Job training grants in danger: Business leaders fear program may die in Legislature
BYLINE: Pallack, Becky
Mar. 25--Tucson-area businesses get a disproportionately large share of Arizona's job-training grants, thanks in large part to one local woman who guides employers through the application process.
But now the Arizona Job Training Program, scheduled to end this year, is endangered in the Legislature.
Business leaders say it's a necessary incentive to lure businesses to Arizona and to help local businesses add higher- paying jobs.
Sen. Barbara Leff, R-Paradise Valley, is sponsoring a bill to extend the program for 10 more years.
But Speaker of the House Jim Weiers, R-Phoenix, says the program gives money to businesses for questionable training.
Around 120 Tucson-area companies have been approved for grants totaling $24,327,854 in the past five years, many with the help of Gerri Brunson of Tucson Regional Economic Opportunities Inc. That's about 30 percent of the total fund payout during that time.
Pima County has about 15 percent of the state's approximately 6 million residents, according to U.S. Census figures released Thursday. Maricopa County, with 61 percent of the state's residents, accounted for about 55 percent of the job training grants over that five-year period.
At Sargent Controls & Aerospace, 230 workers are getting some sort of job training -- from learning high-tech software to negotiating government contracts -- using a grant of around $300,000.
Companies front the money for training and then are reimbursed for half of the actual cost of training each current employee or 75 percent for a new employee.
"We're able to offer more training because of that grant," said Frank Elgaen, training communications manager at Sargent. "It helps us train our people better and more efficiently."
The program, which has been around in different forms since 1994, used to come from the state's general fund. Since 2001, it has been funded by employers' payroll taxes -- $7 per year per employee.
Now, 66 companies
Brunson, a business development specialist at TREO, is now helping 66 companies with active job-training grant programs. In January and February, she helped six more companies make applications with the state.
In TREO's first year, July 2005 to July 2006, the group helped 41 companies win $3.2 million in state job training grant money. Businesses match that amount, so they're getting twice the training they could buy with their money alone, Brunson said.
Brunson's role is to help a company maximize its benefit and minimize the hassle of applying through the Arizona Department of Commerce.
"I know what Commerce wants to see," she said. "I know what the red flags are."
For instance, companies can meet the program's average-wage requirements by including their higher-paid workers on the training roster.
The grants aren't an open source of money. A company must put together a training budget that shows how the money will be spent to benefit employees, usually training them to use the latest technology.
In rare cases, the program has saved local jobs.
After the 2001 terrorist attacks, Sargent "thought they were going to have to lay off employees because the aerospace industry was in a slump," Brunson said. "But with job-training funds, the state allowed them to cross-train their employees. They didn't need to lay off, and they were able to keep their workers on payroll with different duties."
More for large employers
The grant money coming to Tucson has been split about 55-45 between large employers and smaller firms during the past five years.
Raytheon Missile Systems, the largest employer in the region with more than 11,000 employees, used $1.3 million from the fund in that time.
Many of the firms using the program are small businesses that want to grow.
"I think it's a tremendous opportunity for small businesses to get the types of training they could never afford to get for their employees," said Mary Darling, principal owner of Darling Enviromental & Surveying Ltd., 1650 N. Kolb Road.
She used an $11,561 grant to train six of her 22 workers on state- of-the-art 3D computer software last year.
"It allowed us to expand our horizons and get new clients," she said. "We actually got new projects due to the training, including one with Universal Studios in California."
Paragon Space Development Corp., which has 33 employees at its Tucson headquarters, has been awarded four grants totaling $93,938 since 2002.
"In general it's been very positive for us," said CEO Taber MacCallum. "It gives us a lot of flexibility to hire in Arizona we otherwise wouldn't have."
The job-training program often increases the skill levels and the salaries of Paragon employees, MacCallum said, and allows the company to hire people locally and train them for specialized work here.
Paragon designs experiments for NASA. Training grants have allowed the company to develop highly technical specialized software, MacCallum said.
Some companies leave
But some companies that have gotten big grants have left town, possibly taking newly trained and skilled workers with them, said Barrett Marson, a spokesman for House Speaker Weiers. The Commerce Department should consider asking for repayment if a company leaves within a certain period of time, he said. Currently the state can get the money back only during the grant period.
Bombardier Aerospace -- the local company that has used the most grant money since 2001 -- used four grants totaling $2,165,925 from 2001 to 2004, when it laid off 800 people and moved most of its local operations to Wichita, Kan.
DunnAir Business Jet Completion Center, which moved into Bombardier's space and employed about 55 people at its peak, also used a $335,063 grant in 2004. The company laid off 40 people last year and closed in January.
The program, which will be discussed in upcoming budget negotiations, is easy to abuse, Marson said.
"There are many instances in which it's not being used to train new workers in new skills," he said, citing bookkeepers receiving introductory bookkeeping training and companies using the money for sexual-harassment training. "The state wants to attract new businesses to come here. The job-training fund is an opportunity for that, but it's not being used as efficiently for new jobs as the speaker would like to have seen," Marson said.
Bruce Coomer, executive director of the Arizona Association for Economic Development, agrees some questionable grants were made in the program's early years, but the rules for applying are more stringent now, he said. Tribes aren't eligible to use the tax funds anymore; the average wage at the company must be higher than the average wage in the county; there's a premium on new jobs; and the money no longer comes from the general fund.
"If the Legislature drops this program, it's really going to hurt economic development activity in Arizona," Coomer said
Find a database of the recipients of job-training grants. go.azstarnet.com/jobtrainingSearch the database
Renewing state legislation that provides job-training funds is one of four priority issues for a coalition of Arizona business groups.
Bills designed to attract foreign direct investment, upgrade research and development tax credits and continued funding for Science Foundation Arizona complete the quartet of pending bills dubbed by backers as a "Competitive Investment Package" for the state.
"Arizona must step up to compete more aggressively in the global economy," said Kendall Bert, executive vice president and chief operating officer of Tucson Regional Economic Opportunities Inc., or TREO, in a prepared statement. "We must have the right tools in our arsenal to capture our fair share of prosperity."
Joining TREO in support of the measures are 14 other business groups and economic-development agencies that collectively represent the "vast majority" of the state's productive economy, according to an announcement from TREO.
Also backing the measures are the Tucson Metropolitan Chamber of Commerce, the Southern Arizona Leadership Council, the Sierra Vista Economic Development Foundation, the Arizona Technology Council and the Arizona Association of Industries.
-- Richard Ducote
Here are the 10 local employers that were approved for the most job training grant funds since 2001.
Company Grant
1. Bombardier Aerospace $2.2 million
2. IBM $2 million
3. Ventana Medical Systems Inc. $1.6 million
4. Raytheon Missile Systems $1.3 million
5. Honeywell Aerospace $1.25 million
6. Geico $1.2 million
7. Pella Corp. $1 million
8. Spectra-Physics $820,000
9. Evergreen Maintenance Center Inc. $785,000
10. Phelps Dodge Mining Co. $620,000
Source: Arizona Department of Commerce
--Contact reporter Becky Pallack at 573-4224 or at bpallack@azstarnet.com.
Credit: The Arizona Daily Star, Tucson