Education & Workforce Committee

Policy Principles

• Carl D. Perkins Career and Technical Education Act

  America's business leaders supported the successful enactment of bipartisan legislation to modernize and reauthorize career and technical education (CTE) programs. Business Roundtable, along with the National Association of Manufacturers and the U.S. Chamber of Commerce, identified four key principles for the bill:

  
  

  1. CTE must be relevant and meaningful for students.
  2. Recipients of Perkins funding must be accountable for results.
  3. The business community must be actively engaged in helping to inform and support CTE at the state, regional and local levels.
  4. The Perkins Act must provide for state / local innovation and reward excellence.

  
  

  In July 2018, the final version of the bipartisan bill was passed by both houses of Congress and signed by President Trump. This legislation is an excellent example of what can be accomplished when leaders in business, government and education come together to expand education and training pathways for the American people. We must keep pushing forward with initiatives to help prepare America’s students and workers for career success in the 21st century.

• Enactment of the Higher Education Act (HEA) Reauthorization

  Working with a coalition of other national organizations from across the business and workforce development communities, Business Roundtable laid out a series of policy principles for the reauthorization of the Higher Education Act (HEA). Other organizations included the Aspen Institute’s Skills for America’s Future; Business Roundtable; CAEL; Center for Law and Social Policy; Committee for Economic Development; HR Policy Association; Jobs for the Future; National Association of System Heads; National Governors Association; National Skills Coalition; New America Foundation; and the U.S. Chamber of Commerce.

  Outcomes are what matter: Student outcomes need to play a stronger role in our quality assurance system and in the rules determining access to public federal higher education funds. As higher education becomes more essential and more expensive, it is imperative that we reduce the financial risk of educational investments for students, employers, and taxpayers. The best way to manage risk is to pay more attention to learning and labor market outcomes. The federal government and its partners in state government and the accrediting community, should ensure that federal higher education funding is linked to the outcomes that matter most to students, employers, and taxpayers: credential attainment, graduation, jobs, earnings, and/or access to more advanced education. Our policies need to reward institutions for helping all students, especially those from historically disadvantaged or underrepresented groups, access and succeed in higher education and transition successfully into the next stage of their personal and professional development. Our policies also need to make it easier for institutions and policymakers to collect and report student outcome data, including employment and earnings. 

  Federal financial aid policies need to be more flexible: The federal student aid programs authorized under Title IV of HEA do too little to support students who are older, returning to school, or seeking specific skills and credentials for work. While maintaining crucial safeguards against fraud and abuse, eligibility criteria and allowable expenses should be updated to better support students who need to combine work and learning, accelerate their time to degree, and/or attend school part-time and year-round. Creating more opportunities to target grant and loan programs differently, depending on the level of risk or return associated with a particular program, can also provide more safe spaces for innovation in program design.

  Higher Education needs to do more to connect learning and work: If students are to graduate ready for the world of work, we need approaches that marry classroom learning with educational opportunities rooted in exposure to real world experience and problem solving. The tools to bridge this divide, such as work-based learning, cooperative education, apprenticeships, and prior learning assessment, are well known but not widely used in postsecondary education. HEA reauthorization should encourage institutions to expand experiential learning opportunities by supporting the use of college work-study and other innovative strategies for fostering stronger linkages between work-based and classroom learning.

  Accreditation processes need to be more transparent and rigorous, and protect the interests of students, employers, and taxpayers. Our quality assurance system is fragmented, duplicative, and overly focused on institutional inputs and processes rather than program quality and student outcomes. The lack of transparency and the institutional focus of our accreditation system make it too difficult for stakeholders to identify high-quality programs or mitigate the risks associated with bad programs. The reauthorization of HEA provides an important opportunity to strengthen quality assurance policy and practice.

  Quality assurance processes should focus more on programs and credentials: As the labor market grows more competitive and employers look increasingly for specific skills and experience, postsecondary credentials have become more important for securing good jobs. But our quality assurance processes have failed to keep up with the growing demand for and supply of credentials, leaving consumers – both students and employers – with inadequate information about the value, or even composition, of individual credentials. Credentials need to accurately reflect what a student knows and can do. Improved competency and credential validation processes that include employers would go a long way to improve transparency around skill attainment and to ensure that credentials are used for making employment-related decisions. For these reasons and more, greater transparency should be a guiding principle of the reform of accreditation.

