Proposed Employee Training Funding Changes
While a government efficiency task force drew its members from Iowa's business community, a recommended change in workforce training is raising concerns for companies who use the longtime program that would end.
Among the 45 recommendations in the Iowa DOGE Task Force report released in October is one to sunset the program that companies access through community colleges. The Industrial New Jobs Training program would be replaced with what the report calls "flexible, accessible training dollars" in a $30 million fund at Iowa Workforce Development.
But the potential loss of the existing program doesn't sit well with some Northeast Iowa business and economic development officials.
They work with Hawkeye Community College to use the training program, also called 260E for the chapter in state code where it's established. It helped their businesses scale up and is even an important incentive to attract industry to Iowa.
Jeff Kolb, director of the Butler-Grundy Development Alliance, said such companies in the rural counties he works with love the program "just because of the flexibility of it. ... There's flexibility where, (for) a lot of the incentives we use, it's either take it or leave it."
He added that "it's a very unique program" that diverts tax dollars rather than requiring an upfront investment from the state. Community colleges sell bonds through the program to fund training employers repay with new employees' tax withholdings over 10 years.
When out-of-state businesses are looking at coming to his area or existing companies are discussing expansion, Kolb said "260E is typically the first thing we talk about."
Meeting training needs
Corey Jorgensen, chief executive officer of Shell Rock Soy Processing, said the program was "super helpful" when the company opened in 2021 "along with a couple other programs that help businesses get on their feet." After the first six months, the company had eight employees, a number that had grown to 50 after 10 months.
The business crushes soybeans largely purchased from an eight county area around its Shell Rock plant and then sells the extracted vegetable oil and protein separately. The oil is for renewable diesel, biodiesel and sustainable airplane fuel. The protein is sold as food ingredients for pets and farmed animals like hogs, dairy cattle, chickens, salmon, and tilapia.
The company now employs more than 60 people, two-thirds of whom oversee its automated systems or work in maintenance.
Angie Helmichs, the human resources director for Pries Enterprises in Independence, said "the biggest thing" with the 260E program is that it "made the training more readily available," allowing it to be done as needed. Without the program, training would happen "when it fits into the budget."
The aluminum extrusion manufacturer employs 274 people, with the number of workers nearly doubling since 2018. After two building expansions, Pries now has a 310,000-square-foot facility with four extrusion lines, used to mold aluminum for industrial and commercial purposes, and an anodized dip line, which adds a protective coating to the metal.
Helmichs said the training dollars are used to build employee skills in areas like computer numerical control machining, maintenance and truck driving. In addition, the money is used for training in workplace safety as well as to build capacity in the staff for problem solving and critical thinking.
"I also think it helped us with the hiring," she noted, because they have funding to train new employees who don't have the needed workplace skills.
If the 260E program goes away, she questions "what funds will be available" for her company and how the criteria will change to qualify.
Jorgensen said training needs are critical for Shell Rock Soy Processing, and some of it had to begin before the business was operational. Trade-specific training was provided through program funds along with training for maintenance workers and for all staff on environmental health and safety matters.
"Having the funding injection — it was great to have that kind of financial support," said Jorgensen. Without it, he added, "I think it would have been more expensive." As a result, there would have been an increased need to borrow money before the business was fully operational.
Community college role
"We take multiple companies to bond each spring," said Celia Even, Hawkeye's associate director of business and community outreach. "Essentially, the bond is an advancement on their payroll taxes. ...
"Most of these jobs are higher-skilled industrial jobs," she said. Pay required for positions that benefit from the training dollars varies by location. The hourly wage for the region that includes Waterloo must be at least $24.01 for the current fiscal year.
Along with actual training costs, the funds can pay for the equipment and space needed to provide training. Training can also occur at Hawkeye and be done by trainers associated with the college or contracted by the company.
Last year, Even said, more than 300 positions were pledged by participating employers and all but 45 have been filled. Over HCC's last five annual bond sales, 1,518 jobs have been pledged with close to that number filled. Companies can use the bond funds throughout the 10-year repayment period, though some will pay them off more quickly.
"Right now, we have 62 open contracts," she noted, with multiple contracts for several companies. "It's mostly small- to medium-sized businesses" with 100 or fewer employees. Larger companies like VGM & Associates in Waterloo and the Target Distribution Center in Cedar Falls have also used the service.
The 15-member state task force, whose name was inspired by the Trump administration's cost-cutting Department of Government Efficiency initiative, included Iowa leaders in business, elected office and education.
Its report says "the state lacks a nimble workforce training fund competitive with those in other states" despite money spent on multiple programs, including 260E. According to Iowa Workforce Development data in the report, "an average of $38 million in bonds has been issued each year for the last 10 years." After administrative and financing fees, it says "approximately $22.5 million remains annually for business training needs."
The report adds that employer feedback "consistently shows they do not know how to access existing training funds, the process is too involved and/or funds are too restrictive to meet their needs."
Small company worries
Pam Wright, Hawkeye's legislative liaison, believes the $30 million state fund may work well for larger companies but "not for smaller employers" the college works with.
Joel Bennett of Veel Hoeden Consulting in Pella provides leadership training and coaching for blue collar industries like manufacturing through the 260E program, working with Hawkeye and other community colleges. He has "significant concern" for smaller companies if the recommendation is implemented.
"Most of these companies don't have the time or resources," he said, to line up training. Their partnership with community colleges is "invaluable."
Even, from Hawkeye, said with the "statewide first-come, first-served bank of money ... if you're not ready to go on July 1" when the fiscal year starts, the opportunity will be gone. "So we really don't like that approach."
"I'm very supportive of the state looking at programs and making them more efficient," said Bennett. But he contends that 260E is an effective tool for training.
He is also concerned that community colleges and employers who use the program didn't get to offer input to the task force. "I think if there are going to be changes in those (programs), stakeholders need to be at the table."
Kolb, with the Butler-Grundy Development Alliance, said site selectors he works with on new businesses will be concerned if community colleges don't have a hand in the training. "When you're working with the local community college, that's different than working with the (state government's) bureaucratic element," he said.
"They've done it for so many years, they're so good at it," Kolb added. "I'm a big believer in 'If something isn't broke then why do we need to fix it?'"
Article by Andrew Wind, The Courier
