DOCUMENT RESUME

ED 215 151 CE 031 910

AUTHOR Ruff, Richard D.; And OthersTITLE National Priorities for Vocational Education.INSTITUTION Ohio State Univ., Columbus. National Center for

Research in Vocational Education.SPONS AGENCY Office of Vocational and Adult Education (ED),

Washington, DC.PUB DATE Sep 81CONTRACT 300-78-0032NOTE 37p.

EDRS PRICE MF01/PCO2 Plus Postage.DESCRIPTORS *Demand Occupations; Educational Legislation;

*Federal Aid; *Federal Legislation; Grants; IncentiveGrants; Job Training; Labor Needs; PostsecondaryEducation; Program Improvement; Retraining; SecondaryEducation; Technical Occupations; Unemployment;*Vocational Education; Youth

IDENTIFIERS *National Priorities; Set Asides

ABSTRACTNational priorities exist that can be served through

federal legislation for the funding of vocational education. Fouralternatives that are examples of national needs that vocationaleducation would appear to have a potential to address are (1)training and retraining of workers in national critical skillshortage occupations, (2) training and retraining of individuals inhigh technology areas, (3) training and retraining of displacedworkers, and (4) improving employability of hard-to-employ youth inthe inner cities and depressed rural areas. (The discussion of eacharea includes background information, implications, and federal andadditional considerations.) Three alternative funding strategiescould be used for directing federal vocational education dollarsthrough state agencies towards national priorities; block grant,set-asides, and national incentives. Two additional fundingstrategies that represent a more significant departure from historicprecedents are direct funding and directing a greater federalemphasis towards program improvement. (YL8)

************************************************************************ Reproductions supplied by EDRS are the best that can be made ** from the original document. *

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NATIONAL PRIORITIES FORVOCATIONAL EDUCATION

Richard D. RuffMorgan V. LewisMollie N. OrtnBruce J. Shylo

The National Center for Research in Vocational EducationThe Ohio State University

1960 Kenny RoadColumbus, Ohio 43210

U S DEPARTMENT OF EDUCATIONNATIONAL INSTITUTE OF EDUCATION

EDUCATIONAL RESOURCES INFORMATION

CMTERIERICIThis document has been reproduced asMCPIVIN1 from the person nr organdationoriginating itMinor changes have been made to improverep,Odta tied, piddling

Points of view or opinions stated in this (Imoment do not necessanoy represent official N IE

pOSitonorpolicy

September 1981

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"PERMISSION TO REPRODUCE THISMATERIAL HAS BEEN GRANTED BY

Linda Pcis-kr.

TO THE EDUCATIONAL RESOURCESINFORMATION CENTER (ERIC)."

Project Title:

Contract Number:

Project Number:

Educational Act UnderWhich the Funds wereAdministered:

Source of Contract:

Contractor:

FUNDING INFoRMATioN

National Center Lor Hasearch in VocationalEducation, Entormation for Planning andPolicy Development Function

300780032

051MH10012

Education Amendments of 1976,P.L. 94-482

U.S. Department of EducationOffice of Vocational and Adult EducationWashington, EC

The National Center for Research inVocational EducationThe Chio State UniversityColumbus, Ohio 43210

Executive Director: Robert E. Taylor

Disclaimer:

DiscriminationProhibited:

This publication was prepared pursuant to a

contract with the Office of Vocational and AdultEducation, U.S. Department of Education.Gontracbors undertaking such projects underGovernment sponsorship are encouraged to expressfreely their judgement in professional andtechnical matters. Points of view or opinions donot, therefore, necessarily represent official U.S.Department of Education position or policy.

Title VI of tne Civil Rights Act of 1964 states:"No person in the United States shall, on thegrounds of race, color, or national origin, beexcluded from participation in, be denied thebenefits of, or be subjected to discriminationunder any proyram or activity receiving Federalfinancial assistance." Title IX of the EducationAmendments of 1972, Public Law 92-318 states: NoPerson in the United States shall, on the basis ofsex, be excluded from participation in, be deniedthe benefits of, or be subjected to discriminationunder any education program or activity receivingFederal financial assistance." Therefore, theNational Center for Besearch in VocationalEducation Project, like every program or activityreceiving financial assistance frau the U.S.Eepartment of Education must be operated incompliance with these laws.

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FOREWORD

TABLE OF CONTENTS

EXECUTIVE SUMMARY

Page

iv

v

INTRODUCTION1

NATIONAL PRIORITIES5

National Critical Skill Shortages 5

High Technology9

Displaced Workers14

Hard-To-Employ Youth18

FUNDING STRATEGIES25

Block Grant25

Set-Asides26

National Incentives27

Additional Strategies29

REFERENCES33

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FOREWORD

During the months ahead Congress will be examining thelegislation governing vocational education. This paper isintended to inform those who will be involved in that process ofalternative objectiv- which could be considered as nationalpriorities for vocational education. It is the first in a seriesof policy information papers which will be developed by theNational Center for Research in Vocational Education during thecoming months.

A great number of people have generously contributed theirtime and thoughts during the development of this paper; a specialappreciation is extended to: Richard Arnold, American Telephoneand Telegraph; Don Averill, Coast Community College; Paul Barton,National Institute for Work aid Learning; Robert Beckwith,Illinois State Chamber of Commerce; Gene Bottoms, AmericanVocational Association; Anthony Carnevale, Private Consultant;Joel Chastain, Tri-County Technical College; Kenneth Edwards,International Brotherhood of Electrical Workers; James Galloway,Illinois Division of Adult, Vocational and Technical Education;Thomas Johns, U.S. Department of Education; Arnold Loomis,Michigan Division of Vocational and Technical Education; WilliamMann, Peninsula Office of Manpower Programs; David Passmore,Pennsylvania State University; B.J. Rudman, Massachusetts HighTechnology Council; Daniel Saks, National Commission forEmployment Policy; Rollie Thomas, Florida State University; Rosswingler, General Motors Corporation.

Special appreciation is extended to the National Centerproject staff members in the Evaluation and Policy Division:Richard Ruff, project director; Morgan Lewis, program director ofthe Planning and Policy Unit; N. L. McCaslin, associate director;Mollie Orth, Bruce Snylo, Mark Whitmore, and Jeannette Fraser,project staff. Special assistance was provided by Kathie Medley,typist; Janet Kiplinger, editor; and other members of the NationalCenter staff who reviewed early drafts of the paper.

The funds for this effort were provided by the Office ofVocational and Adult Education, U.S. Department of Education.

Robert E. TaylorExecutive DirectorThe National Center foi Research

in Vocational Education

tv

EXECUTIVE SUMMARY

For most of this century, federal legislation has been asignificant force in shaping vocational education in this country.In the coming months, the Congress will be re-addressing thenature of the federal role in vocational education. The purposeof this paper is to expand the information base which is availableto those who will be involved in that process. The Locus of thepaper is an examination of alternative national needs which coulabe designated as federal priorities for vocational education. Asa part of that examination, alternative funding strategies arediscussed.

Historically, the concerns to which federal legi .ation hasbeen directed have reelected assessments of the major nationalneeds that prevailed at the time the legislation was passed.Presently, many of these needs center around the productivecapacity of the American economy. Reflecting this current foe ;,

two of the national priority alternatives examined in this paprrelate to critical skills; the third involves the retraining ofdisplaced worKers; and the fourth discusses how vocationaleducation could serve hard-to-employ youth in inner cities anddepressed rural areas.

The last section of the paper discusses alternative fundingstrategies which could be employed for directing federal resourcestowards designated national priorities; block grants, set-asidesand the notion of employing a national incentive approach areexamined. In addition, strategies which involve direct fundingand the idea of focusing a greater federal emphasis on programimprovement are discussed.

