Donna Walsh, Sue Sosnowski stop raid on job training funds

Lawmakers pass bill to redirect resources to job training

STATE HOUSE – Legislators gave final passage to legislation yesterday that would stop the state from taking a 10 percent cut from the employer-paid Job Development Fund, or JDF.

The JDF, which provides money for workforce training, is subject to a 10 percent indirect cost recovery charge that most of the state’s restricted receipt accounts pay to the general fund. Sponsored by Sen. V. Susan Sosnowski (D-Dist. 37, South Kingstown, New Shoreham and Rep. Donna M. Walsh (D-Dist. 36, Charlestown, New Shoreham, South Kingstown, Westerly), the legislation creates an exception for the JDF so it would not be subject to indirect cost recovery. 

The initiative is part of the Senate’s “Rhode To Work” legislative package and is featured in the Fiscal Year 2015 budget, which Gov. Lincoln D. Chafee signed into law today.

“It doesn’t make sense to be directing even a small portion of the money employers pay for job training to the state’s general fund at a time when we need to take every step we can to immediately equip workers with the skills they need to find a job in today’s economy,” said Senator Sosnowski. “I think this is a point employers and labor can strongly agree on: these funds are intended for job training and they should be used to improve the skills of the Rhode Island workforce.”

The bills (2014-H 7244A, 2014-S 2216B) adhere to the belief that the state should be investing every penny available in job training programs so the state can immediately address its expansive skills gap.

“I introduced this bill last year because we need every dollar we have for workforce training to go to training,” 

Representative Walsh added. “We have too many out-of-work and underemployed Rhode Islanders who need this help to be taking money out of this fund. 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 0.51 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 0.21 percent once the loans are paid off in November. The action taken today will free an additional $1.26 million for job training and work experience efforts. The state allows more than 70 other restricted receipt accounts such exceptions to the indirect cost recoveries charge.

The Senate bill, which has been transferred to the governor’s desk for a signature, is cosponsored by Senators Joshua Miller (D-Dist. 28, Cranston, Providence), Juan M. Pichardo (D-Dist. 2, Providence), Roger A. Picard (D-Dist. 20, Woonsocket, Cumberland) and David E. Bates (R-Dist. 32, Barrington, Bristol, East Providence). Representatives Larry Valencia (D-Dist. 39, Richmond, Hopkinton, Exeter), Lisa P. Tomasso (D-Dist. 29, Coventry, West Greenwich), Frank G. Ferri (D-Dist. 22, Warwick) and Maria E. Cimini (D-Dist. 7, Providence) serve as cosponsors of the House legislation.