Indiana rushes to spend virus relief aid on new jobs program

Indiana legislators scrambled in the final days of their session to make decisions on spending the state’s $3 billion share of the $350 billion in federal coronavirus relief money approved this year for state and local governments.

Like many states, they directed aid to schools, businesses, highway construction and bailing out depleted unemployment insurance accounts. But with much of the money unallocated, budget writers also grabbed onto an idea floated by a local tech millionaire for a revolving loan program aimed at helping workers obtain short-term training certifications to advance their careers.

In an example of how states are casting for ways to spend the federal influx, Indiana’s budget negotiators wrote in $75 million for the Career Accelerator Program — nearly triple the $27 million going to a 2% increase for the state’s higher education system.

It’s also more than three times what the Legislature appropriated to Republican Gov. Eric Holcomb’s Next Level Jobs program two years ago, and nearly double what lawmakers re-injected into his jobs program for the next biennium.

The concept is outlined in just 80 lines of legal text in the 233-page state budget bill and will be overseen by a little-known state agency that hasn’t operated such programs before and whose leaders were only approached by legislative staff a week before the final budget vote about taking on the task.

Senate Appropriations Committee Chairman Ryan Mishler said the funding figure “seemed to be a good number to start with,” but admitted he and other Republican budget writers didn’t have much time to develop operating specifics for the program.

“If it was general fund money, you know, maybe I would have put more thought into the dollar amount, but it seemed like it was a good use of the federal funds,” Mishler said. “The funds were available for it, so let’s do it. Had it not been for the federal funds, I probably would have rethought the dollar amount.”

About two-thirds of states have passed budgets for next year, with others expected to do so soon. Some, such as Indiana, have been directing pandemic relief aid to new job-training programs.

In California, Gov. Gavin Newsom’s latest budget proposal includes 35 workforce development proposals. More than $3 billion planned for the programs is slated to come from $26 billion in fiscal relief money.

The state’s nonpartisan Legislative Analyst Office criticized Newsom’s proposals as having “notable resources” and “no overarching plan or clear set of goals,” noting that many programs are also “new and so large that agencies likely lack the capacity to administer them in a timely way.”

Legislators in New Mexico put coronavirus relief money into programs that they had refused to fund at the same levels with regular state revenue, including $100 million to fully fund tuition for in-state college students and $10 million toward tourism advertising. The state’s governor, Michelle Lujan Grisham, vetoed the appropriations and has not come forward yet with her own detailed proposal.

Indiana’s hefty spending on the Career Accelerator Fund is another example of states unexpectedly finding themselves flush with cash despite predictions last year of budget deficits caused by the coronavirus shutdown. With the $75 million expenditure not needed to keep an existing program afloat, legislators had the luxury of creating a program with little thought given to specifics.

Democratic state Rep. Ed DeLaney, a member of the budget-writing House Ways and Means Committee, said Republicans weren’t open in deciding how the federal money should be spent and the career accelerator program had no public discussions.

DeLaney said it didn’t make sense to put so much money toward a new program when Republicans pushed for Gov. Eric Holcomb to pull Indiana from federal programs that provided an extra $300 in weekly payments to unemployed workers and expanded jobless benefits during the pandemic.

“This program gets $75 million for having done nothing,” DeLaney said. “Based upon its lack of existence, let alone success, they get $75 million. … The governor’s talking practically in crisis terms that we don’t have workers, and this program isn’t even set up and it’s funded.”

Indiana’s INvestEd, an agency focused on college financial aid literacy and administering student loans, will oversee the Career Accelerator Fund. Mishler said lawmakers tapped the state-created nonprofit because it already manages millions of dollars in loans.

Bill Wozniak, INvestEd’s vice president of marketing, said House Republicans chose the organization to run the program a week before the legislative session ended. He said planning remains “preliminary,” with the agency still working out how it will select qualified degree programs and how many staffers it will need to coordinate it before funds become available July 1.

Tech entrepreneur Scott Jones, who made millions from selling an early voicemail system and has started several companies, launched the Career Accelerator Fund in 2019 as a nonprofit pilot program, intending eventually to turn it over to the state. He said the program could help thousands of Indiana residents obtain short-term vocational certificates in the state’s high-demand career fields.

Jones pointed to his Eleven Fifty Academy, a separate organization that trains students for tech-oriented careers, which he said is “setting the bar” for educational providers that stand to benefit from the fund. The Indianapolis-based academy offers courses in coding, software development and cybersecurity. It boasts a 91% graduation rate, with 80% of students finding jobs within two months of completing the program.

Jones has given more than $900,000 in political contributions to state Republican campaigns and committees since 1999, but no significant donations in the last decade.

The new fund is intended to become self-sustaining with fewer anticipated defaults compared to federal loan programs, and by capturing for up to 10 years the growth in income tax revenue expected to be generated by those who complete the training and get a better job.

The text establishing the fund sketches out a program under which participants would enroll in credentialed courses such as computer programing, manufacturing, health care, logistics and aviation that take up to six months to complete and result in graduates finding jobs that pay at least 20% more than what they had earned. Recipients would be expected to repay the interest-free loans in installments based on their new monthly income.

Chris Watts, president of the nonpartisan Indiana Fiscal Policy Institute, said the $75 million decision “was a little eyebrow-raising.”

“This certainly didn’t get as much discussion as some other (federal stimulus) spending in the budget hearings, which of course we would have liked to see,” Watts said. “But what we’re going to be looking for now is if these short-term programs are able to get folks out there and earning a higher wage. If they can, I think we’ll look back on this as a good investment of those dollars.”