The examination of national priorities revealed that the mostimportant consideration for increasing the capacity of the voca-tional education enterprise relates to improving collaborationwith business and industry. The national priorities discussed inthis paper will require vocational education to develop programsresponsive to specific industries; they will also require thevocational education community to work closely with specific firmsin delivering those programs.

INTRODUCTION

In the coming year the Congress will be examining theexisting legislation governing vocational education with theintention of continuing, redirecting, or terminating the presentrole of the federal government in vocational education. Thepurpose of this paper is to provide additional informationconcerning national needs to those who will be involved inIthislegislative process. The intent of the paper is not to examinewhether there should be a federal role in vocational education, adebate that is not best conducted in the abstract. Instead thepaper examines four areas of current national concern anddiscusses some of the implications and considerations related tothe designation of those area:, as federal priorities forvocational education. In addition, it discusses alternativestrategies for funding those priorities.

Background

Historically, the federal role in vocational education hasbeen to encourage and support state and local efforts to preparepeople for employment. The original purpose was to makevocationa- education a part of public education at the secondarylevel. Subsequent legislation, prior to 1963, increased thenumber of occupation&l areas in vocational education that couldreceive federal support. The 1963 Vocational Education Actexpanded the federal effort and attempted to increase the capacityof vocational education to serve individuals. The 1968 and 1976Amendments furthered the use of federal vocational educationdollars for support of programs designated to serve special high-need population groups such as the disadvantaged and handicapped,to overcome sex-role stereotyping of occupations, and to assisteconomically depressed areas.

The concerns to which federal legislation has been directedhave reflected assessments of major national needs that prevailedat the time the legislation was passed. The coalition that led tothe 1917 Smith-Hughes legislation included employers who wanted abetter prepared work force and educators who wanted a moremeaningful curriculum for a wider range of students. The 1963 actwas, in part, a response to the anticipated affect of a decreasingnumber of low-skill jobs due to automation, coupled with theimpact of the baby boom. The 1968 and 1976 Amendments reflectedthe national concern for providing assistance to high-needpopulation groups.

The existence of such pervasive national needs relative topreparing people for work has provided the historic rationale forfederal sq)port of vocational education. This rationale has been

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based on the assumption that such needs are difficult for stateand local educational agencies to address adequately withoutfederal support.

At present there are those who believe that a federal role invocational education is no longer needed. They cite the ratio ofstate and local tunds to federal funds, which in the 1979 fiscalyear was approximately eleven to one, as evidence that theoriginal purpose of federal legislation has been accomplished.In fact, some have argued vocational education is so wellestablished and funded at the state and local level, that thefederal government cannot truly influence the system. There areothers, however, who believe that a federal role is stillnecessary to improve the quality of programs and to directresources to national priorities that otherwise would receive lessthan adequate attention.

Four Possible Priorities

This paper is based on the assumption that nationalpriorities do exist which can be served through federallegislation for the funding of vocational education. At thepresent time many of these priorities are based on increasing theproductive capacity of the American economy. The Reaganadministration has adopted policies that are designed to increaseinvestment and enhance productivity. Coupled with these generaleconomic policies will be an Increase in defense spending at arate not seen in this country since World War II. Can the economyrespond satisfactorily to these demands or will unacceptableinflationary conditions and production restrictions develop whichwill require some national response relative to the labor pool incritical skill areas. Reflecting these current concerns, two ofthe alternatives examined in this paper concern critical skillneeds, a third involves the retraining of displaced workers, andthe fourth discusses how vocational education can serve hard-to-employ youth in inner cities and depressed rural areas.

Phese four alternatives are not suggested as an exhaustivethe possible priorities that should be designated in thelegislation, but are presenttd rather as examples of

:,-?.1 Needs that vocational education would appear to have a: tial to address. Futhermore, as a collective set ofpriorities they represent both the equity and efficiency role ofthe federal government in vocational education.

An examination of the issl related to directing federalresources toward each priority , presented in the next section ofthis paper. For example, the first two priorities relate to skillneeds that have potential impact on the productive capacity of theeconomy. Do tnese skill needs constitute national concerns? Some

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argue that the normal processes of the labor market will correctany skill shortages taster and more precIsely than any federalprogram can. Advocates of an active federal role concede thateventually labor market adjustments do take place, but ask at whatcost and how quickly? How much inflationary pressure, theyinquire, is produced by the bidding for scarce skills, how muchproduction is lost due to the unavailability of workers possessingcritical skills, and how quickly can people learn the necessaryskills? These considerations, they claim, argue for theadvisability of an anticipatory role for the federal government.But can and should the federal government play this anticipatoryrole? The purpose of the next section is to examine theconsiderations and implications of a federal role in each of thefour priorities.

The last section of the paper discusses three alternativefunding strategies that could be used for directing federalvocational education dollars towards national priorities. Thesestrategies represent modifications or combinations of approacheswhich have historically been included in federal vocationallegislation. In addition, two funding s-rategies are includedwhich represent a more significant departure from historicprecedents. The initial three strategies are:

o block grant

o set-asides

o national incentives

The two additional strategies represent various approaches todirect funding and to directing a greater federal emphasis towardsprogram improvement.

With this as background on federal objectives in past andexisting legislation, four possible national priorities for newlegislation are discussed.

NATIONAL PRIORITIES

National Critical Skill Shortages

One possible priority for new legislation would be toencourage the expenditure of federal vocational educationresources for the training and retraining of workers in nationalcritical skill shortage occupations.

Background

Imbalances between avpilable jobs and persons trained inoccupations related to those jobs are likely to exist in aneconomy where individuals are encouraged to make their owneducational and career choices. Many persons will be unemployedor underemployed, and yet many jobs will go unfilled. Oneparticularly important aspect of this problem relates to skillshortages that have a critical impact on the overall economichealth of tne nation. Such national critical skill shortages arecaused by the convergence of significant national trends such as:increased foreign industrial competition, expanded nationaldefense needs, and the rapid development of technologicalinnovations.

These critical skill shortages are not defined solely interms of absolute numbers- -from a national perspective, 10,000 newopenings annually in one occupation may be more critical to theeconomy than 25,000 openings in another. What these criticaloccupations lack in absolute numbers of openings, however, isbalanced by the impact of a shortage in that occupation on thenation as a whole. For example, the occupation of skilledmachinist could be a critical skill shortage occupation. Skilledmachinists are required to produce much of the hardware used inweapons, aircraft, and other military equipment considered to becritical to national defense needs. A related occupation thatcould also be considered critical is that of tool and die maker.Although the absolute number of openings in these two occupationsis small compared to other occupations, the impact of a shortageon the t-sic production capacity of the United States would besubstantial. In general, factors that occupations have in commonthat tend to make a shortage in those occupations criticalinclude: a long training period, the requirement for individualaptitudes and skills not widely distributed in the population, theoutput of a basic product or servic, and the characteristic thatshortages cannot be easily remedied by increases in wages.

It should be emphasized, however, that tne identification ofcritical skill shortage occupations and the subsequent focusing ofour training capacity to address those shortages are substantive

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tasks. National priorities and the skilled occupations related tothese priorities would have to be identified, agreed upon, andthen communicated to tnose agencies and instItuti:ons which couldbest directly respond to the skill training needs. The difficultyof the identification task alone is exemplified in relation to thepreviously noted example of skilled machinists. Schultz's (1980)work on the shortage of skilled machinists notes the claimedexistence of a significant shortaye, and also sets forth goodarguments suggesting that a true shortage may not in actualityexist. Considering a wide variety of occupations, the possibilityof such artifical shortages could be caused by numerous forcesincluding: industry's desire to maintain a large available laborPool, job conditions which create a pass-through occupation, oruneven geographic dispersion of workers.

