Two months after Gov. Gretchen Whitmer issued an unprecedented number of line-item vetoes to the state Legislature’s budget plan, $37.3 million for statewide workforce development programs remains unfunded.
That loss comes as a blow to employers across West Michigan, which receives the biggest slice of the training funding in the state’s Going PRO workforce development program.
The loss of funding stems from a budget battle between the Republican state Legislature and the Democratic governor over infrastructure spending for roads and bridges. When Whitmer passed the 2020 fiscal year budget, she used her line-item veto power to make 147 specific cuts to the budget in an attempt to gain negotiating leverage in the road-funding discussion.
On Wednesday, the state Legislature passed bills that would restore more than half of the proposed spending cut by the vetoes, but did not address the Going PRO workforce development funds, which more than 200 West Michigan employers tapped into last year.
In particular, the region’s manufacturers have leaned on the millions in state funding that they receive through the Going PRO to train their employees, according to Amy Lebednick, business solutions director at West Michigan Works!.
“These grants are an opportunity to make an investment in the workforce and an investment back into West Michigan as well,” Lebednick told MiBiz.
The funds are allocated through Michigan Works! associations across the state. West Michigan Works! distributed nearly $10 million to employers in Allegan, Barry, Ionia, Kent, Montcalm, Muskegon and Ottawa counties in 2019. This piece of the pie is by far the largest in the state — by comparison, the Detroit-area received approximately $5.5 million from Going PRO funds last year — and the manufacturing industry consistently demonstrates the most need, according to Lebednick.
“Manufacturing is our highest request,” she said. “Across the industry, they can’t find enough (qualified) people to fill those jobs and grow. The funding is really critical and giving their staff training so that the business can stay competitive.”
One of the greatest needs among manufacturers in the region is leadership training, she added.
“There is a big push to promote from within and making sure that individuals have the adequate training to be able to fill a promotional role,” Lebednick said.
This past year, Hastings-based manufacturer Flexfab LLC was granted nearly $42,000 in workforce training funds — 100 percent of what the company requested. The funds were primarily used to train the company’s next generation of leadership, according to Andrew Walsh, training and development coordinator at Flexfab.
“We’re targeting some of the up-and-comers that we have here at FlexFab,” Walsh told MiBiz. “As people are retiring, we’re trying to look ahead at succession planning and trying to look at some of those skills that we might need to outsource to some of these local vendors.”
The company, which manufacturers silicon hoses for the heavy-duty truck, aerospace, rail and automotive industries, employs about 500 people in West Michigan and another 500 internationally. In addition to the state funding, Walsh estimated the company spends roughly $500,000 annually to train its workforce, which includes a 90-day program for every newly hired employee. However, the costs are not all “black-and-white,” he said.
Employers receiving Going PRO funds are required to at least match the state’s investment in their workforce development programs. Between employer cash, in-kind contributions, and other funding streams, participating employers far exceed that match, according to West Michigan Works!, which reported the program leveraged $60 million in participating employer investments last year.
Workforce training is “non-negotiable” for Flexfab, and state funding helps the company “stretch” its dollars further, according to Walsh.
“Through training and development, we have the opportunity to strengthen our culture, which in turn attracts more individuals to our company,” he said. “In essence, we’re helping grow the local economy by providing jobs and opportunities for individuals.”
Flexfab applied for $100,000 in funding this year, more than double what the company received last year.
Flexfab is one of 360 companies in West Michigan — 179 of which are new to the program — that applied for 2020 Going PRO funding, according to West Michigan Works!. The organization typically begins approving applications at the end of November and training starts as early as January.
Last year, 70 percent of employers awarded Going PRO funds had 100 or fewer employees, with an average award of $36,000, according to West Michigan Works!. The money can be applied to third-party professional development training for existing employees, on-the-job training for new hires or U.S. Department of Labor registered apprenticeships.
The Mobile Solutions Division of NN Inc. (formerly Autocam Automotive) in Kentwood used a substantial amount of its $50,000 Going PRO funding last year for apprenticeship training, according to Steve Heethuis, the company’s training director. NN Inc. has requested a similar amount of funding to continue the programming in 2020.
“The primary focus for this particular funding is as critical as to the foundational discussions of our roads and infrastructure,” Heethuis told MiBiz. “Our available talent being effective in a global economy is just as important as the ability to get around the state and transport goods and services.”
Michigan ranks fourth in the country for total number of new registered apprenticeships, according to the U.S. Department of Labor data. Recently, the state was awarded a $4 million State Apprenticeship Expansion Grant by the U.S. Department of Labor to expand registered apprenticeships by Oct. 31, 2020.
Without Going PRO funding from the state, NN Inc.’s Mobile Solutions Division would go through a “more thorough critique” of its workforce development investments, which could potentially stall the apprenticeship program, according to Heethuis.
“We will have to evaluate what investment makes sense right now and if we have to hold off,” he said.
The tier-2 automotive supplier also uses Going PRO funds to send employees to customized training and credentialing programs at Grand Rapids Community College. In addition to job training, employee participants in the programs at GRCC also earn 27 transferable college credits.
In prior years, applicable Going PRO training programs were required to lead to a transferable, industry-recognized credential in order to receive state funding. The requirement ensures that the effect of the funding goes beyond individual employers to create a skilled workforce that benefits the entire state, according to Michigan Works.
The organization recently realigned its funding application criteria to include a greater emphasis on workforce training that also includes post-secondary credentials — after Gov. Whitmer announced in her State of the State Address that her goal was to raise the higher education achievement rate in Michigan from 43.7 percent of adults to 60 percent.
Before the current budget standoff, Gov. Whitmer’s 2020 budget recommendations included a total of $27.9 million allocated to the Going PRO fund, down from $29.1 million in 2019. The Senate included in its version of the budget an additional $10 million, for a total of $37.9 million in Going PRO funding. After ironing out the differences, a conference committee approved $36.5 million just before the September vetoes.
The state Legislature plans to take up the issue when it returns from winter break on Jan. 15, according to Lebednick of West Michigan Works!.
“While it is good to know that there is a plan to restore the funds, waiting until January will disrupt the training plans for nearly all applications,” she said.
At NN Inc., Heethuis is waiting to hear if the company’s funding will be renewed and hopeful that recent events are a sign that at least some Going PRO funding is still on the table.
“There is good momentum going in the state regarding talent,” he said. “There’s a lot of strategy and alignment that is proving to be effective. Disrupting that is something that it has to be heavily evaluated.”