Statement from Commissioner Paquette: Growing Medicaid Budget Forces Cuts That Prevent Mainers from Getting Trained for New Jobs Bookmark and Share

February 25, 2014

For Immediate Release: February 25, 2014 Contact: Julie Rabinowitz, 207-621-5009

AUGUSTA—Commissioner of Labor Jeanne Paquette has issued the following statement describing the effects of the growth of DHHS’s budget on the Department of Labor’s ability to assist the long term unemployed and the underemployed.

Growing Medicaid Budget Forces Cuts That Prevent Mainers from Getting Trained for New Jobs

Governor Paul R. LePage has said that because Maine already expanded welfare a decade ago, “Medicaid is now cannibalizing funding from all other state agencies.” This is particularly true in the Department of Labor, where loss of General Fund revenue has prevented many of our citizens from getting a hand up—not a handout—with a good job.

Many of DOL’s job training programs and other initiatives to help businesses hire skilled workers were once funded by General Fund revenue or a mix of state and federal funding. But state funds have been cut drastically, leaving DOL dependent on shrinking federal dollars—dollars that come with many restrictions.

Investments in job training targeted to high-wage, in-demand jobs provide a significant return; in general, trainees earn higher wages with better benefits than they did upon entering the program. The department’s programs are needed the most during economic downturns, yet our funding has declined, while demand for our services has increased.

The department has not been able to sustain a number of programs that help people transition from unemployment and welfare back into the workforce.

Forced by state funding cuts, DOL in 2007 and 2008 had to close almost half of its 22 CareerCenters, including sites in Rumford, Dover-Foxcroft, Ellsworth, Houlton, Belfast, Saco and Waterville, as well as satellite locations in Newcastle, South Paris and Madawaska. Little did the state realize how critical this decision would be just a few years later as these communities dealt with the recession.

These closures severely limited Maine’s ability to assist the unemployed, making job-search support and job-training services much harder to access.

Funding for another program, the Maine Enterprise Option, is gone. This program helped unemployment recipients start their own businesses by providing business management training. Running this program requires our staff to track and evaluate participants to ensure compliance with program requirements.

Between 2006 and 2012, 2,730 people were trained to start businesses, including web and graphic design, bookkeeping, restaurants, dog grooming and bed and breakfasts. But federal Workforce Investment Act funding for this program went away, and we have no state resources to fund it. So DOL stopped enrolling people in 2012.

The Department of Labor no longer upskills workers through the Governor’s Training Initiative, which was funded at a little more than $3 million in 2004, fell to $501,984 in 2010, then dropped to zero dollars in 2011.

Just this year, the Legislature swept $2.5 million from the Competitive Skills Scholarship Program fund to balance the budget. This fund, paid by employers through an offset to unemployment taxes, helps low-income individuals train for high-wage, in-demand jobs. That $2.5 million would have trained an additional 360 people in 2014.

Funding for the Maine Apprenticeship Program fell from a high of $622,907 in 2004 to $436,040 in 2013. In fact, current funding will not meet the needs of the existing sponsors/apprentices in our state. Focusing apprenticeship expansion efforts in Maine’s high-growth, high-wage industry sectors—healthcare, energy and precision manufacturing, for example—could increase training opportunities for unemployed or underemployed adults and teens. Apprentices earn while they learn; therefore, these people could be earning wages instead of collecting benefits.

There are other programs that DOL cannot implement due to a lack of state funding. These are programs that would help develop Maine’s economy by creating a pipeline of skilled workers—something businesses look for when deciding to locate in a state or region.

  • The department could offer a subsidized wage program to wean people off unemployment while allowing them to receive on-the-job training in a new career or with a new employer.

  • The department could conduct an annual job vacancy survey of employers. This would provide real-time data to ensure that our scarce training resources are invested in skills and occupations that employers are actually looking for and hiring.

  • The state could implement the industry partnership program for workforce development—a program included in last year’s budget by the legislature but not funded. Industry partnerships have been effective in other states to leverage private-sector support to develop industry-specific training. Maine’s recent healthcare sector grant showed that we have the ability to do this and our people and our businesses can reap huge rewards from implementing this collaborative training model.

It’s the same refrain. No money for training. But training is an investment with a return—better jobs with benefits, higher wages and a career ladder for future promotions, economic growth and a brighter future for our children.

Sadly, Maine has to forego this investment to feed the beast that is DHHS. The department has utilized best practices and streamlined where ever possible—doing more with less.

But if Medicaid expansion continues to absorb a greater portion of the state’s General Fund dollars, departments like Labor will ultimately be doing “less with less”—the opposite of the best interests of unemployed and underemployed Maine citizens.

Commissioner Jeanne S. Paquette brings more than 20 years’ experience in human resources and workforce development to the Department of Labor. She is a member of the Society for Human Resource Management Maine State Council’s HR Hall of Fame.

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