January 11, 2000

In 1983, through the leadership of the City of Sunnyvale, the North Valley (NOVA) Job Training Consortium and Private Industry Council (PIC) were formed to offer employment-relatedprograms and services in the cities of Palo Alto, Los Altos, Mountain View, Cupertino, Sunnyvale and Santa Clara, funded by the Job Training Partnership Act (JTPA) of 1982.

The six cities formed a Joint Powers Agreement, with Sunnyvale assuming financial liability for the program and the right to speak for the consortium. Sunnyvale City Council and the PIC selected the City of Sunnyvale to serve as the administrative entity, staffing both the program and the PIC through its Department of Employment Development.

In 1998, Congress passed the Workforce Investment Act. It becomes operational in California on July 1, 2000, and replaces the JTPA legislation. If the City of Sunnyvale and the other consortium cities are willing to comply with the new requirements of WIA and to renew the Joint Powers Agreement that constitutes the consortium, NOVA has the right to continue to receive funding through the Workforce Investment Act.

In addition, in Santa Clara County, both the City of San José and the balance of Santa Clara County not covered by NOVA or the City of San José have the right to be designated as Workforce Investment Areas.

Increasingly, workforce development issues and opportunities are more regional in nature, crossing over the geopolitical lines of cities and counties. Recognizing this fact, the Private Industry Councils serving the region often partner on major projects such as youth employment, welfare-to-work reform, labor market and industry studies, developing better strategies to improve our residents' competitiveness for our employers' workforce needs, addressing skill gaps for emerging occupations, and helping businesses manage workforce reductions.

The implementation of WIA provides opportunities to enhance regional collaboratives to build upon our current workforce development system.

Although the Sunnyvale City Council and NOVA PIC are equal partners under JTPA, the PIC has traditionally taken the lead in analyzing the issues and recommending actions. To this end, the NOVA PIC has assessed options available for the City of Sunnyvale to consider in the implementation of WIA. the PIC asked staff to meet with the City of San José, the Silicon Valley PIC, the County of Santa Clara, and the State of California to explore governance options that could capitalize on our existing strengths and expand the quality and quantity of services available to our job seekers and business. The NOVA PIC analyzed the feasibility of the various options against three criteria:

On December 14, 1999, the NOVA PIC conducted a study session with the Sunnyvale City Council to discuss the issues and options. At that time, the NOVA PIC stated it would only recommend that the NOVA consortium cities consider participating in a merged countywide Workforce Investment Act initiative contingent upon gaining agreement on a number of operating and governance conditions that are outlined in this report.

Staff has completed discussions with the involved parties, with these conclusions:

Since it is being recommended that the City of Sunnyvale serve as the Chief Local Elected Official for the consortium, there will be financial risk assumed by the City of Sunnyvale if it serves as administrative entity for the NOVA consortium. If program expenditures for the consortium are disallowed through the audit process for not meeting regulatory intent, as grant recipient the City of Sunnyvale would be responsible for reimbursement to the State or Federal government. The General Fund would be the likely source for repayment of any disallowed costs.

Historically this financial risk has not materialized. Since 1983 with the creation of NOVA, the City of Sunnyvale has administered over $100,000,000 in grants and contracts. There has been no disallowed costs to date associated with any of these expenditures.

In addition, since funds are obligated to programs only based upon appropriations dedicated to NOVA, sufficient Workforce Investment Act funds will exist to cover all anticipated obligations of day-to-day program operations.

The NOVA Private Industry Council and staff recommend the Sunnyvale City Council take the following actions:

In addition, if approached by other cities in the North Valley/West Valley area to join NOVA, the consortium cities should be willing to entertain expanding the boundaries of the consortium. Their decision should include the cost/benefit of such expansion, the effect of boundary changes on the region, and the need for concurrence of the Governor for such changes to occur.

