Kirkwood Community College is spending $6,586 per job to train workers under Iowa’s Industrial New Jobs Training Program — or about half the state’s average of $13,000 per job in 2007.
An Iowa Department of Economic Development review of the program, released Thursday, said Iowa’s average training cost is much higher than the national average of $525 per job.
Steve Ovel, executive director of government relations at Kirkwood, said the $525 average is a reflection of the “pitiful amount of money” that some states are investing in the skills of their work force.
Ovel said Kirkwood has sold $137 million in bonds to pay for 389 job-training projects since the program began in 1983. The bonds have supported the creation of 26,000 jobs, he said.
With interest, the bonds cost $171.3 million to repay.
“If you divide $171.3 million by 26,000, you get about $6,586 per job,” Ovel said. “In our state, we have made the decision to focus a significant amount of our economic development incentive package on job training, as opposed to just writing a check to a company.”
The Iowa Industrial New Jobs Training Program was created during the farm-based recession of the early 1980s. The program allows community colleges to issue bonds to finance job training for new employees.
An employer diverts 1.5 percent of the state income tax withheld each month on an employee’s gross wages to help pay for the program. Kirkwood receives the payment and uses it to pay the principal and interest on the bonds that financed the employee’s training, as well as the college’s administrative and bond issuance costs.
The Iowa Department of Education annually sets the maximum percentage that community colleges can receive for administering the program. Ovel said Kirkwood has kept its fee at 15 percent, which has always been less than the maximum allowed each year.
Employers that have used the job-training program include AEGON USA, American Profol, Clipper Wind Turbine Works, Genencor, Heinz Quality Chef, International Paper, Pearson and PMX Industries. Ovel said the training is usually offered at the work site, and the skills involved are varied.
While the program has been criticized for diverting state income tax revenue from the state’s general fund, Ovel said the revenue would not exist without the program. “The state income tax revenue that is diverted only exists when a new job is created,” Ovel said.
Ovel said 91.2 percent of the jobs pledged by companies seeking job training through Kirkwood since 1983 still existed at the end of 10 years.
“Some employers were unable to create the required jobs, went bankrupt, merged with other businesses or left the state,” Ovel said of the rest.
Of the 389 job-training projects undertaken by Kirkwood, bonds have been fully repaid on 268 of the projects, with 131 either still receiving project funding or still in the repayment process.