I

103D CONGRESS

2D SESSION H. R. 4222

To amend the Job Training Partnership Act to establish a workforce skills

and development loan program to provide grants to States to guarantee

loans made to employers, representatives of employees, and other entities

to provide skills upgrading for non-managerial employees, and for other

purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 14, 1994

Mr. GUNDERSON (for himself, Mr. GOODLING, Mr. PETRI, Mr. CASTLE, Mr.

HOBSON, Mr. SHAYS, Mr. JOHNSTON of Florida, and Mr. POSHARD) introduced the following bill; which was referred to the Committee on Education and Labor

A BILL

To amend the Job Training Partnership Act to establish

a workforce skills and development loan program to provide grants to States to guarantee loans made to employers, representatives of employees, and other entities to

provide skills upgrading for non-managerial employees,

and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. ESTABLISHMENT OF WORKFORCE SKILLS AND

2 DEVELOPMENT LOAN PROGRAM.

3 (a) IN GENERAL.—Part B of title III of the Job

4 Training Partnership Act (29 U.S.C. 1662 et seq.) is

5 amended by adding at the end the following new section:

6 ‘‘SEC. 327. WORKFORCE SKILLS AND DEVELOPMENT LOAN

7 PROGRAM.

8 ‘‘(a) FINDINGS AND PURPOSES.—

9 ‘‘(1) FINDINGS.—The Congress finds that—

10 ‘‘(A) the changing nature of the workforce

11 in the United States is forcing more and more

12 workers to obtain skills upgrading to keep pace;

13 ‘‘(B) employees who receive formal skills

14 upgrading enjoy earning advantages of 25 per15 cent or more over those with no such upgrad16 ing;

17 ‘‘(C) the return on investment from formal

18 training through increased productivity is equiv19 alent to 3 times the cost of such training;

20 ‘‘(D) approximately 40 percent of business

21 executives say they cannot modernize their

22 equipment due to worker skill deficiencies;

23 ‘‘(E) companies cite the lack of funds as a

24 major reason for failure to establish and carry

25 out workforce skills upgrading programs;
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1 ‘‘(F) although the training of the

2 workforce in the United States is a national

3 concern of utmost importance, limited resources

4 at the Federal level make it infeasible to effec5 tively and efficiently address this concern alone;

6 and

7 ‘‘(G) States, employers, and representa8 tives of employees need to share the responsibil9 ity in providing skills upgrading for employees.

10 ‘‘(2) PURPOSES.—The purposes of this section

11 are—

12 ‘‘(A) to encourage industry-based invest13 ment in human resource development that pro14 motes the competitiveness of the Nation’s in15 dustries through productivity and product qual16 ity enhancement;

17 ‘‘(B) to ensure secure jobs for those who

18 successfully complete skills upgrading; and

19 ‘‘(C) to supplement, and not supplant,

20 funds available through existing skills upgrad21 ing programs conducted by employers, employee

22 representatives, and the government; and

23 ‘‘(D) to establish programs which will not

24 replace, parallel, supplant, compete with, or du-
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1 plicate in any way existing skills upgrading pro2 grams.

3 ‘‘(b) AUTHORIZATION.—

4 ‘‘(1) IN GENERAL.—From amounts reserved

5 under section 302(a)(2) for any fiscal year, the Sec6 retary may use not less than 5 percent, but not

7 more than 10 percent, of such amounts to provide

8 grants to States to provide loans to eligible entities

9 described in paragraph (2) to assist such entities in

10 providing skills upgrading for non-managerial em11 ployees.

12 ‘‘(2) ELIGIBLE ENTITIES.—An eligible entity

13 described in this paragraph is—

14 ‘‘(A) an employer;

15 ‘‘(B) a representative of employees;

16 ‘‘(C) a business association;

17 ‘‘(D) a trade organization; or

18 ‘‘(E) a consortium consisting of—

19 ‘‘(i) more than 1 of the entities de20 scribed in subparagraphs (A) through (D);

21 or

22 ‘‘(ii) an institution of higher education

23 (as such term is defined in section 481 of

24 the Higher Education Act of 1965 (20

25 U.S.C. 1088) which continues to meet the
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1 eligibility and certification requirements

2 under section 498 of such Act) and 1 or

3 more of the entities described in subpara4 graphs (A) through (D).