In 1982, the federal Job Training Partnership Act (JTPA) was passed to create nationwide employment training services for economically disadvantaged youth and adults, dislocated workers, veterans and other targeted populations experiencing barriers to employment/reemployment. Unlike previous legislation, JTPA created a shareholder role for the private sector through the formation of Private Industry Councils which provide leadership to defined service delivery areas. It also required a service delivery area to have a population in excess of 200,000 residents.

In 1983, the six cities of Palo Alto, Los Altos, Mountain View, Cupertino, Santa Clara and Sunnyvale entered into a Joint Powers Agreement (JPA) to form the North Valley (NOVA) Job Training Consortium. In the JPA, the City of Sunnyvale agreed to be the fiscal agent for the program, accepting financial responsibility for expenditures; the Sunnyvale City Council was authorized to speak and act on behalf of the consortium as the Chief Local Elected Official; and the Department of Employment Development of the City of Sunnyvale was commissioned to administer the grant funds and activities. In the Summer of 1983, the NOVA Private Industry Council (PIC) was formed and appointed by the Sunnyvale City Council to work as a co-equal partner with the consortium cities in developing the policies and services needed by area job seekers and businesses.

In the 16 years since its inception, NOVA has been highly successful in its accomplishments. It has consistently demonstrated exemplary performance, registered industry-high marks in customer satisfaction, and received numerous commendations and awards. In 1998, NOVA was singled out as the "First in the Nation" in the quality of its business practices using the criteria of the Malcolm Baldrige National Quality Award.

In FY 99/00, NOVA will serve approximately 10,000 job seekers and 1,000 businesses through JTPA allocations of approximately $2,000,000 and a total operating budget of approximately $12,500,000. In addition to serving the six consortium cities, NOVA also provides leadership or partnership in a number of regional initiatives such as: a countywide welfare to work program that is anchored in Neighborhood Self-Sufficiency Centers; collaboratives to bridge the widening "digital divide" between the technology "haves" and "have-nots"; the Youth@Work initiative to link youth with jobs and work experience/internship opportunities; LMI+ and Career Ladders, which study and explain employment opportunities in new industries and the new economy; and the school-to-career movement to foster systemic change in our educational systems that better enable students to be competitive for the new jobs.

When President Clinton, Vice President Gore and Secretary of Labor Reich visited the City of Sunnyvale and the NOVA program in 1993, they stated that they were committed to work with Congress to pass new legislation that would revamp the Nation's workforce development system to mirror many of the values they found at NOVA. In particular they identified: customer focus, orientation on results, services to employers, continuous improvement mechanisms, and a "one-stop" delivery system. The Workforce Investment Act (WIA), which the President signed into law on August 7, 1998, embodies these values.

This new law must be operational by July 1, 2000. It consolidates a number of existing job training programs into three State block grants: employment and training for adults, for youth and for dislocated workers. These block grants replace the JTPA-funded programs. In addition, the new Act brings other federal grants into the workforce system including education and adult literacy, vocational rehabilitation and the former Wagner-Peyser programs. (In California, the Employment Development Department provides the employment services, including labor exchange and unemployment insurance, with Wagner Peyser funds.)

Improving coordination and outcomes is a major emphasis of this legislation. Under WIA, each local area must establish a "one-stop delivery system" similar to the services currently provided by NOVA. This includes core employment-related services being made directly available to the customers, and access to other employment and training services funded under WIA and other federal programs. Each Workforce Investment Area must contain at least one comprehensive One-Stop Center. Networks of affiliated and/or electronic sites may supplement the One-Stop Center(s). The system will be driven by customer choice and measured for performance on the basis of a statewide "education and job training report card." There will be at least two general types of customers for this system: employers seeking employees, and job seekers/training seekers who are pursuing employment and/or training.

