Gaining Ground

Work Force Development


Texas spends $1.5 billion a year in state and federal funds to develop the work force of the future. There are more than 9,000 state employees administering 30 separate work force development, job training and employment-related programs overseen by 14 different state agencies, plus the Governor's office. Another 16,000 Texans are employed in similar programs under the direction of almost 800 other public or private agencies. A flow chart of how all these different programs co-exist would resemble the schematic of a Space Shuttle computer.

Despite all that money and all those people, there's no abundance of evidence that the programs actually work -- or that their graduates do, either, at least in the fields for which they're trained.

There are plenty of examples of how our work force development efforts are falling short, however. In Dallas, only 62 percent of the students enrolled in one Dallas-based job training program for office workers have found jobs. Another program, designed to retrain laid-off defense workers for sales jobs, has placed fewer than two-thirds of its graduates. Still another with the goal of taking women off the welfare rolls through job training has found employment for just 27 of the 41 participants required as a minimum to keep receiving its $357,000 in federal funds.

What's more, performance reports for the federal Job Training Partnership Act (JTPA) in Texas reveal that in one program (Title II-A) serving disadvantaged Texans, many of whom have never before worked, only three out of 10 participants completed the program and found jobs. Another JTPA effort, this one aimed at workers who have lost their jobs because of defense cutbacks or base closings, led to retraining and jobs for only four out of 10 participants.

In 1992, the latest year for which figures are available, almost 16,000 Texans had enrolled in cosmetology classes in state colleges and technical schools, high school vocational education courses and private training institutes. Yet, fewer than half the publicly funded community college cosmetology programs met the minimum standards set by the Texas Higher Education Coordinating Board.

Even those who complete the best training programs don't necessarily find the jobs they're looking for. It costs the state about $3,860 to train each cosmetologist in community college programs, for example, and graduates can expect to earn an average annual salary of $12,340. Texas licenses 11,000 cosmetologists each year -- although there are only about 830 new non-selfemployed job openings annually in that field.

There's another problem. The Texas Guaranteed Student Loan Corporation administers the state's largest financial assistance program for students. This year, the corporation has guaranteed more than $1 billion in loans, a major source of funding for Texans attending community colleges and proprietary schools. But a cursory glance at the student loan default rates among Texans attending cosmetology schools, for example, shows that they're unacceptably high. In Austin, 54 percent of the students at one school have defaulted, leaving behind a $1.2 million tab. In Beaumont, the default rate is 67 percent at another school, for a total of $250,000. In El Paso? Two-thirds of the students at a certain beauty college, for almost $530,000 in debt. San Antonio? Sixty-nine percent, or $315,000. Abilene? Sixty percent, or more than $500,000.

One cosmetology school in Wichita Falls reports that fully 100 percent of its students have defaulted on their loans, although the total tab of $2,500 suggests that its enrollment may have been a bit thin to begin with.

But cosmetology or hair design aren't the only programs for which taxpayers are getting clipped. Nearly half the students in a Dallas trades institute have defaulted on their loans, sticking taxpayers with more than $13 million. An Austin career center shows a 92 percent default rate, or close to $1.2 million this year. A technical school in Brownsville has seen 45 percent of its students default on their loans, leaving an outstanding bill of nearly $7 million. In Corpus Christi, a technical training school reports an 82 percent default rate, for almost $1.4 million. Another of the chain's locations, this one in Texas City, has lost $2.4 million as a result of its 90 percent default rate. The chain's Houston school has an 80 percent default rate, for a total of $6 million in debt. Also in Houston, $3.5 million has been rung up at a different institute, where 78 percent of the students studying to be chauffeurs have walked away from their loans.

There are many ways to look at these figures. But one inescapable conclusion remains: A high percentage of the Texans who attend training or technical schools fail to repay the money they borrow. More than likely, they've been unable to land the kinds of jobs that pay well enough to enable them to make good on their debts. And no one in state government has been willing or able to advise these students about which programs are successful and which are a bad investment of their time and borrowed money.

