Establish a Texas Commission on Commerce and Labor

The Legislature should build an economic and work force development system to serve the state better in the 1990s and beyond.


Background
Texas lacks an integrated economic and work force development policy and a system to implement it. A hodgepodge of various programs in a number of agencies all work to affect some part of the economy and the work force. In the past, Texas has separated and scattered its economic and work force development policies and programs among various agencies. However, demands for a skilled work force and growing recognition of a skilled work force as a key to global competition in the next century point to the need for policy and program integration.

A recent survey by the Texas Department of Commerce (TDOC) of 350 leading business executives found that 87 percent considered a skilled work force as one of the most important factors in selecting a place to relocate or expand. 1~ One of the key factors in determining the location of a business is the accessibility of qualified workers. Texas employers continuously report problems in finding workers with the education and training to meet their needs. According to a 1991 report by the Texas Literacy Council, 43 percent of Texas employers report difficulty in hiring entry-level employees who possess basic skills in reading, writing and math. Also, 67 percent of Texas businesses report difficulty in locating technical and other skilled workers. 2~

In Breaking The Mold, the Texas Performance Review examined the overlap of work force services provided by different agencies and a recommendation was made to transfer the Job Training Partnership Act Program (JTPA) and the Senior Texas Employment Program (STEP) to the Texas Em ployment Commission (TEC). Although the problem of overlapping services was recognized, this recommendation was not adopted.

The p roblem remains and should be addressed if Texas is to develop a comprehensive policy to address economic and work force needs. The consolidation of work force and economic development programs would allow a more integrated approach toward addressing the cu rrent problems of employers and the Texas work force.

The need to integrate work force development programs at a state level has been well documented. In November 1992, the Senate Committee on State Affairs recommended creating local work force developme nt boards and consolidating all work force development programs into one agency at the state level. 3~ The committee staff found that although the state spends over $1 billion on work force development programs among the seven agencies and 21 programs involved, there are no common goals, performance measures or accountability in fact, no work force development system at all. 4~

The Interstate Conference of Employment Security Administrators identified 37 states where the states Employment Services, JTPA and Unemployment Insurance programs are located in a single state agency. Also, a survey conducted by the LBJ School of Public Affairs Center for the Study of Human Resources found that almost 80 percent of states have consolidated their programs. 5~

Economic and Work Force Development Programs
TDOC is the agency responsible for business development. Business development programs at TDOC include assistance for small and disadvantaged businesses, technology transfer, generating export sales, identifying e nterprise zones and developing projects in economically distressed areas.

TDOC also administers JTPA, which was enacted by Congress in 1982. The Act was designed to prepare youth and unskilled adults for entry into the labor force through a partnership between private industry and state, local and federal governments.

TDOC also operates the Texas Literacy Council and the Work Force Incentive Program. This program provides training assistance as an incentive for creating or expanding employment and is only used for the purpose of creating new jobs.

TEC plays a major role in work force-related activities. TEC is the conduit for workers and employers to employment and training programs at the local level. TEC operates the labor exchange program which brings together individuals seeking employment and e mployers seeking workers. Through this program, job seekers receive job search information and techniques to help them present their qualifications to employers.

In addition, TEC operates programs for individuals with special needs. TEC administers Project Rio, the Reintegration for Offenders program, which teaches job search skills and provides job referrals and job development for parolees. TEC also contracts with the Texas Department of Human Services (DH S) to provide services for job ready Aid to Families with Dependent Children (AFDC) recipients and food stamp recipients.

TEC assists in dropout prevention through the Communities in Schools (CIS) program, administers the Trade Adjustment Assistance Act (which provides training and benefits to workers dislocated due to foreign imports) and also provides Rapid Response Services for dislocated workers by certifying eligible persons for JTPA and providing job search assistance. TEC allocates 318 full-time em ployees to JTPA programs and contracts with numerous local JTPA programs. 6~

DHS administers the Job Opportunity and Basic Skills (JOBS) program as part of the Family Support Act of 1988. The program assists AFDC recipients to obtain full-time, non-subsid ized jobs that pay above minimum wage. DHS also administers a similar program for food stamp recipients the Food Stamp Employment and Training (FSE&T) program. DHS contracts the job placement component of FSE&T to TEC and some education-related components to the Texas Education Agency (TEA). The federal government requires DHS to administer these programs, but allows the agency to contract for services. Although DHS contracts these services, the agency still allocates time and staff to development of the pr ogram and assessing the clients. DHS determines the job readiness and training needs of JOBS clients and refers them to TEA, TEC and the JTPA program for education, job search or training, respectively.

