Lawmaker says Idaho's workforce-training fund needs review

A state training treasury maintains support despite getting mixed results.

zkyle@idahostatesman.comNovember 14, 2013 

direcTV, call centers

DirecTV was at one time a recipient of a Workforce Development Training Fund grant in the Treasure Valley.

KATHERINE JONES — kjones@idahostatesman.com Buy Photo

Gov. Butch Otter beamed as he stood behind the podium Oct. 17 in Twin Falls and announced that Clif Bar would build a 300,000-square-foot baking plant — and create hundreds of jobs — in the Magic Valley.

It was a good day for Otter, as well as the city of Twin Falls, the Idaho Department of Commerce and other economic development organizations that offered millions of dollars' worth of land improvements, waived fees and provided other perks to recruit the energy bar maker.

One of the biggest perks was a $4 million grant pledged from the state Workforce Development Training Fund.

Business recruiters say the fund is one of Idaho's most powerful tools for attracting out-of-state employers. But millions of dollars have been lost in state grants to train workers at companies that failed. Among them are Hoku Corp., the bankrupt Chinese solar energy plant in Pocatello now on the auction block, and Transform Solar, a partnership by Boise's Micron Technology Inc. and an Australian company to make solar equipment in Nampa.

At least one lawmaker says it's time for the Legislature to review the fund to determine whether it should survive.

"There are successes with the fund and there are failures," said Sen. Cliff Bayer, R-Boise. "The dialogue is alive and well. This will get a lot of attention in the next session."

SUCCESS STORIES

Money for the fund comes from the unemployment insurance taxes businesses pay to the state. Three percent of that money is set aside for the training fund. Companies receiving grants are reimbursed from the fund after paying to train their workers.

The fund has distributed nearly $47 million in grants to more than 400 businesses since its creation in 1996. Businesses applying for grants must demonstrate that the trained employees will make at least $12 an hour and be offered health benefits.

Chobani was promised a $3.3 million training grant in Idaho's bid to bring the Greek yogurt maker to Twin Falls. Portuguese fruit processer Frulac recently announced plans to build a plant in Rupert, a deal sweetened by a $1.2 million training grant.

While the recent headlines have come from the Magic Valley, the fund has been key to recruiting efforts in the Treasure Valley, too, said Clark Krause, executive director of the Boise Valley Economic Partnership, the business recruiting arm of the Boise Metro Chamber of Commerce.

"It's by far the strongest tool we have in the state to help us bring new business and to grow business across the Valley," Krause said. "It's been a strategic tool with almost every company we've recruited in the last two years."

'VERY BENEFICIAL'

Micro 100 Tool Corp. owner Dale Newberry said his Meridian business, which makes carbide precision cutting tools, is proof that the fund creates jobs. His company used nearly $63,000 in 1999 and an additional $105,000 in a grant that expires Dec. 31.

Newberry said the current grant has helped Micro 100 add 20 entry-level grinders who require three to 12 months of training.

"It's very expensive to train people," Newberry said. "This program helps us to develop new jobs and hire new people. It's been very beneficial."

AmeriBen/IEC Group is another Boise company that has grown with the help of training grants from the fund. The company, which administers health care benefits for companies, received more than $236,000 in three grants since 2009. The business has expanded from 180 employees to about 360 during that time, President and Chief Financial Officer Ben Wright said.

"The program been extremely helpful for us," Wright said. "We've experienced growth. We've hired people who needed jobs and trained them in our industry."

Other past grants include DirecTV, T-Mobile, Alaska Airlines, Amalgamated Sugar and Balihoo.

Businesses don't have to use the full grants. Chobani has spent $2.7 million of its $3.3 million grant, which expires Dec. 31. MotivePower, a Boise train engineering company, has spent $28,000 of a $288,000 grant expiring in April.

STORIES OF FAILURE

Transform Solar received nearly $1.5 million from the fund before going out of business last year. Hoku received more than $650,000 from the fund before closing its $700 million plant this year, before it was even operational.

The Idaho Department of Labor's own 2012 report on the fund called its performance "mixed." Only 40 percent of the grants were rated as effective in terms of raising wages and stimulating growth. Also, about 400 employees working for 100 businesses received training but never went to work.

Such results are unacceptable, said Wayne Hoffman, founder and president of the Idaho Freedom Foundation, which promotes free-market economics as part of its political advocacy efforts.

Hoffman said he'd like to see businesses keep the money they're assessed for the fund and pay for their own training.

"It's a terrible program," Hoffman said. "It wastes more money than it does any good. Obviously, it's a cost borne by Idaho businesses throughout Idaho, and employees."

Krause said the training money paid to soon-to-be bankrupt companies wasn't wasted.

"If the worst thing that happened is a person had a job for a couple years, then that business failed, you still have someone who's been enriched in talents and skills," Krause said.

Hoffman said he'd like to see the law providing for the fund to be repealed during the legislative session in January.

Frank Henderson, a Post Falls Republican and chairman of the House Business Committee, said he hasn't heard the talk about killing the fund.

"In my opinion, it would be a mistake," Henderson said. "The ability to train workers to fit the needs of an expanding industry or one that's relocating to Idaho is really critical to redevelopment efforts."

Bayer, who sits on the Senate's Local Government and Taxation Committee, said he would prefer offering tax breaks to individual employers for training their workforces instead of requiring all businesses pay into the fund.

"This is a tax policy issue," Bayer said. "It needs to be more of an opportunity as opposed to a mandate. Then the decision really lies more directly in the business sector."

Zach Kyle: 377-6464,@IDS_zachkyle

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