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House Budget Updates

FY 11 CR - What It Means to the Local Workforce System

The details of the FY 11 funding agreement, HR 1473, to keep the government running for the rest of the fiscal year, were released early yesterday by Congressional Appropriators, detailing the $38 billion in cuts agreed to by the Administration and the Republican leadership. The bill is expected to be approved later this week.

The cuts to programs under the Labor-HHS and Education Appropriations Subcommittee were particularly large, $13 billion in total. This subcommittee includes funding for WIA programs. All three departments under the subcommittee's jurisdiction took significant funding cuts.

For WIA programs, there is relatively good news when compared to expectations earlier this year. As you recall, the House passed FY 11 CR bill, HR 1, proposed the elimination of all WIA formula funding and included cuts to job training programs totaling $3.6 billion. The Senate rejected these cuts to WIA in their original version of the FY 11 CR bill, leaving a wide gap to be negotiated between the chambers.

However, the final agreement included a much smaller reduction to WIA funding, a $307 million cut to WIA formula programs -- a 10% cut. This cut actually is $182 million reduction (6% cut) to WIA programs, as the agreement carves out of these cuts a new $125 million workforce innovation fund for which local workforce areas will be eligible to apply for funding.

The final agreement also significantly reduces the amount of WIA funds held at the state level, from 15% to 5% -- ensuring that the remaining WIA formula funds are directed down to the local level to the maximum extent possible.

One challenge for the local workforce system will be that these cuts to the WIA formula funds will be taken out of the first quarter PY 11 funding allocation beginning on July 1, leaving little wiggle room for local areas early in the program year.

However, there is good news in this agreement -- the Congress and the Administration reinforced that the local workforce system is the primary delivery mechanism for workforce funding. The agreement protected our locally delivered funding as best it could in an environment where $38 billion, the largest cuts in American history, needed to be made. This agreement reinforces the message received earlier in this funding debate from key White House sources -- we will need to expect cuts, but the Administration will not support the elimination of the WIA system.

Locally delivered WIA formula funding was also protected above a number of the key grant initiatives funded by the Department of Labor, which saw the elimination of their current funds for the career pathways RFP, PY 11 funding for both transitional jobs, green jobs, and career pathways eliminated, as well as a dramatic reduction in the pilot and demonstration funding.

Finally, the CR agreement includes a .2% reduction to be taken against all non-defense discretionary programs.

The Departments will be required to put together plans within thirty days to implement the components of this agreement.

While the fight over the CR is only the first step in a multi-act fight over government spending, the preservation of core WIA funding in this debate is an extremely important milestone. We greatly appreciate your help in continuing to make policy makers aware of the vital importance of our locally delivered workforce system in helping both employers and job seekers in the midst of our economic recovery.