Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committees on Economic Development and Labor, to which was referred S.B. No. 837 entitled:

beg leave to report as follows:

The purpose of this measure is to establish a workforce development strategic planning committee comprised of members representing private sector technology industries to:

Your Committees received testimony supporting this measure from the Department of Business, Economic Development, and Tourism and the University of Hawaii.

Your Committees find that the Inventory of Workforce Development Programs Report to the Governor, 2003 (Report), stated the following:

Unfortunately, your Committees further find that agencies providing workforce training in Hawaii’s workforce development programs do not compile data on which programs are successful in placing workers in higher-paying jobs or whether they are providing training in areas of high demand. State agencies appear to meet accountability requirements for the funding allocation, but cannot identify the value produced by the expenditures within the workforce. The Report further states that it identifies service gaps in the State but no documentation exists on whether that gap needs to be filled or not.

The Workforce Development Act of 1998 (WIA), implemented in 2002, succeeded the Job Training Partnership Act. The funds are annually appropriated by the United States Congress, distributed to the states, and then allocated to the counties by the formula mandated in statute. Workforce development programs receive over $100 million from various federal and state sources. The federal government contributes almost $85 million of which $50 million (in the two years of the program) is WIA funds. The total amount of $100 million is allocated into five state departments (the Departments of Business, Economic Development, and Tourism, Education, Human Services, Labor and Industrial Relations, and Public Safety) and the University of Hawaii, encompassing twenty-five programs in Hawaii.

Your Committees also find that the Department of Business, Economic Development, and Tourism receives $630,000 for public housing residents self-sufficiency programs. The Department of Education receives $10.25 million for School-to-Work, Adult and Vocational Education, and the Department of Human Services receives money for Food Stamp Employment and Training and First-to-Work.

The Department of Labor and Industrial Relations receives the most money, approximately $40 million, for a diversified program that includes job seekers, low income over age fifty-five, apprentices over age sixteen, incumbent workers, and immigrant and refugee programs. The Department of Public Safety receives just over $200,000 for Vocational Education for Offenders.

In spite of the State of Hawaii's ongoing expenditures, Hawaii lags behind other jurisdictions in workforce skill levels, which is cited as one reason that companies are hesitant to locate here. According to the Honolulu Benchmark Report, October 2001, Honolulu has more than twice as many workers at the bottom of the Workforce Skill Mix as at the high end (44 per cent low and 18.5 per cent high). This gap between high-end and low-end jobs is significantly higher in Honolulu than in all but one of the ten equivalent-sized cities. The gap between low-end and medium is 44 per cent and 37.5 per cent, respectively. That makes it difficult for companies in high demand industries to feel confident they can find a competitive pool of highly skilled workers here. Your Committees find that it is time to refocus the State's spending patterns so that the State invests in programs that meet the needs of incoming and resident businesses, and train workers accordingly.

Within our community are several initiatives that demonstrate real promise in a workforce development context. One outstanding example is the Community Entrepreneur Foundation, which is a consortium of public school students integrating academic content areas directly within their business ventures. For example, Waianae High School's Digital Media and Production Center trains students in telecommunications and add to their resumes by being paid to produce corporate videos. Leilehua High School has four Vocational Education Academies: Culinary Arts Academy's work-based learning and post-secondary placement in the restaurant industry; Tech Threads, for digital embroidery along with marketing and advertising skills; Tech Images, teaching graphic technology as a hands-on business opportunity; and Cinema Tech for all areas of television production while offering multimedia production capabilities.

Each of these academies offers services for pay, comparable to real work experience. They produce brochures and plan marketing campaigns and produce professional quality documents. These groups function on little or no money, but on a belief that proper training is essential to success. More importantly, they can track student placements and document where they succeed and where they can make improvements. The schools work with the business community to find out what businesses' needs are; and then work with business to deliver appropriate training.

Another well-tested initiative is Business and Youth Working Together, a business mentoring project of the Workforce Development Council (Council), that serves 400 students every summer in state-wide projects in many fields, including construction, welding, carpet-laying. The students begin a job and follow it through to the end so that they learn how all the different aspects fit together. At present, volunteers do it all, and they desperately need a statewide coordinator position. Funding for this position--$85,000 for a coordinator and related expenses-–is included in Senate Bill. No. 1425. A nonprofit corporation, High-Tech Quest, places 100-150 students into Oahu's tech companies. In spite of all the money poured into workforce development, currently, there is no clearinghouse for what is available so that businesses can project future needs and workers can get the necessary information on how to improve their skills in areas that will offer future job possibilities.

Your Committees believe that there are probably many other examples of "best practices" initiatives. These may not currently have as broad a reach as is needed. State workforce training programs reach a wider audience but do not measure placement results at present. Ultimately, workers should be able to find the best training available, and employers should be assured there will be highly skilled workers for their needs. This measure provides a process to align performance targets of the various workforce development initiatives in the State. Your Committees believe that, with this approach, Hawaii can leverage its existing resources and energies to produce more direct results in upgrading Hawaii workforce skills.

Your Committees have amended this measure by:

As affirmed by the records of votes of the members of your Committees on Economic Development and Labor that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 837, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 837, S.D. 1, and be placed on the calendar for Third Reading.