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Monday, June 16, 2014

Walsh measure stops state from skimming cash from job training fund

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.