5 ‘‘(c) APPLICATION.—The Secretary may provide a

6 grant to a State under subsection (b) only if such State

7 submits to the Secretary an application which contains

8 such information as the Secretary may reasonably require.

9 ‘‘(d) PRIORITY.—In providing grants under sub10 section (b), the Secretary shall give priority to States that

11 have demonstrated the ability to expeditiously establish

12 and carry out loan guarantee programs described in sub13 section (f).

14 ‘‘(e) LIMITATIONS.—

15 ‘‘(1) MAXIMUM ANNUAL GRANT AMOUNT.—The

16 amount of a grant provided to a State under sub17 section (b) for any fiscal year shall not exceed

18 $2,000,000.

19 ‘‘(2) MAXIMUM TOTAL GRANT AMOUNT.—The

20 total amount of grants provided to a State under

21 subsection (b) shall not exceed $5,000,000.

22 ‘‘(f) USE OF AMOUNTS.—A State shall use amounts

23 received from a grant under subsection (b) to establish

24 a loan guarantee program to assist eligible entities de25 scribed in subsection (b)(2) to provide skills upgrading for
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1 non-managerial employees. In carrying out such program,

2 the State shall meet the following requirements:

3 ‘‘(1) ESTABLISHMENT OF RESERVE FUND FOR

4 LOAN GUARANTEES.—The State shall establish a re5 serve fund from amounts received from such grant

6 for the purpose of making commitments to guaran7 tee the payment of principal and interest on loans

8 made by financial institutions to such eligible enti9 ties to provide skills upgrading for non-managerial

10 employees.

11 ‘‘(2) CRITERIA FOR LOAN GUARANTEES.—The

12 State, in conjunction with appropriate financial in13 stitutions, shall establish and publish criteria for

14 providing loan guarantees to eligible entities under

15 the program, including criteria that provides for the

16 following:

17 ‘‘(A) A loan guarantee may be issued

18 under the program only if, at the time such

19 guarantee is issued the eligible entity agrees to

20 pay as an insurance premium an amount equal

21 to 1 percent of the principal received by such

22 entity under the loan to the State’s reserve

23 fund.

24 ‘‘(B)(i) Subject to clause (ii), the eligible

25 entity will use amounts received from the loan
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1 to provide skills upgrading for mid- and lower2 level employees, which may include (but is not

3 limited to)—

4 ‘‘(I) training in total quality manage5 ment, statistical process control, produc6 tion techniques, office automation, mate7 rials resource planning; and

8 ‘‘(II) training to improve basic skills,

9 including reading, writing, and arithmatic.

10 ‘‘(ii) In providing such skills upgrading,

11 the eligible entity shall give priority to non12 managerial employees who—

13 ‘‘(I) directly produce or deliver goods

14 or services; or

15 ‘‘(II) are in danger of being termi16 nated or laid off as a result of moderniza17 tion in the workplace, corporate

18 downsizing, foreign or domestic competi19 tion, or Federal policies adversely affecting

20 1 or more industries.

21 ‘‘(C) Amounts from a loan shall not be

22 used to pay the wages or other benefits of any

23 employee receiving assistance under the pro24 gram.
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1 ‘‘(3) PAYMENT BY STATE TO FINANCIAL INSTI2 TUTIONS IN CASES OF DEFAULT.—

3 ‘‘(A) IN GENERAL.—In accordance with

4 criteria developed by the Secretary, the State

5 shall make payments from the State’s reserve

6 fund to financial institutions that have provided

7 loans to eligible entities that have defaulted on

8 such loans for the purpose of reimbursing such

9 institutions for the amount of principal and in10 terest remaining unpaid to the institutions by

11 reason of such default.

12 ‘‘(B) NO FULL FAITH AND CREDIT OF THE

13 UNITED STATES.—Loans provided by financial

14 institutions to eligible entities under loan guar15 antee programs under this section shall not be

16 obligations of, or guaranteed in any respect by,

17 the United States.

