Subsidized employment pilot program amended, advanced
Lawmakers advanced a bill May 23 that would create a subsidized employment pilot program in Nebraska.
LB368, as introduced by Omaha Sen. Sue Crawford, would create the program within the state Department of Health and Human Services (DHHS) to provide opportunities for employers and participants in the Aid to Dependent Children (ADC) program, known at the federal level as Temporary Aid to Needy Families (TANF).
The bill would create a wage subsidy pilot program for low-income, TANF recipients using existing “rainy day” TANF funds. The bill would allow nonprofit organizations or the Department of Labor to administer the pilot program, which would become operative July 1, 2014, and expire on July 1, 2018. A final report on the program would be submitted to the Legislature.
A Health and Human Services Committee amendment, adopted 40-0, would expand the role of the nonprofit organization in the pilot program and reduce the responsibilities of the Department of Labor. Under the amendment, neither the Department of Labor nor DHHS would provide any direct services within the pilot program.
Under the amendment, the nonprofit organization would establish an application process for employers that would include a process for initial client assessment, job development, job placement and employment retention services and strategies for placement.
Additionally, the nonprofit organization would:
• recruit participants and employers;
• determine participant eligibility;
• assist with employer and employee match;
• ensure the pilot program operates in both rural and urban areas; and
• gather data and performance measures.
Participating employees would receive a prevailing wage for 40 hours per week, not to exceed six months. The subsidies would be 100 percent in the first two months, 75 percent in month three, 50 percent in months four and five and 25 percent in month six.
Crawford said the program would cost $1 million per year and serve approximately 150 Nebraskans who are in need of job skills. Other states have used TANF funds for similar programs with great success, she said, citing a study of four states that indicates 76 percent of participating businesses retained at least one subsidized worker.
“This bill provides a job for people who need a job,” she said. “It’s an important pilot project.”
Omaha Sen. Heath Mello supported the bill, saying the state could make better use of its TANF rainy day fund. The pilot program outlined in LB368 could provide valuable job experience for the state’s long-term unemployed, he said.
“A good job is the best antipoverty program that we can provide people,” Mello said. “This is an innovative approach – utilizing federal funds – that other states have utilized for years.”
During general file debate May 22, Papillion Sen. Bill Kintner offered an amendment that would have required an employer to retain a program participant for at least two years. He said that if lawmakers were going to approve the program, the requirement would prevent employers from taking advantage of participants.
“If we’re going to do it, we’d better protect the people in the program,” Kintner said. “We’d better protect the taxpayers.”
Following questions regarding the feasibility of the amendment, Kintner withdrew it and offered a second amendment that would reduce the requirement to retain employees to one year and stipulate that an employee meet minimum employment standards during that time.
The amendment failed on a 4-32 vote and the bill was advanced from general file 35-1.
During select file debate May 23, North Platte Sen. Tom Hansen offered an amendment that would have terminated the pilot program in 2016. He said two years would provide sufficient time to evaluate the program.
Crawford opposed the amendment, saying a longer pilot program would provide opportunity to analyze data and make changes if necessary in order to improve the program.
“It gives us a chance to do some more learning and to use what we have learned,” she said.
The amendment failed 17-26.
Omaha Sen. Beau McCoy offered an amendment, adopted 26-1, which would require that no more than 10 percent of the funds appropriated to carry out the program be used for administrative costs. He said that amount was the industry standard for nonprofit agencies and would make sure that the bulk of funds are used to provide services.
“I think this hopefully makes certain … that these funds are going to the folks that they should go to the most,” McCoy said.
An amendment brought by Omaha Sen. Jeremy Nordquist specified that the definition of administrative costs not include the cost of service delivery.
Following adoption of the amendment on a 40-0 vote, the bill advanced to final reading by voice vote.