Whatever the extent of the difficulties, it is evident thatunless some national mechanism is established for identifyingnational critical skill shortage areas and for funding programs toaddress them, it is unlikely that the vocational education system,or any other education or training system can efficiently respondto the nation's needs.

Implications

The implications for encouraging the use of federalvocational education funds to address national critical skillshortages are numerous. A fundamental consideration is theviability of federal intervention, which may rest in part with thespecific occupations identified for federal assistance. Itappears that shortages would have to be critical not only in termsof the previously noted criteria such as a long training period,but also in terms of market responsiveness. The dynamics of themarketplace will tend to resolve many national skill shortages.However, the pivotal questions may be--is the response quickenough and are the associated costs acceptable? These questionsare particularly germane with reyard to the industrial defensebase, where it may be necessary to have not only an adequatesupply but an oversupply of trained workers, so that a surgecapacity is established.

It is pertinent to note a specific mechanism for identifyingnational critical skill occupations, as defined in this context,is not in place. Broad-based interagency cooperation within thefederal government, with a substantial amount of lead time todevelop linkages and to identify sources of information will berequired to establish such a mechanism. Moreover, it will benecessary that the system be sensitive both to artifical shortagesand to the emergence of new skill shortages. The latterconsiderations, along with others, s:Iggest the necessity forsubstantial business/industry involvement if a viable

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identification system is to be established.

If the capacity of the vocational education system to addressthe national critical skill shortages is to be improved, twoconsiderations appear particularly important:

Improving cooperative arrangements. Because of thecharacteristics of national critical skill occupations, it appearslikely that substantial improvement in capacity will depend uponvocational education entering into cooperative arrangements withother training providers, business/industry and labor. In orderto be effective these joint ventures will have to involve allphases of the program including the actual training. As anexample of a cooperative training el:fort, assume that a nationalpriority has been placed on the rapid training -..)f more tool anddie makers. In that case, it might be effective for vocationaleducation to assume responsibility for the prerequisite trainingrelated to scientific literacy and general technical skilltraining, with the specific skill training being carried out viathe apprenticeship system.

With regard to national skill shortages, the importance ofcooperative arrangement: relates to improving response accuracyand time, and to reducing associated costs. Relative to theprevious example, the apprenticeship system has and will continueto provide tool and die makers but, the question remains, ifshortages become critical, can the efficiency of the training beincreased through new cooperative arrangements?

Improvinu the delivery system. Due to the nature of thetraining required to be responsive to addressing national criticalskill shortages, the vocational education system will have toestablish an increased capacity to develop training programsquickly. Programs will be required to deliver a diversity ofskill training ranging from basic scientific and technicalliteracy to specialized technical skills. In addition to thequick response capacity, the programs will also requirestate-of-the-art equipment and processes. In a number of states,this state-of-the-art capacity does not exist to a pervasivedegree.

Federal Considerations

The following discussion deals with the rationale for afederal role in this priority and provides additional informationconcerning federal involvement.

Rational. The high cost and limited demand for criticalskill occupations constitute the basis for a federal interest inthis area. These skills are by definition cruicial to the prouuc-

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tive capacity of the nation. However, in any one labor marketthere may not be sufficient demand for a local institution tojustify such a program. The high cost of these programs isanother deterrent to local or state efforts. While it may not bein the self-interest of any one locality or state to offer thistraining, the national interest requires that critical skills bedeveloped.

It should be noted, however, that a federal emphasis oncritical skills would probab.ky not directly serve the equityinterest of the nation. Critical skill training, even withfederal incentives, is likely to be offered predominantly bylarge, well-funded instituions serving areas with high levels ofeconomic activity. Those who are selected for these programs arelikely to be among the more able students who have good basiccommunication and computational skills. A critical skillsemphasis would therefore be likely to direct funds to moreadvantaged areas and people. A federal effort would thus have tobe justified based on the importance of these skills to theeconomy and on the judgement that without federal intervention asufficient training capacity would not be available.

Additional consideratons. Additional considerations relativeto designating national critical skill training as a nationalpriority would include tne following:

o In order to certify those occupations which would be consider-ed national critical skill shortage areas, a federal boardwould need to be established. Tlis federal certificationboard should be broad-based in make-up and include represen-tation from at least the following departments: Commerce,Defense, Labor and Education. The role that the NationalOccupational Information Coordinating Committee (NOICC) shouldplay in relation to this board should be addressed.

o To fund this effort effectively a pool of money reserved forthis purpose should be established at the national level. Amore detailed discussion of such a strategy is delineated inthe funding strategies section of this paper under theheading of National Incentives.

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High Tecnnology

A second possible national priority would be to encourage tieexpenditure of federal vocational education resources for thetraining and retraining of individuals in high technology areas.

Background

It is a well established proposition that the introduction ofhigh technology innovations has played a substantial role ingenerating American economic growth. The importance of these hightechnology innovations has been related not only to their positiveimpact on increasing tne productivity of existing resources, butalso to increasing the size of the resource base itself (Rosenberg1976). Indeed, a basic rationale for the introduction of hightechnology equipment and processes has been to increaseproductivity.

Although tne economic importance is well established, theexact nature of the impact of high technology on labor marketneeds is complex and not easily resolved. In order to develop acomprehensive perspective concerning high tecnnology during thecoming decade, it would appear useful to distinguish between thelabor market impact of high technology on the specific industrieswhich manufacture the computer hardware, robots, and micro-processors, and its impact on the large and small businesses andindustries that directly or indirectly use these products. Thisdistinction is useful not only for understanding the nationallabor market needs, but also for developing the training progransthat are responsive to those needs.

From the national labor market perspective, the distinctionbetween manufacturers and users is useful because of regionaldifferences. Manufacturers of high technology products are notevenly dispersed across the country. The large high technologyfirms are concentrated in a few states, for example, Texas,California, and Massachusetts. Although the businesses andindustries which are users of high technoloyy are more evenlydistributed nationally, regional differences do exist. For thesereasons and others, federal efforts directed toward improving thenational training capacity for high technology should be sensitiveto tne subnational characteristics of this labor market.

In order to assist in the development of a responsivetraining capacity, recognition should be extended not only to thedistinction between manufacturers and users, but also to thenotion that occupations of varying technical skill levels exist inboth the manufacturing and user sectors. Not all jobs in hightechnology industries require high level technical skills. For

example, the soldering of light filaments for calculator digitaldisplays, a job in the manufacture of a common high technologyproduct, requires relatively routine level, assemuly-relatedskills. On the other hand, jobs involving the maintenance ormonitoring of the new generation of industrial robots may indeedrequire a substantial upgrading of existing workers' skills. Inaddition, new occupations such as the laser/ electro-optictechnician have evolved which require highly specialized technicalskills. The growth of high technology has appeared to cause aneed for a training capacity characterized by flexibility anddiversity, one which can provide a continuum of skilled workersranging from routine level assemblers and operators to highlyspecialized technicians.

In addition to the previously noted considerations, effectiveassistance in improving the national training capacity requiresestimating the order of magnitude of the labor market needs inhigh technology job categories. In general, a substantial needexists for training, retraining and upgrading workers in responseto the growth of high technology occupations. Partly because ofthe increased foreign competition, this need appears particularlycritical in the manufacturing sector. A recent survey completedby the Massachusetts High Technology Council (1981) indicates ahiyh annual growth rate for both technician level occupations(average for all technician occupations was 21 percent) and forassembler/production operators (21 percent). These findings weresubstantiated in a national study of 610 electronics firmsconducted by the American Electronics Association (1981), theresults of which indicated significant job growth at theassembler/operator, technician, and engineering levels.