18 ‘‘(4) LIMITATIONS ON LOAN GUARANTEES.—

19 The authority of a State to extend loan guarantees

20 under this section shall not at any time exceed an

21 amount equal to 1,000 percent of the aggregate

22 principal amount in the State’s reserve fund.

23 ‘‘(5) INTEREST FROM AMOUNTS IN RESERVE

24 FUND.—Any interest earned from amounts in the

25 State’s reserve fund shall be credited to such fund.
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1 ‘‘(g) ADDITIONAL AMOUNTS.—In addition to

2 amounts received from a grant under subsection (b), the

3 Governor of a State may use not more than 5 percent of

4 the amount reserved under section 302(c) for a fiscal year

5 to establish and carry out the loan guarantee program

6 under subsection (f).

7 ‘‘(h) FEDERAL AND STATE SHARE.—

8 ‘‘(1) FEDERAL SHARE.—The Federal share

9 under this section may not exceed 50 percent of the

10 total cost of the program established under sub11 section (f) for any fiscal year.

12 ‘‘(2) STATE SHARE.—

13 ‘‘(A) IN GENERAL.—Except as provided in

14 subparagraph (B), the State share shall be pro15 vided from non-Federal sources and may be in

16 cash or in-kind, fairly evaluated.

17 ‘‘(B) EXCEPTION.—The State share may

18 include amounts reserved in accordance with

19 subsection (g).’’.

20 (b) CONFORMING AMENDMENTS.—

21 (1) RESERVATION OF AMOUNTS.—Paragraph

22 (1) of section 302(c) of the Job Training Partner23 ship Act (29 U.S.C. 1652(c)(1)) is amended—
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1 (A) in subparagraph (D), by striking ‘‘pro2 gram system; and’’ and inserting ‘‘program sys3 tem;’’;

4 (B) by striking the period at the end of

5 subparagraph (E) and inserting ‘‘; and’’; and

6 (C) by adding at the end the following new

7 subparagraph:

8 ‘‘(F) establishing and carrying out the loan

9 guarantee program under section 327(f).’’.

10 (2) TABLE OF CONTENTS.—The table of con11 tents of such Act is amended by inserting after the

12 item relating to section 326 the following new item:

‘‘Sec. 327. Workforce skills and development loan program.’’.

13 SEC. 2. INFORMATION RELATING TO SKILLS UPGRADING

14 ACTIVITIES FOR CAPACITY BUILDING AND IN15 FORMATION AND DISSEMINATION NETWORK.

16 Section 453(b)(2) of the Job Training Partnership

17 Act (29 U.S.C. 1733(b)(2)) is amended—

18 (1) in subparagraph (C)(ii)(V), by striking the

19 period at the end of such subparagraph and insert20 ing ‘‘; and’’; and

21 (2) by adding at the end the following new sub22 paragraph:

23 ‘‘(D)(i) collect and disseminate informa24 tion—
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1 ‘‘(I) on successful programs to up2 grade the skills of workers carried out pur3 suant to section 327;

4 ‘‘(II) on research and evaluation con5 ducted concerning such programs; and

6 ‘‘(III) that will assist employers, rep7 resentatives of employees, business associa8 tions, trade organizations, and consortia

9 consisting of more than 1 of the preceding

10 entities in designing and implementing the

11 most effective skills upgrading methods

12 available today; and

13 ‘‘(ii) facilitate communication and the ex14 change of information and ideas among States

15 and the entities described in clause (i)(III) car16 rying out such skills upgrading pursuant to sec17 tion 327.’’.

18 SEC. 3. AMENDMENT TO HIGHER EDUCATION ACT OF 1965.

19 Section 439(d)(1) of the Higher Education Act of

20 1965 is amended by adding at the end the following new

21 sentence: ‘‘For purposes of this section, loans made pursu22 ant to section 327 of the Job Training Partnership Act

23 may be considered to be student loans which are not in24 sured or guaranteed as provided for in this subsection.’’.

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