What's more, there's no state agency in Texas that has work force development as its primary goal. TEA focuses on public schools from kindergarten through 12th grade, emphasizing academic achievement rather than job preparation. The Texas Higher Education Coordinating Board devotes most of its energies to senior colleges and universities, paying little attention to vocational or technical programs. The Department of Human Services is concerned mainly with welfare eligibility, not helping recipients find work. The Texas Department of Commerce, the Texas Employment Commission and the Texas Council on Workforce and Economic Competitiveness all oversee programs related to employment opportunities. These and other groups offer a virtual alphabet soup of programs.

But as we underscored in Forces of Change, the future prosperity of Texas depends as never before on the quality of its work force. Small business owners and corporate executives alike agree that their economic prospects are tied to how well their employees have learned relevant skills. Workers in the coming years will increasingly be asked to take on the responsibilities associated with full business partners. They'll be expected to identify problems and solve them, measure poor performance and make adjustments for it, seize the initiative in their relationships with customers and quickly develop new products or services to meet the changing demands of the market.

One of the most obvious changes noted by working Texans in the future will be the sheer volume of training they'll need just to keep current in their careers, let alone enter the work force for the first time or climb the ladder after years of experience. Everyone who will make up the Texas work force by the turn of the century has already been born. Most have completed their primary schooling, some are in high school or college, and others are trying to make the school-to-work transition at this very moment.

A disconnected network of training programs has sprung up through the years to meet these challenges -- without much success. It's driven by unrelated educational, social and economic development goals instead of an overall vision of human resources and their value. Texas companies will hire nearly 300,000 new workers this year, but many of them won't be able to read, write or count well enough to hold their entry-level jobs. And the cost to businesses of providing remedial education and training will be billions -- for as many years as it takes to bring them up to speed.

A centerpiece of Gaining Ground is a series of recommendations targeting the state's work force development needs. The problem isn't a lack of re-sources, but a lack of focus. We believe the following proposals will help Texas retool its education, training and retraining efforts.

Cutting the bureaucracy with a single work force agency. Since 1990, Texas has created more jobs than any other state, and the outlook for more new employment is among the most positive in the nation. Many observers agree that we owe our recent success to our strategic geography as a gateway to the markets of the Southwest U.S. and across the Mexican border to our Latin American neighbors; others credit our skilled work force. All are correct.

That doesn't mean we can take our future economic vitality for granted, though. The demands of the workplace are changing so rapidly that Texans with minimum schooling and inadequate or out-of-date skills are finding the doors to better jobs closed. They're not only recent high school graduates or dropouts, either. Many older Texans with years of job experience are simply not equipped to compete in the emerging workplace.

TPR has identified five major hurdles to our development of a high-skill, high-wage work force for the future:

TPR recommends that the Legislature form a Department of Work Force and Economic Competitiveness to reduce the scattered bureaucracy that has grown up around current work force programs, and to coordinate the state's future work force development efforts.

The new agency should be responsible for strategic planning, budgeting, meeting federal reporting requirements and developing policy. It should efficiently manage the mix of training dollars available in Texas, with increased emphasis on customized training for job openings that actually exist. It should also create a system for sharing labor market information, designating priority occupations and collecting follow-up data on graduates from vocational and technical programs.

Most important, the new agency should focus solely on the true customers -- Texans seeking training and employers seeking a single, efficient source to deal with their training needs.

We're not Pollyana-ish enough to pretend that these recommendations will be enthusiastically embraced by the directors of Texas' scattered work force training programs. They will argue against creating a "mega agency." But the waste, duplication and lack of accountability that characterize a bureaucracy already exists in the current system. It's just camouflaged across 14 different state agencies.

In fact, consolidation would result in fewer em-ployees centralized in Austin, and an overall reduction in administrative overhead that would more than cover the costs of merging the state's work force programs. The long-term savings, though difficult to estimate, would also be substantial. And as employment and job-training efforts are streamlined into one-stop centers, customer service will be improved and accountability enhanced.

Helping colleges fill industry's needs. State and local governments have traditionally offered tax abatements, infrastructure improvements or free land to attract new industry to their areas or encourage existing companies to expand. But a well-trained work force may now be the single most important incentive.

We've already seen that all the job training or vocational education courses in the world won't make much difference if they don't ensure their graduates jobs. Neither will supply-side programs operating under the assumption that as long as workers are trained in an occupation -- any occupation -- the jobs will follow, much less demand-side approaches whose goal is to train Texans for the current needs of local employers and no more.