The Workforce Investment Act provides for a great deal of flexibility at both the State level and the local level. With strong leadership, this flexibility could be used to create a workforce development system that is more streamlined, comprehensive, integrated, accountable and adaptive. Listed below are some of the new opportunities provided through WIA:

The new Act prescribes a governance structure at both the State level and the local level. States are required to form statewide Workforce Investment Boards. This board is established by the Governor and responsible for developing the State Plan, overseeing Statewide activities, developing Statewide performance measures and developing a statewide employment statistics system. In December, 1999, Governor Davis made more than 60 appointments to the new board.

The State will be divided into Workforce Investment Areas designated by the Governor. The Governor is required to approve any applications to be a Workforce Investment Area if the area has a population over 500,000, or if the area was a service delivery area under JTPA and met its performance requirements and has sustained fiscal integrity. In Santa Clara County, this means that NOVA, the City of San José, and the balance of Santa Clara County (excluding San José and NOVA) have the right to be designated as Workforce Investment Areas.

The Chief Local Elected Official (CLEO) for each Workforce Investment Area must then appoint a local Workforce Investment Board (WIB), which replaces the current Private Industry Councils. (Under the current NOVA structure, the Sunnyvale City Council serves as the CLEO for the consortium.) The CLEO works in partnership with the WIB to develop local workforce plans, including the disbursement of funds, certification and oversight of the One-Stop Center operators, funding youth programs, certification of eligible training providers, and negotiation of local performance measures.

The Act also places responsibility for fiscal liability with the CLEO, even in cases where a separate entity is designated as the grant recipient.

By definition, the new WIB will be larger and more representative than the current PIC. It still requires a majority of business representatives, along with representatives from education, labor unions, CBOs, economic development agencies, and the required partners in the one-stop system. If WIB members don't represent multiple interest groups, it is likely that the 20-member NOVA PIC would be replaced by a 39-plus member WIB.

While the Workforce Investment Act is causing Private Industry Councils across the nation to make major changes to become Workforce Investment Boards, the NOVA PIC has evolved over the years to being and acting very much the way the new WIBs are defined in the Act. Functions charged to the new WIB include:

Based on this history of strategic innovation, NOVA is well positioned to implement the Workforce Investment Act.

Currently Santa Clara County is served by two PICs: the NOVA PIC, representing the six North Valley Consortium cities and administered by the City of Sunnyvale, and the Silicon Valley PIC, serving the balance of Santa Clara County (including San José) and administered by the County of Santa Clara.

With the new population thresholds for area designation under WIA, three pending (and somewhat contradictory) applications for Workforce Investment Area designation have been submitted to the Governor for our region by the City of Sunnyvale, the City of San José and the County of Santa Clara.

The NOVA Consortium has the right to continue as a Workforce Investment Area under WIA because it has functioned as a PIC, has over 200,000 residents and has demonstrated quality performance. To complete the application process, the six NOVA cities would need to enter into a new Joint Powers Agreement; the City of Sunnyvale would need to renew its commitment to have the Sunnyvale City Council serve as the CLEO and fiscal agent; and it is expected that the City of Sunnyvale would continue to require that it serve as the administrative entity for WIA-related activities provided within the six-city consortium.

The City of San José, with over 910,000 population, has also applied to be a Workforce Investment Area. Since this action would leave pockets of the county not served by either NOVA or San José (Los Gatos, Monte Sereno, Saratoga, Campbell, Los Altos Hills, Milpitas, and South County), the County of Santa Clara asked San José to also include these areas in the City of San José's application. San José took this action by submitting two applications: its primary one being to serve San Jose, and a secondary one to serve San Jose and other areas not served by NOVA. San José City Council has authorized Mayor Ron Gonzales to serve as the CLEO for the San José applications. In addition, city staff was instructed by Mayor Gonzales to explore opportunities for a larger partnership and regional approach with NOVA.

Even with the separation of the City of San José, the County of Santa Clara still qualifies for automatic designation as a Workforce Investment Area if it so chooses. It has a large enough population (approximately 300,000) and has also demonstrated good program outcomes. However, its viability as a separate Workforce Investment Area is more in question since the service areas are not contiguous. In addition, creating three WIBs would likely be more confusing for employers and job seekers and less likely to leverage additional resources.

