September 9

Mind the Gap: Public Funding of Tech Apprenticeships

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In this issue I want to tackle public funding of Tech Apprenticeships in the US. In my humble opinion the US has a lot of work to do in the area of funding apprenticeships at the appropriate level. This is critical to allow the US to rapidly expand apprenticeships and catch up with the volume of tech talent needed.

Unlike the vast amount of public funding that goes towards supporting our higher education ecosystem, the amount of funding per participant for apprenticeship is appallingly low. According to Forbes “education appropriations increased $400 per FTE student at public colleges and universities [in 2021], reaching a national average of $9,327 per student” meanwhile the amount allocated per participant in registered apprenticeship programs according to Forbes is $400.

Creating Coding Careers invests more than $30,000 per participant to train folks in our registered apprenticeship program. The gap between public funding and our need for working capital is enormous. We have filled it with fee based services, but that should not become the norm in education.

I am pleased to see that some funding has been approved at both the state level and the Biden administration has proposed spending $48 billion on apprenticeships. But that money has not started flowing yet, and some of it will never be accessible to tech apprenticeships. Much of it (30% to 50%) will be absorbed by intermediaries before it hits the streets and gets to community based organizations and businesses. Intermediaries are organizations that provide technical assistance and incentives to employers and apprenticeship program partners to help grow apprenticeships. They are an important part of the system today, but I would argue they are a by product of inefficiencies and ineffective government.

I love intermediaries because with out them, zero Federal money would flow, but they are should not exist. There are plenty of community based organizations that deserve more direct access to funding and the government needs to find smarter ways to deploy capital. ie. leverage the IRS to verify outcomes and job creation. Every employee still has to complete an I9 and a W2, so the data exists somewhere to see who is creating jobs.

Intermediaries are in fact vital at this time because Federal grants can be nearly impossible for a small organization to win if they have never been awarded a Federal grant already. Without prior history of managing a Federal award organizations are frozen out from competing. The best option for new tech apprenticeships is to partner with a more established organization on grant proposals. After a successful award as a sub recipient, the program can solicit a letter of support and go after its own Federal grant when the program has the means. There is a lot more complexity involved with not only applying but managing Federal funds.

As you move to state, and then local grants the complexity decreases, but so does the total funding available. In general there is typically about $1,500 to $3,000 per participant that is available in what is usually called “employer incentives” available for apprenticeship sponsors. This is not nearly the amount that Creating Coding Careers invests in each participant, but every bit helps.

The largest single source of assistance for workforce development programs like apprenticeships is available at the local level via workforce investment boards. But, it can be very difficult to build out a new program. The largest single source of funding at the local level comes from the “Workforce Innovation and Opportunity Act” or WIOA.

It’s very challenging to get workforce development boards (WIBs) to leverage WIOA for innovative programs that require out of the box thinking. WOIA usage is heavily regulated and audited, and I have been told “takes a lot of work”. If you are planning to leverage this funding stream you will need to find WIBs that are willing to put in the same level of effort you have in mind. WIBs should be looking for ways to be more innovative and effective in their use of these funds.

What makes leveraging WIOA funding for programs even more difficult is that each workforce investment board (about 550 of them here in the US) handles WIOA usage and distributes funds differently. There is no prescriptive solution or model program that is adopted universally across the US. eg. Our local board is San Diego Workforce Partners. They have a completely different process from our local WIB neighbors to the north in Orange County CA. They are not better or worse, they are just different, and it requires building a separate relationship and learning what makes their system work. 

California has 58 counties and there are 45 local workforce investment boards in CA. If you want to leverage State and Federal funding for a new tech apprenticeship across a state the timeline and complexity is vast. Thus problems scale if you are looking to serve participants across multiple states and regions. More work needs to be done to bring our workforce development efforts into alignment as our workforce is now much more geographically distributed with remote work.

I would consider public sources of funding only as a secondary or tertiary stream of funding. There is one other major pool worth investigating:

Partner with Community Colleges

You may find community colleges that are interested in creating partnerships. They may have the budget for career focused programs and generally they seek to improve placement outcomes.

In California community colleges may be incentivized to create pathways into employment by something called the “Strong Workforce Program” where funding to the community colleges is being tied to reporting outcomes. If they perform and students succeed they earn more funding, if they don’t they miss out on dollars from the state. The Strong Workforce Program was designed to create common workforce metrics for all state funded Career Technical Education programs. In addition it establishes a student identifier for high school students and those enrolled in postsecondary education and training programs to enable California to track workforce progress and outcomes for students across institutions and programs. And finally, the Strong Workforce Program seeks to improve the quality, accessibility, and utility of student outcome and labor market data to support students, educators, colleges, regions, employers, local workforce investment boards, and the state in CTE program development and improvement efforts.

There should be a lot of parallels between the goals of community colleges in CA as well as apprenticeship programs. Other states have similar initiatives.

Where to go from here?

My tip is to design your financial model where your funding is tied as closely as possible to outcomes. Companies do value talent and could be the most immediate source of funding. Capital should be tied to good performance, not luck of grants or subject to the budget constraints of the government. If you are thinking about starting a new program please reach out to me. I would love to help you launch a program that creates opportunities for people to transition into well paying careers using the earn and learn model.

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