TEA administers the Adult Basic Education, the GED and the Adult Apprenticeship programs. TEA is also responsible for educating inmates through the Windham School System and for educating parolees.

TEA enforces the Texas Proprietary School Act, Texas Driver and Traffic Education Act and administers the c ontract with the U.S. Department of Veterans Affairs. The Texas Proprietary School Program licenses and regulates private schools offering training in cosmetology, electronics, truck driving, court reporting and plumbing.

Finally, the Texas Department on Aging (DOA) operates STEP and contracts with the Farmers Union Community Development Association to train older workers.

The degree of interagency contracting among these agencies illustrates the degree of interdependency among agencies and programs in this area. Part of the JOBS program administered by DHS is currently contracted to TEC. TEC contracts with TDOC to provide certain JTPA programs. These programs often duplicate efforts by using separate case managers and separate means of assessing client needs. The current system is confusing for businesses that need well-trained workers and for workers seeking assistance to make informed decisions about available employment possibilities. 7~

For example, JTPA also provides job training assistance to JOBS participants and other disadvantaged workers. Approximately 19 percent of JTPA clients are also JOBS clients. 8~ It also provides funding for the Texas Older Workers Programs that serve economically disadvantaged older individuals.

Multiple research efforts on the work force also exist among these agencies. TEC develops and analyzes labor market information and related data to assess labor force characteristics. TEA will spend approximately $2 million this biennium for the Quality Wo rk Force Planning progr am, an interagency effort by TDOC, TEA and the Texas Higher Education Coordinating Board to provide technical assistance and leadership for the improvement of vocational education. However, these committees have made little impact on vocational education c ourses. Schools continue to teach classes, such as homemaking and vocational agriculture, which do little to prepare students for the current demands of the work-place.

The Quality Work Force planning program creates local committees which analyze the labor market, using information provided by TEC s State Occupational Information Coordinating Council. However, school districts do not have to use the information provided by the local committees, and the committees jobs lists often include low-skill, low-w age jobs. Furthermore, local JTPA programs also develop labor market information, which also duplicates the data-gathering function.

Additionally, high school and post-secondary vocational education programs, administered by TEA, and the Vocational Rehabi litation Commission, which serve the disabled, are also involved in work force training. The size and specialization of these programs requires additional study to determine the feasibility of including them in a consolidation effort.

Finally, there are six state advisory committees organized for the purpose of work force development: the State Job Training Coordinating Council; the Texas Employment Commission Advisory Council; the Texas Council on Vocational Education; the Apprenticesh ip Training Advisory Committee; the Texas Literacy Council, and the Texas State Occupational Information Coordinating Committee. 9~ Supplementing the state committees are many advisory committees organized at the local level. They include 24 Quality Work Force Planning Committees, 35 Private Industry Councils, 25 Tech-Prep Consortia and 68 Job Services Employer s Councils. 10~


Recommendations
A. The Legislature should consolidate the following economic and work force development programs into a new agency, the Texas Commissio n on Commerce and Labor, encompassing all functions currently performed by the Texas Department of Commerce and the Texas Employment Commission and a portion of the relevant programs administered by the Texas Education Agency. The current dedication of the hotel/motel tax would transfer to the new agency.