To date, the County of Santa Clara has continued with its application process for three primary reasons: to ensure that all areas of the county receive equitable attention and services; to ensure that the new WIB(s) continues as a strong ally in developing the Welfare-to-Work initiatives; and to ensure that the new system(s) builds upon the existing expertise and capacity of the Silicon Valley PIC, its administration and its service providers. If the above concerns were addressed by either the City of San José, Sunnyvale, or a new partnership between the two, then County staff has stated the County would likely withdraw its application.

The City of Sunnyvale has designated that the NOVA Private Industry Council take the lead in researching and designing workforce development solutions for the NOVA community. Recommendations on implementing the Workforce Investment Act fall under this purview.

To fulfill this charge, the NOVA PIC has spent the past several months identifying transition requirements in the Workforce Investment Act for the NOVA PIC to become the NOVA WIB; exploring options for the geography of the Workforce Investment Area to be served; and developing recommendations to the Sunnyvale City Council for action items that will enable an orderly transition to the new WIB.

As part of its work plan, the NOVA PIC directed staff to research options for changes in NOVA's service area and for partnership opportunities with the City of San José and/or the County of Santa Clara.

On December 14, 1999, members of the NOVA PIC joined the Sunnyvale City Council in a Study Session to discuss the recommendations. The conclusion of the dialogue was that the City of San José should be asked of its desire to share a regionwide WIB and, based upon its response, a set of implementation recommendations would be presented to Council. This report transmits those recommendations.

The proposed activities are consistent with the City of Sunnyvale’s Socio-Economic Goal 5.1F: Provide job training and employment services, within constraints of operative Federal regulations and available Federal funding to address the locally-determined employment and training needs of economically disadvantaged residents and others with special needs.

There are many obvious advantages to maintaining the six-city NOVA Consortium.

Over the sixteen years of operation, the consortium cities, the Sunnyvale City Council and the NOVA Private Industry Council have developed an outstanding relationship in collaborating on workforce development issues and opportunities. NOVA has concentrated on serving a region that is large enough (450,000+ residents, 600,000+ workers) to provide good dynamics and resources, yet small enough to effect change.

By melding the good business practices of the NOVA PIC and the outcome-based management philosophy of the City of Sunnyvale, NOVA has been successful in developing an organization that is characterized by sound management principles, including: fact-based, data-driven decision processes; embedding continuous improvement processes in its operations; focusing on businesses, job seekers and investors as the primary customers of the venture; valuing customer satisfaction measurements and rewarding improvements; aligning organizational activities with the NOVA PIC's Strategic Plan; aligning employees' achievement plans and audits with accomplishing the tactics of the Strategic Plan; and involving both PIC members and staff in task-based management activities to produce the organization's desired outcomes.

As a result, NOVA is recognized as one of the most powerful PICs in the Nation. It has enjoyed superior performance, highly satisfied customers, and Baldrige-quality business practices. It has received national and international acclaim for providing dynamic, customer-driven, continuously improving, innovative solutions in a number of arenas.

So, why consider change? NOVA operations have grown significantly in size since 1983. Starting off with 15-20 staff members and an annual budget of about $2,500,000, NOVA now employs over 100 individuals and annually invests over $12,000,000 in community services.

The organization is much more regional and complex than originally envisioned by the City of Sunnyvale when it took on the leadership role for the Consortium. This is partially because workforce issues are much more regional than the six cities of NOVA. Silicon Valley workers often travel far to get here, and our residents often travel to other destinations for their employment. As a result, many of NOVA's current services touch a much larger geographic community.

Another factor favoring regional action is the growing concern over the widening of the "digital divide," the disparity between the technology "haves" and "have-nots." The record high employment rates in the Valley underscore the importance of the NOVA PIC's strategic goal to improve our success in "growing our own workforce" so businesses can find capable workers and our residents can earn sustainable wages. This agenda reaches far beyond NOVA's six cities.

