Dan Walters: An obscure state agency creates big money problems
07/29/2014 12:00 AM
07/30/2014 9:36 PM
Whatever attention the public and media devote to state government is concentrated on the governor, other elected officials and the Legislature.
But state government is mostly hundreds of agencies, boards and commissions that provide services, make regulatory rules, issue licenses and hand out money.
Generally, they go about their business, whatever it might be, below the public radar, surfacing in the consciousness only when things go awry – which is what’s happening in one of the most obscure, the Employment Training Panel.
Each year, the ETP awards about $50 million from special payroll taxes to businesses, labor unions, community colleges and others for upgrading workers’ skills, thereby improving employers’ profits and employees’ wages.
However, just a month into the new fiscal year, the ETP is in big financial trouble. While its income has expanded sharply from increasing employment, it faces what its chairman, Barry Broad, calls a “dire situation” of virtually running out of money.
A review of the ETP’s background documents and meeting minutes reveals why.
Last year, panel members – most vociferously Broad – were complaining that too few proposals were being filed and groups that had received money were leaving too much unspent.
The minutes of the June 2013 panel meeting quote Broad – a veteran labor union lobbyist – as saying, “We really need to see more good proposals … we do not have enough.”
“So it is no secret that if you are a state agency and you do not move your money, others will find some other way to allocate it,” Broad was quoted.
A month later, Broad sounded another warning. “The economy is improving, our income is going up and we are not getting enough projects as mentioned before,” he said.
That plea, a “marketing program” to solicit more business and informal threats to cut grants to those who fell short on using funds sparked a big activity increase, with utilization rates climbing sharply.
However, the ETP failed to account for increased utilization and, in effect, overbooked its funds. It must spend nearly half of its 2014-15 money on prior-year contracts. A year after worrying about having too little activity, it is unable to finance many new plans.
The panel is considering moratoriums and other steps to curtail cash flow and heard a litany of complaints last week from groups whose programs are now on hold and may have to slash their staffs.
Reminded about his earlier pleas, Broad acknowledged, “We sent mixed messages, and we were wrong, as it turned out.”
Spur-of-the-moment decrees and a lack of long-range planning created a mess that will hurt workers and employers, undermine California’s emergence from recession, and give government another black eye.
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