Training Grant Awards to Big Firms Draw Fire

Capitol Alert News Service

A little-known state panel that doles out about $100 million annually in worker training grants has come increasingly under fire for awarding millions to wealthy law firms and at least one Fortune 500 company. So outraged are some state lawmakers, in fact, that efforts are underway to dissolve the state board.

California's Employment Training Panel is an eight-member board made up of appointees of the governor and legislative leaders. It was created in the early '80s during the darkest days of the state's recession in order to retrain industrial workers and others whose jobs were eliminated due to downsizing or altered by technological advances. Every employer in the state subsidizes the panel and its grants through the unemployment insurance tax.

Critics of the panel, Democrats and Republicans alike, argue that small businesses are not getting their fair share of the grants, and they are threatening to disband the panel entirely.

"This thing was supposed to help businesses in trouble and now it's become corporate welfare," said Assemblyman Dick Floyd (D-Wilmington). Floyd's AB 1684 calls for the panel's dissolution.

Specifically, the panel has been criticized recently for awarding $1.5 million to three high-profile law firms, including $400,000 to San Francisco-based Orrick, Herrington & Sutcliffe to train its lawyers on the latest computer software. The firm earns $130 million annually.

California's largest winery, Modesto-based E&J; Gallo, has also been awarded $1.2 million in grants. And this week, the panel was scrutinized by an Assembly committee for awarding Harman International Industries Inc. of Northridge, an electronics firm with $1.5 billion in sales, more than $2.6 million in grants this year.

The Employment Training Panel's marketing director, Charles Lundberg, defended the Harman Industries grant, saying the money will be used to train workers coming off state welfare rolls and other "at-risk" employees with questionable work histories. Under the panel's guidelines, the company has to prove that it both trained the new workers and kept them on the payroll for at least 90 days before it gets any money from the state.

The panel has its boosters in the Legislature. Sen. Patrick Johnston (D-Stockton) carried the legislation that created the panel in the '80s. This year he has introduced a bill, SB 1560, that proposes several panel reforms, including prohibiting the retraining of workers who make more than $30 an hour. Johnston said the panel also needs to make some internal reforms, and to adjust its guidelines to emphasize retraining of workers for careers in the skill-oriented biotechnology and other high-tech fields.

Companies seeking information on retraining grants should contact the Employment Training Panel at (916) 327-5640.


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