December 2, 2003

SUBJECT:FY 2003/2004 Reduction in Workforce Investment Act Funding to Conduct Labor Market Research and Forums and Budget Modification No. 20     

This Report recommends Council adopt Budget Modification No. 20.  This modification will reduce the amount of Workforce Investment Act funds available to the Department of Employment Development by $467,832 and decrease the budgeted appropriations accordingly.  This reduction is a direct result of several grant-funded activities not being renewed by the State of California for FY 2003/2004.  This Budget Modification will also result in the elimination of ten (10) positions; the Sunnyvale Employees Association represents all ten positions.

BACKGROUND

The City of Sunnyvale Department of Employment Development manages programs and services for the NOVA Job Training Consortium, a seven-city entity formed through a Joint Powers Agreement.  The City of Sunnyvale administers all of NOVA’s programs, and has done so under the condition that outside funding is available to cover all of the associated costs.  Since its inception in 1983 NOVA has been successful in attracting sufficient outside resources to manage all obligations.  In recent years funding from these competitive grants has equaled 75% to 85% of NOVA’s overall budget, with the remainder being appropriated allocations.

This year the State of California issued a request for proposals that included the possibility of researching new and emerging occupations and industries in the Silicon Valley, and developing forums to help businesses, educational agencies and job seekers better understand the changing economic environment.  NOVA was in a very competitive position to secure these funds, having performed similar labor market studies on behalf of the State uninterrupted for the past eight years and receiving high marks for the quality of the work.

Given its severe economic condition, this year the State of California kept reducing the funding available for these proposals, eventually releasing only approximately $1 million.  NOVA’s application for $467,832 was one of more than 100 applications not funded.  In late October the City received notification that NOVA was not going to be funded this year.

EXISTING POLICY

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 other with special needs.

DISCUSSION

To mitigate the loss of these funds and to not risk expenditures from the City’s General Fund, there are two potential courses of action: increasing revenues from sources outside the City or decreasing expenses.  All options explored to date to increase revenues for additional labor market studies have not been successful, nor is it believed that they will be successful in the next several months.  Given the change in Administration in Sacramento, new appointments are not yet in place to respond to our requests.  In addition, the Davis Administration prior to leaving office committed almost all discretionary funds available for this fiscal year.

As to the reduction of expenditures, the only realistic option available at this time is reducing payroll costs.  While sufficient funds exist in the Department of Employment Development’s administrative budget to cover the costs that have occurred to date, available funding for these services will be exhausted by mid-January.  Therefore staff is proposing the elimination of the ten (10) positions currently filled, with the process to begin in early December 2003.  Eliminating these positions will provide sufficient savings to absorb the lost revenues by the end of Fiscal Year 2003/2004.

Fiscal Impact

Approval of Budget Modification No. 20 will decrease the FY 2003/2004 budget for the operations of the NOVA Job Training Consortium by $467,832.

BUDGET MODIFICATION NO. 20 FISCAL YEAR 2003/2004
	Current	Increase (Decrease)	Revised
Employment Development Fund
Revenues: Workforce Investment Act Funds –Labor Market Info Grant	$1,102,317	($467,832)	$634,485
Expenditures: Employment Development Programs	$12,969,681	($467,832)	$12,501,849

PUBLIC CONTACT

1. Public contact was made through posting of the Council agenda on the City's official notice bulletin board, posting of the agenda and report on the City's web page and the availability of the report in the Library and City Clerk's Office.

ALTERNATIVES

1. Council approves Budget Modification No. 20 reducing the amount of funds available from the Workforce Investment Act by $467,832.

2. Council supplements the budget for administering the NOVA Job Training Consortium from the General Fund by all or part of the $467,832.

3. Other action as determined by Council.

RECOMMENDATION

It is recommended by staff that the Sunnyvale City Council adopt Alternative #1, approving Budget Modification No. 20.

Prepared by:

Michael J. Curran
Director Dept. of Employment Development

Reviewed by:

Mary J. Bradley, Director
Department of Finance 

Approved by:

Robert S. LaSala
City Manager