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Hurricane Katrina places workforce training funds in peril

After wrangling with state lawmakers on an annual basis for sufficient workforce training funds through general budget negotiations, industry leaders were thrilled when, earlier this year, the Mississippi Legislature created an annual $20 million pot of money earmarked for community college workforce training programs designed to keep unemployment low.

All summer, business leaders have been mulling how to slice the bigger workforce training money pie. But because Hurricane Katrina put thousands of people out of work and unemployment claims are pouring in, workforce training funds may be in jeopardy and businesses may soon have to pay a higher unemployment tax.

Mississippi unemployment claims are paid from the Unemployment Security Trust Fund, which has a balance of approximately $729 million. But if the fund falls below $500 million, the new workforce training money would be cut off, and unemployment tax would rise from 5.1% to 5.4%, the amount businesses were paying pre-legislation. By comparison, the State of Louisiana has nearly $1.5 billion in its trust fund and, based on claims, could run dry in less than 90 days.

For now, the federal government is picking up the tab for unemployment claims in Mississippi, but the length of time the practice will continue is unknown.

“If the federal government doesn’t bail out unemployment, the trust fund would be dipped into, and if that takes place, our revenue stream would stop altogether,” said Jason Pugh, assistant to the executive director of Mississippi State Board for Community and Junior Colleges (SBCJC). “There’s a $500-million suspension trigger, so we feel comfortable we’ll have the $16 million to cover our (workforce training) obligations — $10 million already spent and $6 million in new commitments. Next year, though, we may not have a funding stream, the long and short of which means we’ll have to make a request for next year’s training monies in the general fund through the standard legislative approach.”

For the month of September, the Mississippi Department of Employment Security (MDES) processed 72,589 unemployment claims and paid out a total of $21.5 million to Mississippians. People from Louisiana and possibly other states also filed claims in Mississippi last month. Those claims will be processed as interstate claims and forwarded to the appropriate state. The state normally pays unemployment claims for 26 weeks, between $30 and $210 per week, depending on the claimant’s income.

The governor’s staff is aggressively addressing the need for additional federal funds.

“We’ve already received a $3-million HB-1 grant for training in the construction industry,” MDES spokesperson Liz Barnett pointed out.

Last month, the SBCJC asked leaders of the 15-college system to forecast additional training needs for the year and to estimate ramping up short-term construction trades training projects. “Those estimates were $4.3 million and $3.1 million, respectively. That additional $7.4 million would be real useful,” said Pugh.

Jay Moon, president of the Mississippi Manufacturers Association, said manufacturers along the Mississippi Gulf Coast suffered significant damage to buildings and equipment.

“Even though they are somewhat back in production, one important issue to remember is that much of the equipment is going to have to be replaced because of saltwater exposure,” he said, “and there will have to be a training component to go along with that new equipment.”

Moon said he is confident that Gov. Haley Barbour, MDES and the Department of Labor will resolve issues threatening to curtail workforce training dollars in Mississippi.

“I think we’ll see a lot of training money coming into the state as a result of Katrina, so that’s a source of external funding that would help the drain on the Unemployment Insurance Trust Fund,” he said.

Contact MBJ contributing writer Lynne W. Jeter at lwjeter@yahoo.com.

About Lynne W. Jeter

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