In both the manufacturing and user sectors vocationaleducation institutions have the potential to address the trainingneeds relative to high technology. However, there are, in themanufacturing sector in particular, special considerations thatmust be addressed in determining their most appropriate roJi- andthe nlost effective delivery system. Three such considerationsare: (1) the need for firms to Keep certain equipment andprocesses confidential in order to remain competitive, (2) theimpossibility of duplicating the unique and extremely expensiveequipment utilized by some companies in an educational setting,and (3) the difficulty of mastering the highly complex skillsrequired for certain equipment and processes except under thesupervision of experienced company personnel. It is important tonote that these considerations do not negate the role of anoutside training institution, but rather help to define it.

Implications

When addressing the designation of high technology as anational priority for vocational education, there are, in addition

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to the previously noted background issues, several other consider-ations which are important.

First, it should be recognized that if snortages develop inthe high-level technician occupations, those shortages willprobably be critical in nature. Their criticality is based onconsiderations such as: (1) the long training and experienceperiod required, (2) requirements for individual aptitudes andskills not widely distributed in the population, and (3) the basicdevelopmental nature of the work in many of these occupations.

Second, valid labor market projections are likely to bedifficult to obtain since, in the manufacturing sector, acompany's orojections will be influenced by the need to protectproprietary secrets and will be fundamentally difficult toestimate reliably due to the fluidity of high technologyindustries. Moreover, obtaining a relevant estimate of theupgrading and retraining needs in the user sector appearsparticularly unlikely.

Third, although a number of the large high technologymanufacturing firms have the capacity to conduct their owntraining and indeed some have chosen that approach, others willnot. It is particularly likely that firms will look for outsideassistance in reference to basic training in mathematics andscience and in the general technical skills required in areas suchas electronics and mechanics. Moreover, in the manufacturingsector the number of small firms is increasing. In theelectronics industry alone, the American Electronics Association(1981) recently estimated that as many as fifty new electronicsfirms are formed each month. Generally these small companies donot have a substantial capacity to conduct their own training.

In summary, it would appear that if vocational education isto be responsive to the emergence of high technology, a dual roleneeds to be adopted. It will need to be responsive both to thedemand of industries that manufacture high technology products andequipment, and to the small and large organizations which use hightechnology products. In order to maximize the capacity of thevocational education system for this dual role, severalconsiderations are important.

Provide specific training in cooperation with industry.Long- and short-term intensive, specialized programs geared to theneeds of a particular industry or a specific firm need to beexpanded. These programs would involve training of new workers,as well as the retraining and upgrading of established workers.For several reasons, including the availability of specialized andexpensive equipment, many of these programs 'sill have to beconducted on the job site. Because of the fluid and competitivenature of the manufac'uring sector, quick-response capacity will

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be required if the training eLlort 1:-; to b truly responsive.

In order to develop this capacity it will oe critical notonly to develop new types of collaborative arrangements withbusiness and industry, but also to create close linkages withagencies involved in economic development.

Improve prerequisite training. Some of ti training neededto be responsive to the emergence of high technology will beconducted by individual firms or by consortia of firms in the sameindustry. A number of forces will drive tnis tendency; however,if vocational education institutions develop appropriate linkageswith these firms, they will be able to provide valuableprerequisite training. In these cases, programs will be neededthat provide occupational mathematics and science as well as basictechnical skills.

Upgrade existing programs. The anticipated widespreadintroduction of high technology equipment such as word processorswill require that efforts be directed toward the general upgradingof existing vocational programs. Because of the substantialchanges high technology is causing in many occupations and due toof the high cost of the equipment, vocational programs can becometechnologically outdated. Even if arrangements are made foron-site training, the upgrading of equipment will requiresubstantial outlays of resources. Also, new approaches need to beintroduced for the retraining of vocational instructors.

Federal Considerations

The following section discusses the rationale for a federalrole in this priority and provides additional informationconcerning federal involvement.

Rationale. The reasons supporting a federal emphasis on hightechnology occupations are similar to those cited in support ofcritical skill training: importAnce to the economy, costs, and insome cases limited overall demand. The United States presentlyenjoys worldwide leadership in many of the high technology areas.However, because of the well-orchestrated support for industriesin some foreign countries, international competition is likely tobe Keen during the next decade. Although the problem is certainlymultifaceted, a key component in remaining competitive is thedevelopment of an adequate supply of workers with the appropriatetechnical skills. If the additional demands of the militarysector are to be effectively met, it may be necessary not only tomaintain an adequate supply of skilled workers, but perhaps anoversupply in some areas so that a surge capacity is available.

The national implications of the high cost of training, and

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in some cases of a limited but critical laoor market need, tend tosuggest a need for federal emphasis.

Additional considerations. It hign technology were to bedesignated a national priority, several additional considerationsare noteworthy:

o The individuals who ultimately are selected for thehigh-level training are likely to be among the more able andadvantaged in our society. An emphasis in this area wouldprobably not directly serve the equity interest of thenation.

o The postsecondary, as opposed to the secondary, component ofvocational education would probably receive the greaterbenefit from a federal emphasis in this area.

o Because of the vast differences in the delivery system forvocational education in each state and the varied definitionsof the notion of high technology, there will be a substantialdiversity of need;, and associated solution strategiesproposed by the individual states.

o A small amount of federal financial assistance provided to alarge number of institutions would probably not have asubstantial effect on improving the overall capacity ofvocational education to respond to the growth in hightechnology. The base cost of establishing state-of-the-artprograms is very high. This situation is compounded by theupdating requirements which are caused by the rapid changesin the development of high technology.

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Displaced Workers

A third possible national priority would be to encourage theexpenditure of federal resources for the retraining and upgradingof displaced workers.

Background

Distinct, permanent changes are taking place in the U.S.economy. Since 1970, nearly a million manufacturing jobs havebeen lost in the steel, rubber, automotive, and other basicindustries in the Northeast and Midwest. Moreover, it is likelythat many of these jobs are not lost due to cyclical changes inthe economy, but are instead permanently lost due to fundamen:_alshifts in the economy. Although at the present time the workersexperiencing the greatest displacement problem work in basicmanufacturing industries in the Northeast and Midwest, thisdelimitation may not hold throughout the decade. The need forretraining and upgrading of displaced workers is likely to have animpact on other industries and other regions of the country duringthe next ten years due to: shifts in consumer demand patterns,foreign competition, technological changes, and the relocation oflabor intensive firms.

The forces causing displacement are complex and the proposedeconomic prescriptions vary substantially. For example, foreigncompetition appears to be a force to consider in estimating thefuture nature of the displacement problem, yet the impact isdifficult to predict accurately; A case in point, the automotiveindustry has experienced a significant challenge from competitionfrom Japan. However, the movement towards building Japanese autoplants in the United States, the reportel commitment of Japan tobecome dominant in the advanced computer market, as well as...certain changes in the American auto industry, may shift theproblem focus of Japanese competition.

The nature and magnitude of the displaced worker problem willalso be influenced by macroeconomic policy. If the major portionof any national effort to revitalize American industry is directedtoward today's declining industries, the need for retraininy andupgrading will be substantially different than if the major effortis towards assisting up-and-coming industries.

Regardless of the exact nature of the foreign competition orthe specific national economic policy that is adopted, many firmswill likely be either retooling or relocating to reduce laborcosts during the coming decade. In order for industries to reducethe number of workers displaced, substantial retraining and

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upgrading will be required. It is estimated, for example, thatthe introduction of technological innovations in textilemanufacturing is likely to cause the loss of 300,000 relativelylow-paying jobs by 1990 (Normans 1981).

