Diminishing federal funding for workforce development impairing Kentucky's labor force goals

According to a new report from KentuckianaWorks, after adjusting for inflation, overall workforce spending in Kentucky decreased by 6.8% between 2013 and 2017 from $1.1 billion dollars to $1.04 billion dollars, a decline of $77 million dollars. Much of this drop is a result of federal disinvestment in workforce spending.  Federal workforce spending in Kentucky decreased by 29.7% between 2013 and 2017 from $511.4 million dollars to $359.6 million dollars. During this same time period, the Commonwealth of Kentucky increased state workforce spending by only 12.3% from $606.9 million dollars to $681.7 million dollars. Much of this increase in state spending went to the Kentucky Community and Technical College (KCTC) system which saw its funding increase by 10.4% from $448.7 million dollars to $495.4 million dollars.  All other workforce development programs, excluding the Work Ready Skills Initiative, saw their funding decrease by 3.6% between 2013 and 2017 from $158.2 million dollars to $152.5 million dollars.

For many Kentuckians who are detached from the labor force, public sector funded training provides the only reliable opportunity to reap the benefits of economic growth. Today’s economy requires the lifelong acquisition of skills and workforce training programs provide individuals the conduit to obtain these skills. This new report from KentuckianaWorks, based on a review of state and federal budget documents, examines government funded public sector workforce spending in Kentucky and provides key takeaways and consequences for how the Commonwealth chooses to allocate its dollars.  

The Commonwealth has prioritized funding for programs that focus on helping workers obtain middle-skill jobs through the KCTC system. This has primarily been in high-demand fields such as health care, transportation/logistics, advanced manufacturing, business services/IT and construction. While this policy benefits many workers, many disadvantaged adults cannot participate in these trainings because they lack a high-school degree or credential and the literacy, numeracy, and writing skills to enroll in a community college. The requirements of the Work Ready Scholarship provide an example for how many Kentuckians will be unable to access training opportunities. Workforce development for disadvantaged workers, primarily funded through Federal funds, has seen its funding decline the most in recent years.

A decrease in funding has made it difficult for programs to provide wrap-around services such as transportation, physical and mental health interventions, and childcare access. This has particularly reduced the ability of programs aimed at helping disadvantaged adults improve soft-skills and receive skills training. A lack of these services within the workforce development system, will likely serve as an impediment to employment under the currently proposed Medicaid work-requirement. 

A lack of state funding to local workforce investment boards (WIB) and cuts to federal spending has reduced the capacity of such entities to coordinate employer engagement in the labor market. It has additionally weakened the ability of WIBs to provide needed training for employers. Employer engagement allows workforce systems to best align with the labor needs of employers. Underfunding local workforce investment boards means less ability to build out linkages within the workforce development system. Programs like KYFAME and the Work Ready Skills Initiative demonstrate how effective these partnerships can be.    

Overall, the report concludes if the Commonwealth of Kentucky wants to succeed in reaching its workforce goals, it must seek ways to appropriate funding to programs that help disadvantaged Kentuckians build their skills and access educational opportunities. Without programs in place to provide this critical step, many workforce development initiatives will fail to serve their higher goals of helping Kentuckians achieve economic self-sufficiency.       

For a more detailed examination of the State of Kentucky workforce spending. Please download the full report.