Manufacturers fear state workforce bill could put $50M from feds at risk

The Indiana Manufacturers Association says it fears the state could lose out on upwards of $50 million in federal workforce development revenue if state lawmakers this week pass a proposed workforce development bill.

The bill approved by House and Senate leaders would ax the state’s existing State Workforce Innovation Council and replace it with the governor’s workforce cabinet—a smaller group that Gov. Eric Holcomb’s office feels would be more nimble in making needed changes to the state system.

But in order for the state to be assured of keeping its federal workforce funding, it needs federal approval that it hasn't yet received.

Sen. Doug Eckerty, R-Yorktown, told IBJ last week that the Holcomb administration had gotten the green light from the feds to recompose the new board, but Holcomb’s spokeswoman Stephanie Wilson told IBJ on Monday that it hadn’t yet received federal approval.

"We do not have a federal waiver at this point,” Wilson told IBJ in an email. "However, Gov. Holcomb and his team have been in communication with the federal Department of Labor and Secretary [Alexander] Acosta, and we believe our actions are in line with the secretary’s pledge to provide states flexibility to do what’s right.”

Wilson told IBJ the governor is “confident” the state will not lose its federal funding.

“We don’t think there’s any likelihood,” Wilson said, given the positive conversations the state has had with the DOL.

But the Indiana Manufacturers Association, which is urging legislators to vote against Senate Bill 50 when it comes up for a final vote Tuesday or Wednesday, believes the change could violate federal law and thus put federal funding at risk.

For one, the federal government requires the state to include legislators on their boards. In Senate Bill 50, legislators are not included in the new workforce cabinet.

The Legislature has limited time to make a final decision on the bill, as the legislative session ends for the year on Wednesday.

"The State Workforce Innovation Council (SWIC) will be replaced by a new Governor’s Workforce Cabinet, with fewer members and less employer representation,” according to a position paper from the manufacturers. "We see this as a step backwards for Indiana’s employer community."

The state receives $49.6 million from Title 1 of the federal Workforce Innovation Opportunity Act. It also receives another $22.7 million in Title II and Title III funds under the act, which some believe may also be at risk.

The Indiana Democratic Party pounced on the news, releasing a statement saying the governor has committed an “unforced error.”

"When you don’t have a vision, you build the airplane as you fly and things can get bumpy,” according to the statement from the party. "Apparently, for Governor Eric Holcomb, that means putting $49 million in federal funding at risk and alienating the industry group whose members generate nearly a third of Indiana’s GDP.”