In exploring changes in how NOVA operates, the value-added or the confusion created by having three different administrative structures in the county, each performing many parallel activities, should be considered. While NOVA has demonstrated the strength of focusing on a smaller subregion of the county, multiple systems could be either advantageous, duplicative or counter-productive. In addition, mandated partners in WIA would need to be represented on up to three different boards, all serving their respective regions.

A regional approach could also benefit the one-stop service centers by creating a more integrated look throughout the county, providing a better marketing opportunity to employers and job seekers. Federal legislation actually allows the Governor to create additional incentives for regional collaboratives.

As the NOVA PIC and staff weighed the opportunities and risks of recommending a larger regional partnership, they concluded that any merger was contingent upon assessing this action against three criteria:

When these criteria were shared with the City of San José, Mayor Ron Gonzales was very supportive of working toward this outcome. He has stated his respect for the values that have made NOVA successful and his commitment to build a more coherent, comprehensive, effective and accountable workforce development system throughout the Valley. The Mayor assigned City of San José staff to work with NOVA staff to define the elements of a potential agreement that would safeguard the interests of the City of San José and the NOVA Consortium, while benefiting from the advantages of regional planning, collaboration and systems building.

In all of the dialogue among the County of Santa Clara, the City of San José, the City of Sunnyvale, the Silicon Valley Private Industry Council, and the NOVA Private Industry Council, it is apparent that there is a collective goal to work towards a more comprehensive, effective, regionwide workforce development system that improves our residents' access to and competitiveness for the work opportunities in our thriving industries. This has been accomplished in the past by focusing on subregions in the Valley and working cooperatively on common goals.

One option now available is to create a regionwide workforce development system that is led by a single Workforce Investment Board. With strong private sector leadership and public sector participation, this Board could be accountable countywide for producing measurable results valued by both businesses and job seekers, and would capitalize on the strengths and expertise of the various stakeholders.

In late December staff discussed with the City of San José and the County of Santa Clara their interest in amending their applications to the State of California to create the following infrastructure for implementing the Workforce Investment Act:

The City of San José has not expressed an interest in forming one WIB serving two workforce areas with two separate Chief Local Elected Officials, at this time. However, there is an interest in expanding the NOVA consortium to include other areas in the North Valley/West Valley area, if those areas elect to be served by NOVA.

Since it is being recommended that the City of Sunnyvale serve as the Chief Local Elected Official for the consortium, there will be financial risk assumed by the City of Sunnyvale if it serves as administrative entity for the NOVA consortium. If program expenditures for the consortium are disallowed through the audit process for not meeting regulatory intent, as grant recipient the City of Sunnyvale would be responsible for reimbursement to the State or Federal government. The General Fund would be the likely source for repayment of any disallowed costs.

Historically this financial risk has not materialized. Since 1983 with the creation of NOVA, the City of Sunnyvale has administered over $100,000,000 in grants and contracts. There has been no disallowed costs to date associated with any of these expenditures.

In addition, since funds are obligated to programs only based upon appropriations dedicated to NOVA, sufficient Workforce Investment Act funds will exist to cover all anticipated obligations of day-to-day program operations.

Given the goal for NOVA to successfully transition from the requirements of JTPA to the requirements of the Workforce Investment Act, there are two distinct alternatives for action:

The NOVA PIC and staff recommend pursuing the first option at this time. To accomplish this, Council would authorize the following actions:

In addition, if approached by other cities in the North Valley/West Valley area to join NOVA, the consortium cities should be willing to entertain expanding the boundaries of the consortium. Their decision should include the cost/benefit of such expansion, the effect of boundary changes on the region, and the need for concurrence of the Governor for such changes to occur.

Staff concurs with the NOVA PIC's recommendations.

Prepared by:

Approved by:

Robert S. LaSala
City Manager