  Higher education is not an island; HEA shouldn’t be either: The reauthorization of HEA creates opportunities to better align the law, particularly the rules surrounding access to the federal student aid programs, with other federal education and training programs. The recent reauthorization of the Workforce Innovation and Opportunity Act is an example of how policymakers can facilitate coordination and alignment among programs offering complementary services. The upcoming reauthorizations of the Higher Education Act, Elementary and Secondary Education Act, and the Carl D. Perkins Career and Technical Education Act create more opportunities for states and institutions to coordinate federally-funded education and training programs through activities like joint planning, data-sharing, cost-sharing, accountability, and dual enrollment.

  Policy should encourage innovation and experimentation: Meeting the education challenges of the future will require new ways of designing, delivering, and assessing teaching and learning. Our public policies should support the scaling of evidence-based strategies as well as innovation in higher education to make it more accessible, affordable, and relevant to students, employers, and communities. New models are emerging inside and outside the existing higher education system that are pushing the boundaries of educational design. These include career pathways and stackable credentials, flexible scheduling, concurrent enrollment models with adult education, and competency-based education. HEA should provide safe spaces for experimentation with new outcome-based quality assurance processes, alternative currency for awarding financial aid, and rigorous evaluation of new approaches.  

• Passage of a Revised Federal Work-Study Policy

  In association with 12 other national organizations, Business Roundtable released a letter to Senators Lamar Alexander and Patty Murray of the Senate Health, Education, Labor, and Pensions (HELP) committee which outlined a set of recommendations for work-study policies.

  
  

  Fix the Funding Formula

  Institutions become eligible to participate in the FWS program based on a complex funding formula that has grown increasingly unbalanced over the years. Two features in particular of the funding formula distort how the program’s limited resources are distributed, channeling them away from the public two and four-year colleges that enroll the large majority of low-income students:

  
  

  Funding guarantees for incumbent institutions: When the program was first created it included a relatively small number of colleges and an ad hoc committee of experts determined funding levels. As time passed, policymakers recognized the need to create a funding formula to better target the program’s resources toward high need students and ensure fairness. The first major adjustment was made in 1979. But in an effort to protect colleges that might lose funds under the new formula from a financial shock, Congress guaranteed existing colleges 100 percent of their most recent allocation. In subsequent rounds of HEA reauthorization, this “campus base guarantee” has been reset, each time guaranteeing more institutions 100 percent of their previous year’s funding, and is currently set at 1999.

  While colleges covered by the guarantee are assured, at a minimum, the same base amount of funding each year, funding for the FWS program has not significantly increased. As a result, an ever-growing share of FWS dollars flow to colleges regardless of the financial status of their students, or of the needs of students in other institutions, but based solely on an institution’s historic participation in the program. In fact, the campus base guarantee currently accounts for 67% of all FWS dollars allocated (around $600 million), leaving only a third of the program’s resources subject to the funding formula designed to target institutions with high need students.

  The campus base guarantee has made it almost impossible for the program to respond to the changing demographic and enrollment patterns of American undergraduates. It is the reason why the resources have remained so concentrated in the Northeast – where many institutions began participating in the program in the 1960s – and has failed to gain a foothold in other parts of the country.

  A bias toward high-tuition institutions: The annual funds remaining after the campus base guarantee has been met (about $300 million) are distributed via a “fair share formula” that seeks to channel resources to colleges with “high need” students. But the formula does a poor job actually identifying high need students since it is based primarily on the cost of attending a particular institution (i.e. tuition and living expenses), not the economic circumstances of students. Specifically, the formula calculates “institutional need” based on the gap between the cost of attendance and the average expected family contribution (EFC) of students. At institutions with high tuition there is a larger gap between cost of attendance and EFC, so this essentially identifies “high need” students at high tuition schools who are not necessarily low income. The formula is effectively blind to students attending affordable institutions – who are more likely to be low income – and biased toward students at high cost institutions, even if they are not from low- income families.

  The fair share formula, combined with the distorting effects of the campus base guarantee, explain why nearly quarter of federal work study participants come from families earning over $90,000 per year, well above the earnings of many low-income students.7 We propose the following reforms as essential steps for better targeting this valuable program toward the students who need it most.

