Transfers the workforce development council from the department of labor and industrial relations to the department of business, economic development, and tourism for administrative purposes.

A BILL FOR AN ACT

SECTION 1. The legislature finds that despite the immense importance and critical interdependence of state-level economic and workforce development efforts, there is a lack of coordination and mutual understanding between these major programs and significant differences in their administrative structures. These problems hamper the State's ability to address the serious challenges of building a high-wage, highly skilled, and competitive economy.

The need to merge economic development and workforce development efforts stems from the changing role of workforce development. In the past, federal and state workforce programs were targeted towards specific client groups that found entry into the labor market difficult. This included populations of school dropouts, the disabled, welfare recipients, and other hard to hire groups. These groups are still important in workforce development. Currently, the main thrust of workforce development is undergoing a significant transformation from serving primarily client groups to the broader goal of supplying skilled and productive workers for businesses, especially for industries emerging as new economic drivers. This changing role has redirected workforce development from a social service orientation to an economic development orientation involving considerable collaboration with the business community. Moreover, as the baby boom generation enters retirement age the emerging critical issue for economic development is ensuring skilled labor replacement and growth to maintain a competitive growing economy. Each system maintains teams that deal with businesses, develop growth strategies, and generate research and policy recommendations without working within the scope of a single coordinated plan for economic and workforce development or drawing on the expertise and additional resources of one another.

A recent September 2005 study by the national Governors Association, Aligning State Workforce Development and Economic Development Initiatives, finds that organization consolidation can produce many benefits and lasting change that justify the effort, such as unified authority and its potential for ensuring more coordinated planning, implementation, and evaluation. In addition, the study found that consolidating agencies can break up dysfunctional bureaucracies and send strong signals about new directions and expectations.

Over the past decade a number of states have recognized the synergy of their workforce and economic development programs and integrated them under a single agency. Currently, Missouri, Oklahoma, Minnesota, Michigan, Idaho and Kansas have combined state level economic and workforce development efforts in one form or another. The December 19, 2005 final report of the Governor’s Economic Momentum Commission also recommends the merger of the workforce development programs of the Department of Labor and Industrial Relations with the economic development programs of the Department of Business, Economic Development and Tourism, with the latter department providing strategic oversight and coordination.

In a recent study by the National Center on Education and the Economy it was found that combining workforce and economic development efforts have a number of potential benefits including: consistency and alignment through one broadly defined, clear mission; greater resources under one roof that can be more flexibly and creatively applied; greater accountability by all staff ultimately answering to one organizational leader, and the potential for restructuring to institutionalize desired changes in attitudes, behavior, and outcomes that often motivate the effort and influence its success.

The purpose of this Act is to transfer key workforce development-related programs from the department of labor and industrial relations to the department of business, economic development, and tourism in order bring about more effective integration of state economic and workforce development efforts.

SECTION 2. Section 202-5, Hawaii Revised Statutes, is amended to read as follows:

"§202-5 Organizational relationships. The workforce development council is placed within the department of [labor and industrial relations] business, economic development, and tourism for administrative purposes and shall act in an advisory capacity to the governor."

SECTION 3. On July 1, 2007, the workforce development division and office of research and statistics in the department of labor and industrial relations, including rights, powers, functions, duties, and positions, shall be transferred to the department of business, economic development, and tourism.

SECTION 4. All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and such officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; and provided that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

An officer or employee of the State who does not have tenure and who may be transferred or appointed to a civil service position as a consequence of this Act shall become a civil service employee without the loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefits or privileges and without the necessity of examination; provided that such officer or employee possesses the minimum qualifications for the position to which transferred or appointed.

If an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the State with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the State as determined by the head of the department or the governor.

SECTION 5. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the department of labor and industrial relations relating to the functions transferred to the department of department of business, economic development, and tourism shall be transferred with the functions to which they relate.

SECTION 6. All rules, policies, procedures, guidelines, and other material adopted or developed by the agencies, divisions or offices transferred or placed for administrative purposes under this act, shall remain in full force and effect until amended or repealed by the department of business, economic development, and tourism, pursuant to chapter 91, Hawaii Revised Statutes.

SECTION 7. All deeds, leases, contracts, loans, agreements, permits, or other documents executed or entered into by or on behalf of the agencies, divisions or offices transferred or placed for administrative purposes under this act, shall remain in full force and effect.

SECTION 8. The department of business, economic development, and tourism with the cooperation and assistance of the workforce development council and the department of labor and industrial relations shall prepare an implementation plan for the reorganization of the State's economic development and workforce development programs transferred or placed for administrative purposes under this Act and shall submit a report to the legislature not later than twenty days prior to the convening of the 2007 regular session. The report shall include but not be limited to, the implementation plan, any recommendations for additional statutory amendments that may be necessary to fully effectuate the implementation plan and the purposes of this Act, and any proposed legislation containing recommended statutory amendments.

SECTION 9. If any part of this Act is found to be in conflict with federal requirements that are a prescribed condition for the allocation of federal funds to the State, the conflicting part of this Act is inoperative solely to the extent of the conflict and with respect to the agencies directly affected, and this finding does not affect the operation of the remainder of this Act in its application to the agencies concerned. The rules under this Act shall meet federal requirements that are a necessary condition to the receipt of federal funds by the State.

SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 11. This Act, upon its approval, shall take effect on July 1, 2007.