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Toward Order From Chaos: State Efforts to Reform Workforce Development Systems (MDS-1249)

W. N. Grubb, N. Badway, D. Bell, B. Chi, C. King, J. Herr, H. Prince, R. Kazis, L. Hicks, J. C. Taylor

During the 19th and 20th centuries, a complex system of education has developed in this country. Over a considerably shorter period--since the early 1960s--a different system of workforce development has begun to emerge, including various programs intended to prepare individuals for the labor force. The programs include vocational education, short-term job training, adult education, specific programs for certain populations (like welfare recipients and dislocated workers), state-funded training for specific employers, and the training employers provide themselves--creating a complex and ill-defined system, often charged with overlap, duplication, waste, and sheer confusion.

Recently, states have taken more active roles in reforming their workforce development systems. This report examines ten relatively active states--Florida, Iowa, Maryland, Massachusetts, Michigan, North Carolina, Oklahoma, Oregon, Texas, and Wisconsin--through interviews with state officials and then with local administrators in at least two localities within each state.

In general, states have initiated reforms either because of economic decline, because of their own concerns about chaos and duplication in their workforce programs, or in anticipation of federal legislation. While there has been considerable variation among states, most have adopted a state-level administrative or advisory group, with a local or regional counterpart to plan and oversee local services. To be sure, both local and state agencies vary in the programs they include and the power they have, but the overall purpose is to establish more rational state policy and then to implement it at the local level.

States have also varied in the instruments they use to achieve their goals. Some have made extensive use of institution-building mechanisms, like advisory committees, consolidation of programs, technical assistance to the local level, and efforts to change the culture of local-state relations. Others have invested more in market-like mechanisms: performance measures and standards; performance-based budgeting; competition among providers; competition through subcontracting; voucher mechanisms; and better information to consumers, especially through one-stop centers. The new Workforce Investment Act of 1998 may also encourage vouchers through the Individual Training Accounts it encourages.

Most states have also recognized the need to stimulate the demand for employment, and have developed a variety of programs (including those providing training for specific employers) to stimulate demand. While there are fledgling mechanisms to coordinate demand-side policies with workforce development, these are still inconsistent in most states. However, the mere fact that policies stimulating employment demand have emerged, and could be coordinated with policies providing more education and training, is a hopeful sign.

Not surprisingly, states have various challenges in implementing their reformed "systems." The most important of these is the instability which has occurred when new governors have changed policy direction. In contrast, states that have relatively consistent policies with bipartisan support--like Florida, North Carolina, and Oregon--have made the most progress. Other barriers to implementation have included resistance from education providers, inconsistencies in state practices, competing priorities for programs, the continuation of multiple advisory committees and substate entities, and the continued restrictions of federal programs and regulations. Thus, consistent policies, over longer periods of time, are necessary to overcome barriers to implementing a state's vision.

In addition, the development of active state policies is a departure from the past, when most states were content to let local programs coordinate as they desired--or not coordinate at all. By and large, states have not taken many directive measures, recognizing that local autonomy is both necessary and politically unavoidable. (The one great exception comes in welfare reform, where many states have required local communities to adopt a uniform state approach.) The most common policy has been one of "central guidance, local direction," where the state provides a vision, some guidance, and encouragement through funding for local communities, which, in turn, direct their efforts to plan and coordinate local programs. In this process, the development of one-stop centers has been a great help, since these have required a number of local programs to work together.

Not unexpectedly, local responses to state initiatives have been mixed. Some communities want to move faster than the state, and complain that state inaction has sometimes thwarted local initiative. Some, on the other hand, do not want to change their practices at all, and resent any encouragement or directive from the state. Overall, however, with much pulling and pushing on all sides, the entire structure of local and state efforts seems to be moving in the direction of greater coordination.

In these efforts, the roles of employers are widely thought to be crucial. Employers can play many different roles in workforce development, and states have adopted a variety of policies encouraging their participation. On the other hand, the tendency of some states to concentrate on welfare recipients has discouraged employers, who generally want to have little to do with this group; and inconsistencies in state policies have contributed to confusion over employer roles. This remains an area where substantial improvement is possible.

Many states had begun their reform efforts in anticipation of federal consolidation of vocational education, job training, and adult education in 1996. But consolidation did not pass; instead, Congress enacted a substantial reform of welfare, instituting many practices to get welfare recipients into employment as quickly as possible--the philosophy of "work first," as distinct from the belief in employment and training that underlies the workforce development system. In many states, education and training programs have welcomed the transformation of welfare agencies from places which merely certify individuals eligible for benefits, to ones that try to move welfare recipients into independence. However, in several ways, welfare reforms have undermined the efforts to improve workforce development systems. They have undermined the rhetoric about high skills and high wages, since they usually provide very short and low-level training. They have reversed the tendency to develop holistic and universal approaches, since "work first" efforts generally provide limited services to the welfare population only. They have distracted local and state policymakers, and, in some places, changes meant for welfare recipients have driven changes for the nonwelfare population as well. The welfare-related changes have also alienated employers and exacerbated local-state tensions. While it is too soon to know what the ultimate effects of welfare reform will be, its spillover into other dimensions of workforce development have been largely negative.

States mean different things when they reform their workforce development systems. In the variety of state efforts, we can discern a rough hierarchy of efforts to link programs. These range from information-sharing among programs, to referrals of individual clients or students, to joint service delivery where programs collaborate in providing employment services. Joint planning, the deliberations around one-stop centers, and various state inducements have all helped local and state programs move up this hierarchy of coordination, while shifts in state policies and the preoccupation with "work first" have stalled these efforts.

A different dimension of system-building is the improvement of the quality of individual programs. It is much easier to coordinate programs that are of high quality; conversely, other programs do not like to work with those perceived to be of low quality. Many states are trying to improve quality through performance measures, while others--notably North Carolina--have increased technical assistance. In general, however, dimensions of quality have not been especially prominent in state reforms, and most local and state officials could not provide well-considered conceptions of quality or name exemplary programs. This remains a central issue to address in the future.

Other unresolved issues include the continued separation of education from training, the difference between the rhetoric about a skilled workforce and the reality of low-quality programs, and the debate between institutional versus market-like approaches to reform. However, compared to a decade ago, there is considerably more discussion of all these issues. The reforms that states have tried so far have clarified the options they face, and federal policy--particularly in the Workforce Investment Act of 1998--is likely to encourage further state efforts at coordination. To be sure, the development of coherent workforce development systems is far from inevitable--after all, some states have reversed their progress, others have barely begun, and there is considerable skepticism that greater coordination is worth its political costs. Nonetheless, the direction of movement toward more coherent systems is unmistakable.

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