  
  

  HEA reauthorization is a perfect opportunity to address the distortionary effects of both the campus-based guarantee and the fair share formula. We recommend the following changes:

  1. Phase out the “campus-base guarantee” over a 5-year period and replace it with a guarantee of 10% of the total funding per year.
  2. Replace the fair share formula with one that is driven by a combination of Pell enrollment and Pell graduation rates.

  
  

  Improve linkages between work-study and careers

  According to the Higher Education Act, FWS positions “must be related to educational goals to the maximum extent practicable”. But institutions are not required to assess or report on the degree to which work study jobs are career relevant. We believe that FWS can be used to better prepare students for a career after college. Many low-income students have difficulty supporting meaningful work experiences like unpaid internships while they are in colleges. The same recent study found that participation in FWS had little impact on students’ careers after graduation. To improve this link, we also propose a stronger alignment with programs of study where feasible. Specifically:

  1. Congress should better define what the statute means by FWS positions “must be related to educational goals to the maximum extent practicable” in the reauthorization of HEA.
  2. With this improved guidance, HEA should direct the Department to collect data from colleges on the number of students who are placed into opportunities that relate to their course of study.
  3. Currently, many low-income students face a disadvantage in the labor market because they cannot afford to take unpaid internships like their more affluent counterparts. FWS could play a role in addressing this inequality. Congress should consider lifting the restrictions on students using their FWS funding for jobs with for-profit companies and off campus non-profits.

• Establishing Public/Private Regional Partnerships to Recruit and Retain a Skilled Workforce

  In June 2018, Business Roundtable launched the Workforce Partnership Initiative (WPI) to tackle current and future skills development challenges and drive economic growth in seven regions around the U.S. CEOs of leading businesses will partner with local colleges and universities to accelerate and scale best-in-class workforce readiness programs and develop a steady talent pipeline that meets the changing needs of each region’s growing industries.

  The public-private partnerships developed and scaled through the WPI will increase the number and diversity of skilled regional workers by expanding work-based learning programs, creating new industry-recognized credentials and building new and innovative apprenticeship models.

• Workforce Innovation and Opportunity Act

  Key Principles for Reform

  As Congress moves forward with the long-overdue reauthorization of the Workforce Investment Act (WIA), Business Roundtable encourages policymakers to embrace the following principles to ensure a far more effective and efficient workforce investment system in this nation.

  Business Driven: To be effective, the federal workforce investment system must provide for a strong and active role for the employer community. This involvement is critical for ensuring training and employment services are relevant to the jobs that are in demand today or will be in demand in the future.

  Less Bureaucracy: To be effective, the federal workforce investment system must be streamlined and efficient. Overlapping and duplicative funding streams are unnecessary and the administrative costs diminish funds that could be used for training. Overly complex federal rules and regulations, which micromanage state and local implementation of programs, drive away the willingness of business leaders to participate and create barriers to individuals seeking to obtain necessary services.

  Expanded Training for In-Demand Occupations: To be effective, the federal workforce investment system must have “preparing individuals for a career” as a main focus. Currently, too few individuals receive training under the Workforce Investment Act, in part due to the multiple hoops individuals must often go through to access training. This issue, along with better allocation of resources and more efficient delivery of services, must all be addressed.

  More Innovation: To be effective, the federal workforce investment system must enable new approaches for the delivery of employment and training services and promote innovations that expand access to training and make training relevant, such as industry-recognized credentials. It must also promote positive outcomes such as through pay-for-performance contracting.

  Performance Driven: To be effective, the federal workforce investment system must be driven by real accountability that is focused on outcomes that matter most — such as a job. A key objective is consistency across similar programs and the assurance that grantees and providers of services are accountable for results by measuring placements of those trained, the compensation and quality of the job and success on the job.

  Collaboration: To be effective, the federal workforce investment system must be fully engaged with the full array of local and regional partners, particularly community colleges and other postsecondary institutions that share similar missions and urgency for preparing individuals for careers.

  Better Information: To be effective, the federal workforce investment system must be driven by high quality data so that: 1) high-quality labor market information drives training opportunities, 2) participants are able to make informed career and training decisions among providers and 3) program outcomes are reliable in order to ensure a robust and fair system of program accountability.