Increasingly, public funds for technical education programs carry performance criteria that include job placement standards and ways to measure whether participants earn better wages. In fact, the Smart Jobs Fund, created by lawmakers in 1993, helps pay the customized training costs of employers who create high-wage jobs.

A number of community colleges, technical schools and training institutes in Texas have begun to meet the challenge as well. At the request of local petrochemical companies, the College of the Mainland in Texas City created customized courses to help supply qualified technicians. The Center for Business and Industry Training on the campus of Brazosport College has trained more than 10,000 young men and women for Lake Jackson-area industries. Chrysler Technologies Airborne System in Waco obtained a grant from the Smart Jobs Fund to provide additional training for company electricians. None has accomplished more, however, than the Texas State Technical College (TSTC).

TSTC. Founded in 1965 on state-donated land at Waco's deactivated James Connally Air Force Base, TSTC has since opened campuses in three other cities and a number of extension centers around the state. And the school has moved beyond strictly providing vocational education to non-college bound students. More than 40 percent of those currently enrolled at the Waco campus have previous college experience and are now mastering skills in specific industries.

Funding for TSTC differs from that of most public colleges. There's no local tax base, for example, so the school depends on private donations and state dollars. For fiscal 1994, TSTC was budgeted $48 million in state general revenue; another $6 million came from private and other support.

The evidence is that it's money well-spent. TSTC has demonstrated an ability to quickly adapt curricula to meet the changing demands of the Texas job market. For example, when the housing industry slumped in the 1980s, the school cut back on its building trades and construction courses. It then added an aquaculture technology program to help the state compete with others in fish farming, one of the fastest growing agricultural industries in the country.

Each TSTC technology program boasts its own advisory committee made up of a cross section of business experts who constantly update and upgrade the school's courses to accommodate work force needs. It's the first school in the nation to offer laser electro-optics technology instruction for use in the medical field, and has developed aerospace, hydraulics and other high-tech courses to train its students for well-paying jobs. Its lab equipment is so advanced that researchers from Rice and Baylor often vie for its use.

Today, the college is developing "teaching factories" to help small manufacturing companies map strategic plans, speed up their technology and expand their markets. The facilities are also intended to match businesses with experts and retired practitioners who can offer insights to the obstacles and market barriers they once had to overcome -- all of it designed to give Texas industries an edge in the economic competition of the future.

TPR recommends that the state's new Department of Work Force and Economic Competitiveness, proposed above, be directed to investigate and report on any regulatory barriers that prevent community and technical colleges from responding to industry's training needs. Colleges should enjoy the flexibility to act quickly when they receive requests for customized training. They should not be overburdened by extensive record-keeping that raises administrative costs or state regulations that discourage efficiency by allowing them to recover only their costs of instruction.

The potential for future customized training contracts with area industries should give community and technical colleges incentives to offer useful courses -- real training for real jobs. To make sure that taxpayers don't simply subsidize training that employers already provide, reimbursements should be based on criteria similar to that of the Smart Jobs Fund, including both growth in job openings and in earned wages.

Community and technical colleges should also be permitted to redirect their customized training revenue to technical programs, enabling them to purchase and maintain equipment, attract new business contracts and offer their students the highest quality education. And the new work force agency should help the Texas Higher Education Coordinating Board streamline the process for approving new degree programs.

Creating a Skills Development Fund. In addition, the Legislature should create a Skills Development Fund, which would serve as a source of startup and emergency money for community and technical colleges that offer training programs.

Access to the pool of funds should be competitive and subject to strict guidelines. Preference should go to colleges that lack resources for facilities and equipment but that demonstrate community, business and trade union support. For example, if a college collects 50 percent of its equipment costs from private sources or local funds, it should be able to request a matching grant from the state.

Statewide efforts in the past have tended to focus on large corporations, neglecting the positive influence of small business on local communities. The creation of business networks is one way to shift that focus. These networks should encourage companies to learn production techniques from one another, pool their training and purchasing resources and bid as one on projects none of them could win individually.

Finally, neither this nor the other recommendations in this section are intended to supplant existing technical education programs. They are offered instead as complementary efforts that can help all Texas community and technical colleges become more effective, efficient and responsive to the needs of their business taxpayers.

