MEDC Training Funds Still Scarce

November 8, 2004
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The state’s fiscal crisis of the last three years has forced economic developers to leverage available funding for job-training grants.

The budget for the Michigan Economic Development Corp. job-training grants is about one-third of that from just four years ago, a period in which funding plunged from $31 million to the current $10 million as the state coped with its financial crisis.

As a result, the MEDC has altered the Economic Development Job Training program. It is working to steer funds more toward expanding companies that have the highest need. It also is directing training to firms locating new facilities in Michigan, and to multiple employers pooling workers who require similar training.

The agency’s goal is to leverage available resources and generate the greatest possible return on investment, said Valerie Hoag, the MEDC’s vice president of economic development and job training.

“We’ve had to prioritize a bit more than we used to,” Hoag said. “We’re doing as much as we possibly can with the resources we have.”

Since 1994, the MEDC has awarded more than $330.9 million in job-training grants that covered 70 percent of the cost for hundreds of employers to upgrade the skills of more than 561,000 existing and new employees.

In 1994, the agency awarded $39.9 million in grants that it says helped to train 68,000 workers.

The EDJT budget began sliding during the 1990s, falling from $40 million in the state’s 1994 fiscal year to $31 million in FY2001.

Then the economy slowed and the state’s finances went with it.

EDJT funding dipped to $26.5 million in FY2002, was slashed to $11.7 million in FY2003 and trimmed further to $10 million in FY2004. The state budgeted that same level for its fiscal year that began Oct. 1.

The result of the funding cuts has been a corresponding drop in the number of employers able to tap MEDC grant funds for worker training.

The number of workers benefiting from MEDC job-training grants has fallen from 68,157 in FY1994 to 17,199 in FY2004.

Given more than $3 billion cuts from the state budget in the last three fiscal years, “I feel fortunate to hang on to what we did get,” Hoag said.

In deciding which employers do receive grants, which are made directly to community colleges that organize and conduct training sessions, Hoag said MEDC emphasized high-skill, high-wage jobs and a high level of commitment from employers.

As it did last year, the MEDC in FY2005 will again look to direct grant funds to consortiums of employers seeking the same kind of training in areas such as lean manufacturing or quality control, she said.

“All employers are important. We just had to make some tough choices and prioritize what the needs are,” Hoag said.

The MEDC does not place a minimum or maximum limit on the number of employers or employees required within a training consortium to receive funding, Hoag said.

Employer consortiums last year ranged from as large as 912 workers in the Detroit area, which included several companies, to as small as 60 employees.    

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