Louisiana Gov. Bobby Jindal signs workforce bill while flanked by college officials.

Linking Business and Budgets

August 7, 2014

Business leaders have been vocal in their criticism of higher education for not producing enough skilled workers. Yet corporate types rarely stand up for public colleges during funding battles in state capitols.

That may be changing in Louisiana. A recently enacted law in the state requires colleges and private industry to team up on workforce-related academic programs. It includes $40 million in new money. And corporate partners must pony up a 20 percent match for the colleges to receive funding.

“They’re making a financial investment,” said Monty Sullivan, president of the Louisiana Community and Technical College System. “They’re also making a substantial political statement.”

The legislation follows $252 million in new state spending on 29 facilities projects for the two-year system. That bill, passed last year, also came with a private industry match of 12 percent – bringing the total allocation up to $286 million.

Louisiana’s Republican governor, Bobby Jindal, and the state's Republican-dominated Legislature also increased state support for higher education by almost 7 percent this year. While the state is relatively flush with oil and gas industry tax revenue, the increase was a welcome shift in spending trends for public institutions.

Some of the money comes with performance-related strings, however. And the two-year system made many cuts in recent years, as state funding slipped from being 70 percent of the colleges' revenue to about 30 percent.

The community and technical colleges eliminated more than 700 academic programs during the last five years. Many of those cuts were in areas that are not closely tied to workforce needs.

For example, Sullivan said, the system largely stopped teaching cosmetology. It now partners with private, for-profit institutions for those programs. And the two-year colleges also moved their truck-driving programs to being noncredit, which are largely self-supporting based on demand and tuition revenue.

At the same time, the system redirected more resources to high-demand job fields. They include construction, welding, computer science and process technology.

The slashing came with layoffs. Delgado Community College, which Sullivan led until this year, has eliminated 220 positions in recent years.

Sullivan said the cuts, although painful, helped bring business leaders and lawmakers to the table to support higher education.

“We could not spend the resources of the state of Louisiana on programs where we could not justify the demand,” said Sullivan. “We have to be more responsive to market demands.”

The system has become more efficient. It doubled the annual number of credentials issued, compared to 2007. During the same period the amount of state funding per credential has decreased from more $20,000 to roughly $4,500.

Louisiana might be a bellwether for state support of higher education, said Mary Alice McCarthy, a senior policy analyst for the New America Foundation, who previously worked for both the U.S. Department of Education and the Labor Department.

She said years of disinvestment appear to be ending, but that states in the future will increasingly tie their funding to workforce and economic development goals rather than just general degree completion.

That's already happening in Louisiana, where Sullivan said business leaders have a different view of community colleges.

“They’re beginning to think of us a little bit less as a state agency,” he said. Now major employers see the colleges as partners.

Funding Formula

Louisiana’s public, four-year institutions are also eligible to participate in the new matching grant program. Their role will be in creating or bulking up research-related programs aimed at creating new jobs. The two-year system will work with industry to fill current job needs.

“We must do a better job training skilled workers who will be needed to fill the demand for jobs at the major industrial and high-tech projects coming to Louisiana,” Jindal said last month in a written statement. “That’s why our top priority is making sure we have the resources to prepare our students and train them for the jobs of the future.”

The new money stream is dubbed the Workforce and Innovation for a Stronger Economy (WISE) Fund. Its performance-based formula will allocate money to degree programs that industry leaders and economic forecasters say are most likely to need more trained workers.

Colleges will need to submit a business plan to the state Workforce Investment Board to compete for the funding. Those plans will include pledges by the colleges' business partners to kick in a 20 percent match on the state contribution. That means the two-year institutions essentially must secure the private fund-raising before going to the state.

The public institutions will also be required to set a goal for annual degree production in targeted job fields. The state will tie installments of the money to whether colleges make good on those production goals.

The legislation created a governing board for the WISE program. That group, which includes members from the state workforce board, will help oversee the fund.

Sullivan said the two-year colleges have their work cut out for them. The demand is huge in some industries. For example, skilled construction jobs are projected to increase by 1,100 percent in coming years.

“The numbers are staggering,” he said.

Most of the academic programs that will compete for the new money are already in place. The task is to work with employers to increase their capacity, while also tailoring the curriculums to teaching necessary skills.

Sullivan said the system is in talks with Entergy Corporate, a major energy company base in the state, about a possible partnership, among several other businesses.

Companies understand how colleges will use the money, said Sullivan. That’s a change from trying to sell business executives on an arcane state funding formula for higher education. They see that the funds won’t go to a “black hole,” he said, but to a “targeted investment.”

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