Establishing a Smart Jobs "Rainy Day" account. In 1993, lawmakers created the Smart Jobs program, a customized job-training project administered by the Texas Department of Commerce. The program encourages companies to offer their workers training for better paying jobs and to hire and train new employees for certain high-wage work.

To pay for Smart Jobs, the Legislature created a holding fund into which one-tenth of 1 percent of Texas' total taxable wages is deposited. When the holding fund exceeds the minimum balance set by lawmakers, the money becomes available for Smart Jobs. When the holding fund falls below its minimum balance, as it did in fiscal 1994, Smart Jobs receives no new revenue.

The Legislature should strengthen this inherent weakness by establishing a permanent "rainy-day" account within the Smart Jobs fund to ensure that money is available precisely when it's needed most.

Providing Truth-in-Lending for student loans. There's an old Texas adage: No one ever got cut on the corners of a square deal. What many young Texans encounter when applying for student loans, however, is something else -- confusing, conflicting or impractical information as they try to plan their futures.

The Texas Guaranteed Student Loan Corporation was established in 1979 to administer federal higher education loan programs throughout the state. As of the first of this year, about one-quarter of its guaranteed loans were in default, an amount that exceeded $543 million.

These numbers don't necessarily indicate poor performance by schools. They do, however, strongly suggest that many students fail to complete their train-ing or, worse, can't find jobs once they graduate. Moreover, up to 30 percent of proprietary schools in Texas go out of business each year. All purport to depend on their reading of the potential labor market for their continued existence, but a large percentage of them suffer fatal troubles while forecasting the future demand for their services.

Beginning in the next fiscal year, Texas will have to pay the federal government a substantial fee for every school with a default rate of more than 20 percent. Clearly, Texas has a new incentive to actively oversee the accreditation and licensing of public and private post-secondary institutions. The state share of student loan default rates may amount to $3 million during the first year alone.

TPR recommends that the Legislature establish a "Truth-in-Lending" provision in all student loans guaranteed by the Texas Guaranteed Student Loan Corporation. This would provide students with the comparative information they need on the performance of the schools they wish to attend, from default rates to graduation rates to job placement rates. As better-educated consumers, Texas students could select schools that seem more likely to fit their needs -- and the costs to state and federal taxpayers would decline.

Measuring vocational education's success. During the 1992-93 school year, more than half-a-million Texas students -- 38 percent of all 7th through 12th grade enrollment -- took at least one vocational education class.

So how well do we judge the success of these programs and hold them accountable to their students and the taxpayers who fund them? Not well at all.

Part of the current accountability system, the Academic Excellence Indicator System, or AEIS, uses TAAS scores and dropout rates to measure school district performance. New tests have been developed and are due to be phased in shortly, but the state still lacks any effective means to find out which vocational education programs are effective and which aren't.

TPR suggests that the State Board of Education add a vocational performance indicator to its AEIS. With the numbers of young Texans enrolled in vocational training expected to grow, it only makes sense to set up a way of determining whether they are being well-served in the classes they attend.

The Legislature should also require that all state community and technical colleges participate in the Texas Student Information System or conduct follow-up studies of their graduates to provide accurate information on their performance.

Raising Texas literacy rates. Six million Texas have trouble calculating their household bills, discerning poison warnings on pesticide cans or reading bus schedules. They can't complete an employment form, figure out if their paycheck is correct, help their children with homework or read the news of the day on the front page of the local paper. They couldn't compete in the global marketplace if their livelihood depended on it -- but increasingly it does.

Telecommunications offers a potential tool to reach a large, diverse population. TPR proposes that the Texas Center for Adult Literacy and Learning (TCALL) encourage television cable companies to broadcast literacy programs and provide literacy tapes for distribution to public school districts. In addition, TCALL should explore the possibility of becoming one of the Ford Foundation's Adult Literacy Media demonstration projects.

All public universities with approved teacher education programs should be encouraged to include English tutoring for adults as part of their teacher preparation curricula. And a program should be established among state employees, who are often Texas' most eager volunteers, to conduct literacy classes in targeted areas.