The summative point is that the numbers of displaced workersand the respective industries from which they will be displacedare only partially predictable. However, it would appear thatdisplacement is likely to be a continuous problem throughout thedecade, that the industries most affected will vary over timeand that the problems will affect states and regions differently.These considerations will have a significant impact on thedetermination of the most appropriate type of training response.

Turning to the historic involvement of the federal govern-ment, it can be said that the concern for the displaced worker isnot a product of the 1980s. The federal government has asubstantial history in this area. When Congress passed theManpower Development and Training Act (MDTA) in 1962, itrecognized that all workers could not successfully make major jobtransitions. Although the act was subsequently focused on thedisadvantaged, it was originally d preventive job retrainingprogram. During and since that time, adjustment programs havebeen included in the Trade Expansion Act of 1962 and itssuccessor, the Trade Act of 1974. Such programs have morerecently been included in the Redwood National Park Expansion Actof 1978. These efforts provide a rich information base for futurefederal policy decisions.

Implications

If the retraining of displaced workers were designated as anational priority for vocational education, a method foridentifying the workers requiring assistance would be needed. Inthis regard, the Employment Service should play a key role.Vocational programs directed towards this effort should becoordinated with Employment Service efforts, as opposed toestablishing new systems for identifying displaced workers.

In addition to addressing remedially the displacementproblem, efforts in this area could also be directed towardspreventive retraining and upgrading programs to help minimizeanticipated displacement problems. These efforts might beparticularly effective if they wer sensitive to existingtuition-aid arrangements. The amount of resource commitment tothese types of arrangements, in which the employer pays the costsof part-time education, is increasing. Yet, it would appear thisresource is presently being under-utilized.

In developing an improved capacity for vocational education

15

to respond to tne retraining and upgrading of displaced workers,two considerations appear particularly important:

Flexibility in programs. Both the content and delivery ofvocational education programs need to be more flexible in order torespond to the needs of displaced workers. The length of thetraining must vary according to the needs of the industry and withthe experience of the individuals involved; some training would beshort-term and specific, while other efforts would be long-termand comprehensive. Since a large number of the displaced workerswill be coming from routine skill, labor-intensive industries andmany new positions will involve new technologies, retraining willlikely require upgrading in occupational science and mathematics.The age and experience of the clients involved will also have tobe considered when the programs are designed. Arrangements foropen-entry and open-exit to programs and credit for related workexperience may be appropriate. Other arrangements regarding thetime of day, day of the week, or location of training will also berequired depending on the ability of workers to attend training,especially if they are working otner "survival" jobs in theinterim.

Cooperative arrangements with business, industry and labor.Several considerations pertinent to the alleviation of thedisplaced worker problem require close cooperative efforts betweenvocational education and business/industry and labor. Theyinclude (1) the identification of the occupations which require anupgrading of worker skills; (2) the identification of theoccupations for which workers can be retrained when displaced fromtheir current occupations; and (3) the use of facilities,equipment and/or personnel to provide up-to-date training.

Many displaced workers will have held high paying positions,for example, positions in the automotive industry. If placementis to be maximized, some of these workers will have to beretrained for positions in different industries. In order toeliminate the placement problem, such programs could be conductedat the work site with the content designed specifically for thenew job role. In general, if this retraining is to be effective,it should be directed towards higher level, better payingoccupations.

Federal Considerations

The following section discusses a rationale for a federalrole in this priority and provides additional Informationconcerning federal involvement.

Rationale. The justification for using federal vocationaleducation funds to retrain workers who lose their jobs because of

16

national or international economic trends rests on the inabilityof any one state to influence these trends. The trends arenational in origin but affect states differently, depending on thenature of their economic activity and vulnerability to foreigncompetition. It therefore would seem to be an appropriate role ofthe federal government to ease the burden on the most severelyaffected states by providing extra funds to retrain displacedworkers.

The potential economic benefits can also be cited as afederal reason for emphasizing retraining. Experienced workerstypically need less emphasis on good work habits and attitudesthan entry-level workers. They already have the generalcharacteristics desired by employers. Coasequently, trainingfunds can concentrated on the specific skill training for whichlabor market demand is demonstrated. When the trainees acquirethe needed skills, the probability that they will obtain jobs andstay employed is greater than for individuals who have noemployment history.

Additional considerations. If retraining of displacedworkers were to be designated a national riority, twoadditional considerations are noteworthy:

o At any given time, not all states will be experiencing adisplaced worker problem warranting federal intervention.In addition, because of the subnatiol al nature of theproblem, the specific circumstances :ill differ widely fromregion to region. An appropriate funding strategy would needto be sensitive to these considerations.

o Because the client group for this objective would be mainlyadults, a federal emphasis in this area will tend to benefitpostsecondary, more than secondary vocational education.

17 2,:.;

Hard-TO-Employ Youth

A fourth possible national priority would be to encourage theexpenditure of federal resources for improving the employabilityof hard-to-employ youth in the inner cities and depressed ruralareas.

Background

Altnouyh many subpopulations, such as minorities andhandicapped individuals, experience high rates of unemployment,the problem is particularly acute among youth. One-half of allunemployment in recent years has been accounted for by individualsaged sixteen to twenty -tour. High rates of unemployment, how3ver,are not experienced proportionately by all youth. The threeyroups that experience the most severe problems are schooldropouts, youth from poor families, and minorities. Unemploymentrates among black youth, for example, have grown from 16 percentto over 30 percent, whereas white youth unemployment has remainedrelatively constant at 13 percent. Hispanic youth have alsoexperienced high unemployment rates. The youth unemployment amongHispanics stood at 16.4 percent in 1979, but the figures forcertain subgroups, such as Puerto Rican youth, were much higher.

whereas Hispanic and black youth comprised 19.7 percent ofthe youth population in 1979, they represented 29.4 percent of allunemployed youths (A Summary Report of the Vice President's TaskForce on Youth Employment 1980). As the relative proportion ofminority to white youth increases during the 1980s, the problem ofyouth unemployment is likely to become increasingly one ofminority youth unemployment.

While it is generally recognized that serious youthunemployment problems exist, there is no consensus as to themagnitude of the problem, especially as it relates to hard-to-emp'oy youth. It can be argued that youth unemployment rates donot4adequately define or describe the hard-to-employ youthproblem. For example, the observation that most youth experiencesome periods of unemployment while making the transition into thelabor force would tend to lead to an overestimation of theproblem. In addition, the methods used to collect employment datamay contribute to an overstatement of the problem, as will thefact that unemployment rates for teenagers include in-school youthwho are liviny at home, but are seeking part-time work. On theother hand, youth unemployment rates might understate the problembecause many unemployed youth are no lonyer seeking employment andare not therefore counted in the unemployment figures. Moreover,in orur to describe the true nature of the problem, it isimportant to recognize tnat a relatively small dispropor-

18

tionately black group exists which experiences long-termunemployment (Clark and Summers 1978). The dynamics of the youthunemployment problem are not adequately captured by employmentstatistics alone.

While the exact number of hard-to-employ youth can bedebated, it is nevertheless known that many youth lack the skills,the job opportunities, or both, to become employed. The problemappears to be particularly acute in the inner-city and depressedrural areas. In the nation's cities a growing number of minorityyouth are competing for jobs within deteriorating urban markets(Adams and Mangum 1978). The high concentration of minorityfamilies in metropolitan poverty areas is well documented. Whatis not so well known is. that 26 percent of the total blackpopulation resides in nonmetropolitan areas (outside of a StandardMetropolitan Statistical Area) (Fratoe 1980). Many of theseindividuals reside in rural depressed areas where occupationaltraining and job opportunities are limited.

