to the Skills Development Fund.

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While some monies have been designated for infrastructure and community development, the Enterprise Fund has dipped into the Skills Development Fund to secure working training for economic development projects, including at least $3 million each for the Toyota and Tyson deals. While current Skills Development funding is only 8% of the Enterprise Fund allocation, committed Enterprise Fund projects could consume up to 60% of the Senate appropriation for Skills Development.

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The Enterprise Fund should assume 100% of related project costs, including worker training, either through reimbursing the Skills Development Fund or including a job-training setaside within a specific Enterprise Fund grant.