SACRAMENTO / BRADLEY INMAN : A Model Training Program Is Beset by Lingering Questions

For eight years, California has engaged in an expensive social and economic experiment to retrain workers who are likely to be fired because of changes in the economy.

With the goal of making the entire California economy more competitive, the state Employment Training Panel has served as a model for government training programs all over the country--despite uncertainty over the success of the experiment here.

Nearly 100,000 workers have gone through training programs funded by the panel. In partnership with thousands of California employers, this low-profile government agency has doled out $251 million to large and small firms that use the funds to retrain workers who face unemployment due to outdated skills.

But the program has been criticized for being overly bureaucratic, lacking direction and being slow to respond to training demands.

Questions also persist about the employment training panel itself. Could the training be accomplished without public funds? Are the grants being used by some companies to gain a market advantage over others? Do the training programs keep people off the unemployment rolls for a sustained period? Does it encourage companies to expand their own training programs?

Questions also have been raised about how relevant the training is, and whether it teaches workers sufficiently advanced skills. A $2-million ETP award to a group of Ventura County agricultural firms was criticized because the funds were used to train farm workers merely to harvest a different crop.

Further complicating this award is an investigation of former ETP official Robert Munoz. The Ventura County district attorney’s office is looking into a possible violation of state conflict of interest laws in connection with Munoz’s vote on the farm contract.

Despite this latest controversy, legislators, job training experts, corporate executives and labor leaders say the training program is a bright spot in the government’s long history of failed attempts to train workers.

“We didn’t want this effort to look like so many other government training programs that had flopped before,” said Peter Cooey, legislative consultant to the Assembly Finance and Insurance Committee. “This was an attempt to be relevant to the real world.”

Business and labor leaders participated in the crafting of the sponsoring legislation in 1982 to insure that the program had a private-market orientation. Firms that qualify for the funds are responsible for their own training. In addition, the agency formed to oversee the program enjoys autonomy from the state bureaucracy.

The independent seven-member panel is appointed jointly by the legislature and the governor and has its own source of funding through a special unemployment insurance surtax that is paid by California employers. It generated $78 million this year alone.

The panel distributes funds to companies that train people who have exhausted their unemployment insurance benefits or to firms that retrain people who are threatened with being laid off.

Some of the state’s largest financial institutions, aerospace companies, retail firms and agricultural interests have received training funds from ETP.

This year, for instance, 480 Thrifty drugstore cashiers are being trained to use the firm’s new computer terminal cash registers. Without these skills, Thrifty store executives claim the workers could face unemployment.

More than 100 employees of the Pacific Stock Exchange are learning the firm’s electronics options trading system, and Teledyne Systems was awarded a state contract to train 356 employees to learn a new computer language.

After weaving through a bureaucratic maze to receive the funds, participating companies are required to cover a portion of the training costs.

The Department of Finance does an annual audit of ETP, but a comprehensive study isn’t scheduled to take place for two more years. “Until then, we won’t know for certain whether this grand experiment is something to brag about or not,” said Cooey.

But it’s evident that ETP lacks a consensus on exactly where the funds should be directed.

The enabling legislation talks about reducing the burden of unemployment. Employers, on the other hand, see the program as a way to make themselves more competitive, and labor unions lean on it for beefing up the skills of members. Some legislators want ETP to be an economic development program. Others see it as a way to address the social problems of unemployment.

While these goals might be made be compatible, ETP hasn’t resolved which industries, which areas of the state and what type of training programs should be targeted.

In the first two years, for example, 60% of the funds went to firms that were training “new hires” who were previously unemployed. Now the vast majority of the funds goes to companies that are re-training existing workers--even though members of the panel are asking if this is appropriate as the economy weakens.

One explanation for ETP’s lack of direction is a dearth of leadership. There has been considerable turnover in panel members in the past few months and the executive director post has been vacant for nearly two years awaiting an appointment from Gov. George Deukmejian.

In the absence of steady direction from panel members and a permanent director, funds have been distributed based on which companies took the time to figure out the panel’s funding system and which firms hired the best advisers to help them through the process.

A powerful behind-the-scenes influence on ETP decisions has been a gaggle of private consultants who generate hefty fees advising companies on how to get and administer ETP funds.

Last September at his first meeting as chairman and as a new member of the panel, former American Telephone & Telegraph Co. executive William Woods asked everyone in the audience to introduce themselves. The room was full of consultants.

One high-level staff person who did not want to be identified said “a lot of people are feeding from the ETP trough.”

Last year, the panel commissioned a study on consultants after hearing a report that one earned $1 million in fees associated with panel work, according to Cal State Northridge Prof. Richard Moore, who did the study.

While the analysis found that consultants played an important role in the awarding of ETP grants, Moore also concluded that, “there is a need for brokering government services, especially for small and medium sized companies” that don’t have the personnel to get grants and administer training.