Although widespread recognition is extended to the existenceof a hard-to-employ youth problem, arguments are provided that theproblem at an individual level is solved simply by the agingprocess. Contrary to that view, it would appear that earlyunemployment among hard-to-employ youth cannot be dismissed as atransitory problem with no long-term adverse consequences.Analysis of the National Longitudinal Survey (NLS) data hasestablished that a "hangover effect" exists for those who haveunfavorable early labor market experiences, and that consequently,these individuals are less likely than others to have favorablesubP2quent work experiences (Adams and Mangum 1978). In addition,the odds against these individuals making a successful labormarket transition are greatly increased if they are also fromeconomically disadvantaged families.

To date the nation has made a significant investment inprograms for hard-to-employ youth, but their employment problemscontinue to increase, and it appears unlikely that demographictrends will resolve the problem. Programs designed to increasethe employability and transition to work of inner-city and ruralyouth from depressed areas will need to include several broad-based efforts. Activities designed to prevent youth from droppingout of school will have to be intensified. Periods spent out ofthe work force are not as bad if the individual is still inschool, but an individual is at a distinct disadvantage regardingemployability it the early teen years are spent both out of schooland out of work (Adams and Mangum 1978). In-school instructionwill need to be systematically related to work experience, and thebasic educational and employability skills of youth will need tobe improved. Ultimately, the prospect of employment must alsoexist in order to decrease the hard-to-employ youth problem.

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Implications

An emphasis on increasing the employability of hard-to-employyouth in the inner city and depressed rural areas would haveseveral positive consequences. The major positive consequenceswould relate to the potential social and economic gains to theindividual and society at large achieved by removing youth fromthe rolls of the unemployed. An additional return could beachieved if the combined federal, state, and local efforts weresubstantial. A substantial effort could create an existingemployable labor pool of sufficient size that it would assist inattracting business and industry back into the inner cities. Ifthe concept of "economic zones" in the central cities is to beimplemented, a sizable labor force of varying skill levels will berequired, along with an increased local training capacity.

A federal emphasis in this area could also have unintendednegative consequences. For example, if a cooperative-typetraining approach were given an increased emphasis, a reduction inthe out-of-school youth and adult employment could result.Second, if federal resources were directed towards this priority,a significant percentage of the resources would likely be directedtoward support-type services, leaving fewer dollars available forrevitalizing the fundamental training capacity (e.g., equipmentand teacher updating) of vocational education. Last, if thefederal resources for the disadvantaged were targeted strictly tothe inner cities and depressed rural areas, programs fordisadvantaged clients in other areas would tend to suffer.

The education issues associated with this area are signific-ant and even if the required educational and employment skills areprovided, employment also depends on existing job opportunities,and in the inner-city and rural depressed areas the job supply isperpetually deficient. Although no definitive educational answersto solving the hard-to-employ youth problem exists, some specificstrategies hold promise.

Keeping youth in school. At any moment, 2 million teenagersare unemployed, another 600,000 out-of-school youth are neitherworking nor looking for work, and 75 percent of teenage blackyouth who are out of school are jobless (Clark and Summers 1979).Many inner-city and depressed rural area youth are likely to dropout of school unless they are offered relevant and beneficialexperiences. It would appear that students in general findvocational programs satisfying. Of the studies which deal witheducational satisfaction, a vast majority indicate that a highpercentage (80-90) of the vocational students were satisfied withtheir training (Mertens 1980). In the case of hard-to-employyouth, it would be particularly important that the programs beresponsive to the special needs of these youth and not be focusedon low level, dead-end jobs. The emphasis on keeping youth in

20

school does appear to pay off. This pay-off is reflected by thefigures snowing that high school graduate youth experience onlyone-half the unemployment of high school dropouts the same age(Mangum and Walsh L980).

Improving employability skills. Both large and smallemployers consistently emphasize the need for basic employabilityskills (Youth Knowledge Development Repoct 2.15 1980).Employability appears to be first and foremost a function ofattitudes, habits, deportment, and general intellectual andmanipulative skills more than a function of specific occupationalskills (Mangum and Walsh 1980). Examination of job contentsuggests that about one-third of jobs can be done by anyone withthe equivalent of a standard high school education and reasonablemanual dexterity. Another approximately one-third require someon-the-job traiaing and the remainder require formal preentrytraining (Mangum and Walsh 1980). This implies that job trainingfor hard-to-employ youth needs to emphasize basic employabilityskills and that meaningful institutional programs should bedirected towards occupations that require formal preentrytraining. Effective programs snould therefore include carefullydefined training in work-coping skills, general technical skills,and appropriate work in the basic skills. Coping skills such asworking with others, developing self-motivation, arriving at workon time, and working within an authority structure seemparticularly important.

If vocational education is to address all components of thetransition from school-to-work problem, it will be necessary toprovide job search skills as well as job skills. Skills relatedto finding jobs are particularly important for inner-city andrural youth and, when accompanied by information on where tosearch or how to use contacts acquired via work experience, are ofgreat value.

Improving work experience/career exploration programs. Sinceyouth in general and hard-to-employ youth in particular experienceserial unemployment in trying to match successfully theiraptitudes and interests with the requirements of different jobs,the early opportunity to explore different careers appears to bebeneficial. A potential strategy would be to increase the use ofthe vocational education delivery system in providing careerexploration activities. Given the dropout data, it might beparticularly useful to increase the opportunity for emphasis oncareer exploration in the junior high grades.

Programs that combine work experience with career explor-ation have shown more promise than either strategy alone forimproving the employability of youth (Magnum and Walsh 1980).Although achieving a wider variety of work experienceopportunities may not be possible in the depressed rural areas,

some possibilities do exist for the inner city case. Vocationaleducation would need to form new types of arrangements with theexisting business and industry community. In some cases, voca-tional programs would need to be coupled with job creationefforts. The present strategy of using targeted job tax creditsneeds to be assessed in order to identify what incentives, if any,encourage employers to place hard-to-employ youth. Considerationmust also be given to the transportation needs of youth, as wellas the support services they would require to function in a worksetting.

Improving permanent employment opportunities. In order toimprove the employability of hard-to-employ youth, trainingefforts must be coupled with increased access to permanentemployment. When public sector activity is low or nonexistent,alternatives to public job creation are limited. One alternative,however, is to expand youth entrepreneurial programs that producea marketable product in addition to providing training and workexperience. Another alternative is to reduce job competitionbetween youth and adults by reducing t,ie minimum wage for youth.Obviously a number of pro and con arguments exist for the latteralternative.

It would appear, however, that any substantial gains inreducing unemployment will probably depend on improving thegeneral economi- condition of the area. As long as there is noimprovement in the deteriorating infrastructure that has ledbusiness and industry to move out of the central city, theemployment prospects for hard-to-employ youth will remain bleak.Any successful attempts to expand employment opportunities forhard-f-o-employ youth will require more effective cooperation amongfederal agencies, training service providers and employers.Industry, in particular, will have to be convinced that expandingemployment opportunities for these youth is consistent within thecontext of a profit making enterprise.

Federal Considerations

The following section discusses a rationale for a federalrole in this priority and provides additional informationconcerning federal involvement.

Rationale. The basis for a federal role in inner cities anddepressed rural areas lies in the right of all persons to have"ready access to vocational tra.liny or retraining which is ofhigh quality, which is realist... in the light of actual oranticipated opportunities for gainful employment, and which issuited to their needs, interests, and ability to benefit from suchtraining." (P.L. 94-482, Sec. 101, Declaration of Purpose).Inner cities and depressed rural areas have particular problems in

22 2""

providing such access. Both areas have high proportions ofpoverty populations and limited employment opportunities. Thiscombination means that public funds are limited and there isintense competition for those funds that are available.Consequently, inner cities and depressed rural areas have thefewest training stations in proportion to potential students ofany areas of the country.

