Performance Funding in Job Training
WASHINGTON -- Opportunity Nation, a nonprofit group that produces a national index on economic opportunity, has joined two U.S. senators in a push to encourage closer ties between employers and colleges, particularly two-year institutions.
The group has endorsed a bill from Sen. Michael Bennet, a Democrat from Colorado, and Sen. Rob Portman, an Ohio Republican. That legislation seeks a better return on investment for the $15 billion the federal government spends on 46 different job training programs each year, Portman said at an event Opportunity Nation held here on Tuesday. “We’d like to consolidate some of those programs,” he said, arguing that there is overlap in almost all federal job training efforts.
Those funding streams include several that are important to community colleges, including the Workforce Investment Act and the Trade Adjustment Assistance Act.
The proposed legislation probably wouldn’t cut funding for higher education, however. That’s because the two senators give two-year colleges and other career-focused institutions “priority access” to dollars for job training in the legislation, which is dubbed the Careers Through Responsive, Efficient and Effective Retraining (CAREER) Act.
“We’d like to include community colleges more,” Portman said.
Even so, the two senators want to keep better tabs on that money. The bill includes performance-based funding elements, including a pilot program that would pay colleges on the back end for their job training programs based on outcomes like job placement and earnings. That approach “rewards results and penalizes complacency,” Portman has said.
The pay-for-performance language in the legislation was picked up by the Senate panel that voted in August to renew the Workforce Investment Act. That bill has not been updated in 15 years. The Democrat-led Senate and Republican-led U.S. House of Representatives remain far apart in their ideas about how to renew it.
Bennet and Portman said their legislation is aimed at encouraging colleges to work closely with employers to design credentials that have value in the work place. “It’s an effort to align job training to the actual needs of employers,” said Bennet.
Several prominent groups besides Opportunity Nation, including the National Association of Manufacturers and the National Skills Association, are backing the bill.
The American Association of Community Colleges has yet to take a position on the legislation. It includes several “interesting ideas,” said James Hermes, the association’s vice president of government relations.
The community college group supports a somewhat similar bill -- although a less expansive one -- from Sen. Kay Hagan, a Democrat from North Carolina. That legislation would also give priority to job training programs that offer portable, industry-recognized credentials. It does not include performance funding, however.
The overall thrust of both bills, which Hermes said the association supports, is to encourage the production of “relevant credentials that are really going to help people.”
Measuring the American Dream
Des Moines Area Community College is one institution that does job training right, according to Opportunity Nation.
The college’s president, Rob Denson, said employers serve on advisory boards for the curriculums of all 150 academic programs the college offers. That input has helped students get the training employers need.
“They will hire our two-year IT grads at $65,000 a pop,” Denson said.
The college is also an “early adopter” of the 16 metrics that Opportunity Nation uses to gauge the potential for upward mobility in all 50 states, Washington, D.C. and more than 3,000 counties. Beginning in 2011 the group has released an annual index score and letter grade for each locality, as well as for the nation.
Opportunity Nation is a “neutral body that tells us where we are,” said Denson. “The good news is we’re way ahead of Missouri. The bad news is we’re behind Nebraska.”
The index is based on measures about local economies, such as unemployment and poverty rates, as well as levels of educational attainment and “community assets” like civic engagement and access to healthcare and healthy food.
Mark Edwards, executive director of Opportunity Nation, calls the index the “first statistical measure of the American Dream.”
The two most important indicators, he said, are poverty rates and the percentage of “disconnected youth” in a state or county, which is the percentage of 16- to 24-year-olds who are not working and not in school or college.
Nationwide, 5.8 million or 15 percent of young people fit this definition. Their annual cost to federal coffers is $94 billion, according to Opportunity Nation, through both direct government support and lost tax revenue.
Higher education is featured in another indicator. The group echoes the national college completion “agenda” by awarding points based on the number of adults who hold at least an associate degree.
Fully 47 states have moved the needle on this measure, according to the most recent version of the index, which the group released last month. D.C. comes in first with a 55 percent degree attainment rate. West Virginia’s rate of 24 percent is the lowest. But the state has also made the biggest proportional gains.
The index shows an enormous variation from county to county. That means some local counties are in deep trouble.
For example, Putnam County, Florida, gets a D- rating. Only 19 percent of adults who live there hold at least an associate degree, while 24 percent of young people are “disconnected.” Violent crime rates are more than double the national average. And the mean household income of $33,000 lags well behind the national average of $49,000.
“Too often the ZIP code where you’re born does determine your destiny,” Edwards said.
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