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Executive Summary

In 1999, the Texas Legislature directed the Texas Comptroller of Public Accounts to conduct a performance review of the Smart Jobs Fund, the Skills Development Fund (SDF) and the Self-Sufficiency Fund (SSF) programs and report back to the 2001 Legislature. This report contains information designed to meet the legislative requirements, including an analysis of the wage levels of trainees, an assessment of grant recipients’ satisfaction, the programs’ overall impact on economic development, especially economically distressed areas, the programs’ administrative efficiency and additional information deemed useful by the Comptroller.

To assist with the review, the Comptroller’s office contracted with the State Occupational Information Coordinating Council, formerly an independent group but now a division called the Career Development Resources (CDR) within the Texas Workforce Commission. CDR attempted to collect information on the programs’ trainees from the Unemployment Insurance wage reporting system and the Texas Department of Human Services. Other consultants assisted with the return on investment and economic analysis.

Delay in the delivery of the report to the 2001 Legislature is a result of the difficulty in getting trainee records for each of the programs. Trainee records were delivered for analysis to CDR in early December 2000. The complexities of manipulating the data, as well as the poor quality of the data itself, made the matching files to other databases time consuming and difficult.

In the end, trainee records from the programs were not sufficient to permit a complete analysis as legislatively mandated. Financial information on program operations and even the actual number of trainees continue to change. As contracts closeout and the actual numbers of trainees qualified for reimbursement are determined, the programs’ administrative efficiency indicators will change. Given these issues, the Comptroller’s report is based only on the best information available on both administrative efficiency and return on investment.

Chapter 1 describes the requirements for the Comptroller’s study, summarizes previous studies performed by other groups as well as background information on each of the programs.

Chapter 2 summarizes results from the customer survey performed to determine customer satisfaction with the Smart Jobs and SDF programs. About 1,300 surveys were sent to community colleges and businesses that were either direct grant recipients or indirectly used the programs through a community college. The response rate was 43 percent. In general, customer satisfaction was significantly higher with the SDF program for all areas of customer service. Smart Jobs, with its administrative requirements that directly affect businesses, rated lower in overall customer satisfaction.

Chapter 3 investigated, to the extent possible given the program financial and the trainee information available, the administrative efficiency of each of the programs. For the SDF, the average cost of training for those trainees who qualified for reimbursement was $878. The Smart Jobs average cost of training for trainees who qualified for training was $1,891 per trainee.

Based on administrative costs at the state, community college and business levels, Smart Jobs has spent about $1 in administrative costs for every 12 grant dollars, while SDF has spent on average $1 in administrative costs for every 8 grant dollars. Smart Jobs administrative costs ratios should change over time to reflect the added contract monitoring and program quality controls.

Chapter 4 describes each programs’ trainees, their employment patterns and wage gains during the study period. It is important to note that data for each program’s trainees was incomplete and sometimes inaccurate, so that a full analysis could not be performed. The control group analysis was performed; however, confidence in the accuracy of the control group information was low for most areas of comparison.

The range of earnings for trainees in both programs before training ranged widely, with the median earnings in both programs at about $25,000. Because both programs served significant numbers of individuals with previous incomes that exceeded $50,000 per year, the mean annualized earnings for both programs was about the same as the average Texan or about $30,000 per year.

For both programs, employment rates for trainees increased in the quarter immediately after training. Average earnings gains for former trainees in the Smart Jobs program were $1,590 between the first full pre-training quarter and the first full post-training quarter.

For SDF trainees, average earnings gains were about $1,090 for the same periods. Training did not seem to affect businesses’ ability to retain their workers. Neither Smart Jobs, nor SDF had much affect on the state’s welfare costs because trainees for the most part were not receiving public assistance.

Chapter 5 explored the effect these training programs had on the state’s economy and the state’s return on investment. Although the data limited the accuracy and depth of analysis, both programs appear to have helped raise short-term earnings in the aggregate. For the first six months after training, the SDF had an estimated return to the taxpayers of about $15.4 million, representing a 25 percent return on total program costs. The Smart Jobs program had an estimated implied public sector revenue in the first six months of $19.9 million, representing a return on total program costs of 10.9 percent. Based on this analysis, the short-term impact appears fairly positive for both programs.

To improve future reviews of these programs, the report also contains a series of recommendations, which would:

  • expand the information reported in the SDF and SJF databases,
  • facilitate the construction of control groups to match trainee groups and
  • enable reviewers to compile a thorough and useful analysis.