Additional considerations. Additional considerations rela-tive to designating this objective as a national priority include:

o Whether to employ some strategy that would involve a feder-ally mandated matching requirement versus 100 percent federalfunding is a frequently noted issue. In relation to thedisadvantaged, some evidence from the implementation of the1976 Vocational Education Amendments would indicate that thematching requirements, particularly relative to excess cost,may not be useful (Ruff 1981).

o If some type of effort related to the disadvantaged were tobe designated as a national priority, then the degree towhich the client population should be delimited is asubstantive question. This discussion addressed a relativelyhigh level of delimitation--only hard-to-employ youth in theinner city and depressed rural areas. Whatever the degree oftargeting, the definition of the target population in thelegislation should be definitive. On tne other hand, maximumflexibility should be extended to the states onconsiderations related to funding and i_rogram design.

o If hard-to-employ youth in the inner city and depressed ruralareas were designated a national priority, a majority of themonies would be directed towards the secondary component ofvocational education.

o More substantial and pervasive linkages between CETA andvocational education would enhance the federal effort toaddress the hard-to-employ problem. In this regard, thecompatibility of tne CETA and vocational education regula-tions in relation to definitions, funding periods andreporting requirements needs to be addressed.

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2S

FUNDING STRATEGIES

If the judgment is made that there are national prioritiesthat can be addressed by vocational education, the questionbecomes one of how best to influence state and local authoritiesto address those priorities. The federal government conducts veryfew education or training programs. Legislation must eitherencourage or require state and local authorities to conduct thekinds of programs judged to be in the national interest,

Most debate over federal funding focuses on the degree towhich legislation should specify how and for whom funds should bespent. At one extreme is the block grant approach that delineatesfederal objectives in very broad terms and minimizes federalcontrol. This approach assumes that state and local officials aremore informed of the needs of their areas and better able todesign and conduct programs suited to these areas than are federalofficials. At the other extreme are strategies that involvespecific targeting and prescriptive control requirements. Theexistence of national priorities that may receive less thanadequate attention from state and local authorities is the majorjustification for these strategies.

There are advantages and disadvantages to the variousapproaches and legislators must weigh these in selecting thestrategies that are most likely to further the national interest.This section discusses the advantages and disadvantages of themajor funding strategies that have been or could be used infederal vocational education legislation. In this paper, threeof these: block grants, percentage set-asides of the blockgrants, and a national incentive program, assume that thetraditional policy of directing federal funds to a sole stateagency will continue. Alternative methods of fundiny multiplerecipients, including individuals, are also examined, as are thefunding implications of limiting the federal role to programimprovement.

Block Grant

A true block grant would be a sum of money allocated to astate for a particular purpose to be used in the way stateofficials deem most appropriate to that purpose. Most federalfunding of vocational education has been in the form of modifiedblock grants. They have been modified in the sense that the fundshave been limited either to specific .occupational areas, toselected types of programs (e.g., cooperative education), orthrough percentage set-asides. As an additional requirement theways in which each state intends to use federal funds aredescribed in a state plan that is subject to federal approval.

25

29

The major advantage of a true block yrant Is its sensitivityto the diversity of needs across states and to the variety ofsystems that exist for the delivery of public vocationaleducation. BlocK yrants maximize state flexibility to determinewhere and how federal funds are used. True block grants alsominimize federal administrative burden on the states. If it isassumed that states know best how to spend federal funds, thenthere is no need for monitoring and compliance requirements.

The very advantages t at maximize flexibility, however, makethe block grant an ineffective method of ensuring that statesrespond to identified national priorities. To the degree a clockgrant is truly a block yrant, it contains no mechanism to ensureattention is pc.id to national needs that are not coincidental withstate needs. Because of this weakness, Congress has frequentlyspecified that certain percentages of the basic state grant mustbe used for designated purposes. These percentages, usuallyreferred to as "set-asides," are discussed next.

Set-Asides

Attached to the basic state grant in the present legislation(P.L. 94-482) are requirements that specified percentages shall bespent for selected purposes, for example: serving the disadvan-taged (20 percent), the handicapped (10 percent), and those at theadult/postsecondary level (15 percent). If the state can developthe mechanisms for identifyiny the target groups and for ensuringthe necessary matching funds, such requirements assure thatfederal funds will be spent on national priorities. In somestates such mechanisms have not been totally established and ithas been necessary for a few states to return to the federalgovernment a portion of their set-aside dollars.

When federal funds are directed to a specific purpose, it isnecessary to devise procedures to ensure that they are used forthe intended purpose. The federal rules and regulations that havebeen adopted for set-asides are almost inevitably not compatiblewith some state procedures. As a result, the claim is often madethat the federal regulations hinder the attainment of the objec-tives they are intended to fester. It would be desirable, ofcourse, to have reyulations that are compatible with procedures inall states, but given the variety of state systems, this isprobably not attainable.

If the decision is made that a national priority is importantenough to direct federal funds toward it, tne legislation shouldspecify the objectives sufficiently to focus state efforts. Ofthe four possible objectives discussed in this paper a set-asidestrategy appears to hold most promise for hard-to-employ youth.As noted above, the present legislation already has a set-aside

26

for the disadvantaged. One problem with the existing legislation,however, is that the definition includes the academically as wellas the economically disadvantaged. The inclusiori of theacademically disadvantaged makes the vocational educationlegislation somewhat incompatible with other legislation and tendsto spread widely a limited amount of money.

The option proposed in this paper would focus ncit only on theeconomically disadvantaged but also on those in defNed geographicareas. To direct funds to these specific individuals it would benecessary to adopt a definition of the economic disadvantaged anda definition of geographic areas. It is important that suchdefinitions be based on data tnat are available to educationalplanners. One such definition reflecting these criteria forinner-city youth would be young people in schools that servecensus tracts where the median family income, as determined by the1980 Census, is a specified percentage of the median family incomein the state. A similar definition would be applicable todepressed rural areas by using county income data, which are alsoreadily available. An alternative measure of the proportion ofdisadvantaged in defined geographic areas could be the percentageof families in poverty status, which is also reported by theBureau of the Census for census tracts and counties.

These definitions would not be dependent on identifyingindividuals from disadvantaged families. They would simply directfunds to schools where labge proportions of the students are fromdisadvantaged backgrounds. Such an approach would minimize theneed for extensive record keeping to prove that federal funds werespent on their intended recipients.

One problem with such definitions, however, is that they;,..xclude hard-to-employ young people who do not live in thedesignated areas. The proposed approach represents a compromisebetween minimizing administrative complexity and ensuring accessto services for all who need them,.

National Incentives

Since this alternative has no direct equivalent in the 1976Amendments, an initial description is warranted. A set of objec-tives would be delineated in the federal legislation as legiti-mate purposes for which federal dollars could be expended. Inaddition, a subset of those objectives would be designated asnational priorities. The state agency would have the option touse its federal monies for any of the specific objectives;However, an incentive would be provided to encourage the states todirect their federal resources toward the objectives selected asnational priorities.

27

The incentive would be in the form of a specified amount ofvocational education funds reserved at the national level andavailable via competitive bidding to those states which elected tocommit federal funds to a national priority effort. For example,if retraining for displaced workers were selected as a nationalpriority and a state elected to commit $300,000 of its federaldollars toward a specific project related to that objective, itcould submit a proposal to the federal government for additionalfederal funds. A limit on the percentage of additional moniesshould be set--for example, 50 percent or in the present example$150,000 of additional monies. The pool of national priorityfunds could be created so that a specified amount would beavailable for each of the national priorities or an overall poolcould be created for the national priorities taken collectively.