The new agency should be responsible for economic and work force policy development and strategic planning, labor market analysis, employment services, job training, unemployment insurance and related fu nctions. The agency should integrate systems, where appropriate, between higher education, elementary and secondary education and health and human services. The agency should be administered by three commissioners appointed by the governor with an executiv e administrator hired by the governor. The Texas Department of Commerce Board should be retained in an advisory capacity to the new agency following guidelines for advisory boards found elsewhere in this report. The new agency should include the following programs currently located in other agencies:

Current Agency Program

Texas Department of Commerce All economic development programs
Job Training Partnership Act programs
Trade Act Programs
Texas Literacy Council
Work Force Development Incentive Training Program

Texas Employment Commission Employment Services
Unemployment Insurance Programs
State Occupational Information Coordination Council (SOICC)
Project Rio
Communities in Schools

Texas Education Agency Proprietary Schools
Adult Basic Education
Apprenticeship Programs
Veterans Education

B. To the extent permitted by federal law, the Legislature should combine the advisory councils of these programs, including the State Job Training Coordinating Council, into one council.

The council should have the same composition as the State Job Training Coordinating Council under the Job Training Partnership Act. Its mission should be expanded to include the other advisory councils missions.

C. The Legislature should mandate that the Commission on Commerce and Labor develop an integrated economic and work force development policy for Texas.

The new agency should have the authority to develop a statewide work force development policy and should be held accountable for its implementation. This policy should include a course of action that will improve the skills of the Texas work force; create , develop and locate employment opportunities for unemployed Texans; assist Texans with special needs to receive education, training and employment services; improve the state s economy; improve the quality of adult education and job training.

D. The Legislature should mandate that the Commission on Commerce and Labor combine literacy and adult basic education programs into one program during fiscal 1994.

To prevent duplication of services, the Adult Basic Education program, now at the Texas Education Agency, and the Texas Literacy Council, now at the Texas Department of Commerce, should be merged, when moved, into the new agency.

E. The Legislature should mandate that the Commission on Commerce and Labor make recommendations to the 74th Legislature concerning any necessary changes in the structure of local councils involving programs under the purview of the new agency.

The agency should solicit input at the local level to develop any proposed changes and should hold public hearings concerning any recommendations.

F. The Legislature should discontinue the appropriation to the Quality Work Force Planning Committees, and the funds should revert to the General Revenue Fund rather than to the vocational education appropriation.

This function duplicates the local labor market information component of Job Training Partnership Act Program (JTPA) programs. Additionally, the State Occupational Information Coordinating Council provides regional occupational information. Other recommen dations in this report address the quality of vocational education courses.

G. The Legislature should mandate that the Texas Department of Human Services (DHS) reque st a waiver from the federal government to transfer the administration of the Job Opportunity and Basic Skills (JOBS) and Food Stamp Employment and Training programs to the new commerce and labor agency.

Federal law requires the Title IV-A agency, DHS, to administer these programs. A waiver would allow these programs to be administered by the new agency.


Implications
Combining economic and work force development programs into a single agency would enable Texas to develop and execute an integrated, com prehensive economic and work force development policy. It would also underscore the importance of the state s work force as the key competitive weapon of the next century.

The change would result in ongoing administrative savings and less duplication of effort once the transfers were fully completed.


Fiscal Impact
The consolidation of the TEA adult education and proprietary school programs and the elimination of the Quality Work Force Planning program is estimated to save $2.2 million and reduce staff b y ten employees. The consolidation of TDOC is estimated to save central administrative, financial, personnel, operating and support expenses of $2.3 million annually and reduce staff by 50 employees, or 50 percent of TDOC s current overhead budget.

Moving costs are estimated at $300,000. The benefits from the recommendations assume the transitions could be made by September 1, 1994.

Savings to Net Savings to
Fiscal the General Administrative the General Change
Year Revenue Fund Costs Revenue Fund in FTEs

1994 $4,490,000 $300,000 $4,190,000 -60
1995 4,490,000 0 4,490,000 -60
1996 4,490,000 0 4,490,000 -60
1997 4,490,000 0 4,490,000 -60
1998 4,490,000 0 4,490,000 -60



Endnotes
1 Senate Committee on State Affairs, A Quality Work Force: The Premier Chip In A High-Stakes Game (November 1992), p. 1.
2 Ibid.
3 Ibid.
4 Ibid.
5 Comptroller of Public Accounts, Breaking The Mold: New Ways To Govern Texas, Volume 2, Part II (July 1991), p. GG 98.
6 Ibid.
7 Senate Committee on State Affairs, A Quality Work Force, p. 32.
8 Ibid. , p. 57.
9 Ibid. , p. 24.
10 Ibid.