City eyes loan to cover facilities costs for job training nonprofit

City Council has committed to offering financial help to the Workforce Solutions Capital Area job training program to help it address facilities expenses that resulted in a 20 percent cut to its programs this year.

The resolution, which passed as part of the consent agenda Thursday, directs the city manager to recommend options for the city – most likely through a three-year no-interest loan – to provide bridge funding to Workforce Solutions. It also directs staffers to look for other ways the city can assist the agency in its service delivery, as well as helping to obtain federal, state and private money to cover job training programs.

The exact amount the city will loan to the agency is still undetermined, but Mayor Steve Adler told the Austin Monitor it will likely come from $1 million designated to support middle-skill job training in the city’s recently revamped economic incentives programs.

Workforce Solutions operates three offices in the Austin area and recently moved to a new 65,000-square-foot space near Rundberg Lane in Northeast Austin for its flagship office. The new office comes with a 10-year lease and two six-year renewals. In January the group received $469,000 from Travis County to help cover facilities expenses.

The bridge funding is needed because the state and federal laws that govern agencies like Workforce Solutions don’t allow it to set aside part of its budget to save up for facilities expenses. Because of that, any moving or other expenses that come in over budget need to be paid for using funds for programs.

“Current federal and state contracting rules do not permit Workforce Solutions to ‘save up’ funding over years to pay for such moves, and thus funding for the facilities’ expansion must be sourced from current client-services contracts and secured externally,” Tamara Atkinson, CEO of Workforce Solutions, said in an email. She added that Workforce Solutions is not permitted to use federal or state contracted funds to pay the interest on traditional loans.

That means its most recent budget had a $1.7 million cut in contracted services, or roughly 20 percent of the funding for client services, resulting in training 320 clients this budget year compared to the 420 clients trained in fiscal 2018.

The total fiscal 2019 budget for Workforce Solutions is just over $44 million, with much of its funding coming via federal and state contracts for job training and employment services. It also has an assortment of similar contracts with the city and Travis County.

Workforce Solutions is one of the main players in realizing a goal of Adler and other area leaders – to create 60,000 middle-skill jobs in fields such as health care, information technology and advanced manufacturing, with 10,000 of those positions filled by low-income residents through job training.

The nonprofit was heavily involved in the creation of 2017’s Master Community Workforce Plan, which has also been championed by Travis County Judge Sarah Eckhardt.

Council’s resolution doesn’t include a deadline for city staff to report back with their recommendations for assisting Workforce Solutions, but Adler said the funding piece is likely to be put together “fairly soon.” Staff members said at Tuesday’s work session that the loan wouldn’t require a budget amendment, but would need a contract specifying terms that would have to come back to Council for approval.

Adler said the city’s focus on placing more residents in middle-skill jobs makes the loan an important move for the city.

“We know the work is one of our top priority items as a Council, and right now they’re having to take programmatic money to spend on operating in a new facility,” he said. “Travis County made a grant and it didn’t look like we’re in the same position to do that, given everything that’s happening with us up at the Legislature, so our staff took a look at it and came up with what is a revenue-neutral solution to the city.”

Photo by sbmeaper1.

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