This strategy is based on the premise that financialincentives, as opposed to prescriptive approaches such as mandatedset-asides, are more effective for achieving national priorities.The major advantage of the strategy is that it tends to maximizethe opportunity for states to address national priorities in afashion that is compatible with state needs. Moreover, itprovides a financial incentive to encourage states to address thenational priorities. Ultimately, the approach has the potentialfor states to develop a greater commitment to the pursuit of thedesignated national priorities.

The increased flexibility this strategy offers could be notonly its major advantage, but also the major difficulty. Theapproach does not ensure that the federal dollars in the basicstate grant will be directed toward the national priorities.Furthermore, the opportunity to acquire additional federal fundsmay not function as an effective incentive for those states wherethe designated national priorities are of relatively lowimportance.

The national incentive approach could be used equallyeffectively with all four priorities presented in this paper orwith most other objectives that could be selected as nationalpriorities. Moreover, the strategy seems particularly compatiblefor coupling with various types of tax incentives to privateemployers. Because of the importance of tax incentives, a furtherdiscussion is warranted.

Since costs of formal training conducted by privateemployers are already deductible as normal business expenses, taxincentives would probably have to take the form of tax credits,which reduce total taxes owed. Under the current Targeted JobsTax Credit Program, employers can, for example, deduct a statedpercentage of the wages paid to a student hired under a formalcooperative educational agreement. This approach could beextended to other aspects of employer-education interchange suchas allowing a special tax credit for state-of-the-art equipment

28

donat!cl to educational institutions or for a percentage of thewages paid to teaching personnel who are hired for the summer tobecome updated on new technologies. There are a number of suchinterchanges that could be encouraged through tax credits.

Tax credits to employers could be linked to the previouslydescribed reserved fund for national priorities. A small portionof that fund could be set aside as "bonus dollars" for stateagencies that provide the leadership in having industries committheir training resources toward federal priorities. For example,if a 1 percent bonus were established, a state agency wouldreceive $10,000 for each $1,000,000 of industrial commitment. The$10,000 would then have to be directed toward an effort related tothe national priorities.

Of course, any incentives involving tax credits would requirethat the legislation be considered by additional committees ofCongress. This could well prolong the legislative process.Nevertheless, if the often-cited objective of closercollaboration between vocational educators and employers is to betruly achieved, incentives of this sort will probably be needed.

Additional Strategies

The three strategies discussed above are approaches thatcould be used for directing federal dollars through state agenciestowards national priorities; they differ only as to the methodsand degree of targeting that are employed. Tne two strategiespresented in this section, however, are founded on a slightlydifferent basis. The first alternative is based on the notion ofdirect funding. This represents a significant departure fromprevious federal vocational legislation. The second alternativeis based on the concept of directing greater federal emphasistowards program improvement, as opposed to program maintenanceefforts. The latter does not so much deal with funding strategy,as it does with the general purposes for which federal dollarsshould be used.

Multiple Agencies or Clieats

The other funding strategies discussed in the paper haveassumed the continuation of the legislative history of designatinga sole state agency as the recipient of federal dollars.Alternative funding distribution strategies have been proposed,however, which to varying degrees deviate from that traditionaldesignation.

A frequently noted departure from the sole state agencyapproach involves designating more than one institutionalrecipient within a state as eligible to receive federal funds.This notion is most frequently discussed in terms of thesecondary-postsecondary issue. More significantly,departures have also been posed such as direct funding ofvocational dollars to the individual consumer through some type ofvoucher approach.

The arguments for direct funding are based on the judgmentthat the present system is unresponsive to the objectives offederal legislation. The sole state agency, it is claimed, is abranch of tne state educational bureaucracy with all the inertiaand vested interests that this entails. Critics contend that itmatters relatively little what federal legislation says, becausestate officials find ways to do what they want to do. Fundingmultiple agencies would, in the view of these critics, loosen thiscontrol and direct funds to agencies which would be moreresponsive to changing needs of society.

Proposals for direct funding to clients go even further andattempt to bring he forces of the free market into vocationaleducation. Proponents of this approach believe that when poten-tial students are provided with the means to purchase their owntraining they will seek out the most effective providers. Theseinstitutions may be either public or private, but they will besought out and selected only to the extent that they meet themarket test of being the best product for the price.

Whether the advantages claimed for these alternativeapproaches would in actuality be realized is debatable, but theyunquestionably go counter to the need for coordination and linkageof what i.-_ already seen by many as an overly fragmented system ofdelivering vocational services. In the public sector alone, thereare secondary, postsecondary, and CETA programs, most of which areadministered by separate agencies resulting in coordination andduplication problems. Added to these are apprenticeship programs,proprietary institutions, and the training conducted by privateemployers. Funding multiple agencies, whatever its advantages inincreasing responsiveness, is likely to make coordination moredifficult.

Any approach that involves direct funding to individualswould entail much greater investment by the federal government.In fiscal year 1979, federal expenditures under the VocationalEducation Act were $551 million. At a minimum voucher level of$1,000 per student this amount would provide training for 551,000students, in comparison to the 17.3 million students who wereenrolled in courses receiving some federal aid. It seems unlikelythat the federal government is willing to assume a far largershare of the costs of educating these 17 million students or torequire the states to offer vouchers.

303q

Program Improvement

As noted above, limiting the use of federal funds toprogram improvement is not a funding strategy so much as adefinition of purpose. The 1976 Amendments state that federalresources should be used only "where necessary" for maintenance ofprograms. An alternative strategy would be to limit federaldollars to program improvement and exclude program maintenanceefforts.

In this context, program improvement entails the creation ofnew programs or the substantial updating of existing programs toaddress inadequacies in personnel, curriculum, or equipment. Itwould encompass activities such as purchasing new equipment,building new or modifying old facilities, training or retrainingstaff and providing relevant research and development. This wouldconstitute an expanded definition compared to the specific part ofthe 1976 Amendments labeled "program improvement". What it wouldnot include would be the payment of teacher salaries or the buyingof new equipment for outmoded programs.

The major advantage of the strategy would be that itmaximizes the federal leadership role to bring about change andinnovation. It addresses the problem that state-of-the-artequipment cost coupled with instructor retraining cost, plus therequired research and development makes a major revitalization ofvocational education in many states unlikely.

This approach also entails several difficulties. First, itcould decrease the flexibility for states to combine all of theirresources in the most effective way. In addition, it makes itdifficult to develop legislative language which is specific enoughto achieve the intent, yet flexible enough so that states canundertake appropriate efforts. The intent is not to mandate whatindividual states must do in the area of proyram improvement, butto define activities that constitute program improvement and allowstates to do what is appropriate. Last, and perhaps mostimportant, this strategy in its pure form does not provide aviable opportunity for the federal government to designatespecific national priorities.

31 3Z)"

REFERENCES

Adams, A.V., and Mangum, G.L. The Lingering Crisis of YouthUnemployment. Kalamazoo, MI: The Upjohn Institute forEmployment Researcn, 1978.

American Electronics Association, Technical Employment Projections1981-1983-1985. Palo Alto, CA: American ElectronicsAssociation May, 1981

Clark, K.B., and Summers, L.H. "The Dynamics of Youth Unemploy-ment." National Bureau of Economic Research, Working PaperNo. 274, Cambridge, MA: National Bureau of Economic Research1978.

Clark, K.B., and Summers, L.H. "Labor Market Dynamics andUnemployment: A Reconsideration." Brookings Paper onEconomic Activity. Vol. 1. 1979.

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