Providing supported employment for Texans with disabilities. Fifteen percent of all Texans have a physical or mental disability. These conditions, affecting some 2.5 million men and women, range from mild to total debilitation and include physical handicaps, mental illness and mental retardation. As many as 80 percent of these Texans could go to work if the barriers to their participation in the job market were removed.

Telecommunications is already opening up a whole new realm of opportunities for people with disabilities, doing away with obstacles of distance and architecture. And because four of every 10 disabled Texans never make it out of high school, it makes sense to help them further their academic credentials. With training, many could find satisfying work, pay taxes and make other vital contributions to the state economy.

In early 1994, the Comptroller sponsored a Supported Employment Summit, bringing together representatives of clients and their family members, advocacy groups, other state agencies, service providers and potential employers. The participants developed a plan to help Texans with disabilities find jobs without subsidies, and give them the ability to make independent choices about their careers.

But a great deal more must be done. Vocational funds should be redirected by state agencies with the goal of increasing the number of persons with disabilities working in integrated settings by 50 percent through the year 2000. The Texas Rehabilitation Commission should train counselors in the use of work incentives and review cases to ensure that all individuals eligible for Supplemental Security Income (SSI) receive the federal funds.

In addition, TPR recommends that the Texas Committee on Purchases of Products and Services of Blind and Severely Disabled Persons revamp the administration of its program.

Funding JOBS for teens. The federal Family Support Act of 1988 created the Job Opportunities and Basic Skills program, or JOBS, to help certain public assistance recipients become economically self-sufficient. States were asked to design their own projects to provide education and training, with an eye toward young parents and other potential welfare clients, especially teenage mothers and their children.

In Texas, the challenge is particularly tough. Nearly 92,000 public school students between the ages of 12 and 22 are eligible for AFDC. The state's AFDC roles include some 37,000 teen mothers, many of whom don't attend school regularly because they lack child care or transportation, or because they have unstable housing arrangements or live in dangerous neighborhoods.

Yet, in 1993, Texas left nearly $11 million in JOBS funds sitting on the table in Washington, and that amount is projected to almost triple by 1995.

TPR recommends that the JOBS program be expanded to offer local school districts incentives to step up their support services for teen parents and others at risk of dropping out. School-age welfare recipients and potential adult clients should be identified, trained and given an equal opportunity to join the work force.

No additional spending would be required. The new Department of Work Force and Economic Competitiveness, proposed above, should be directed to pursue the federal funds currently available but unused to pay for the effort -- a gain of $74 million for local school districts over the next five years.

Educate Texas: Lifting Texans up from welfare. For Texans on public assistance, a principal barrier to finding work is often their lack of education. Fifty-two percent of heads of households who receive Aid to Families with Dependent Children (AFDC), for example, have no high school diploma, a minimum requirement for most jobs.

There are many programs in Texas to provide basic education for adults. DHS and TEA administer adult classes for certain federal welfare recipients. At least 600 public school districts and community colleges offer adult education programs, including classes in basic English, computer training and General Education Development (GED) preparation. More than 80 school districts provide child care facilities for student parents or labs for students enrolled in child development classes.

Most of these efforts employ a variety of innovative methods to find funding. In El Paso, for example, the school district's adult education program is housed in an entire elementary school building, and the district scours its budget to free up much of the cost for custodians, utilities, furniture and equipment. But this in-kind support isn't counted toward total state spending on adult basic education, so it doesn't draw down matching federal funds that could help provide the services to even more needy Texans.

TPR urges the Legislature to form Educate Texas, a statewide system of adult learning labs for AFDC recipients. Educate Texas should be a cooperative effort of TEA, the Higher Education Coordinating Board and the new Department of Work Force and Economic Competitiveness, working with local school districts and community colleges, to create on-site adult learning labs and child care facilities. Without costing state taxpayers more, Educate Texas would enable thousands of AFDC clients to receive basic emergency education, from GED preparation to parent training to job-interview skills.

This recommendation would allow money already being spent by state and local schools and colleges to qualify for additional federal funding. It would also free up money currently earmarked for the JOBS program described above and allow the state to redirect it to job training and employment services. Local schools and colleges would receive a total of more than $52 million in additional federal funds over the next five years to expand their efforts to lift Texans off the welfare rolls through basic education.