Three areas of sector intermediary work a state can fund, and the funding sources that can pay for each.
There are three main areas of sector intermediary work that a state can fund: the intermediary’s core role as the voice of its sector, the workforce strategies it recommends, and the programs it operates. Not all three have to be funded at the same time, or by the same funding source. A state can start by funding the area that matches the role it is asking the intermediary to play, and add funding for the other areas of work as the intermediary proves its results.
The steady operating budget that lets an organization speak for its sector.
The funding pays for a small team that builds and publishes the sector’s demand picture, develops competency frameworks for its priority occupations, serves as the sector’s front door to workforce development, brings the sector’s priorities to the state, and endorses the programs that teach to the picture.
Philanthropy is a natural first funder for the core work. Foundation grants move faster than public money, and they can cover the first two or three years of staff and startup costs while the intermediary builds its demand picture and its track record. Over time, a state appropriation can make the funding durable, since a line in the state budget survives grant cycles. The central support team that serves all of a state’s intermediaries is a natural first piece for a state to absorb: it is a single line item that benefits every sector at once.
Money set aside to act on the strategies the sector recommends.
The funding pays for the workforce strategies the intermediary identifies each year, for instance creating or expanding a program, buying equipment, or building work-based learning at scale. Strategies that need only a policy or licensure change, or that employers can carry out themselves, require no new program funding.
Several sources can pay for the first strategies a sector recommends. The WIOA Governor’s Reserve can fund sector strategies through the statewide workforce funds a governor already directs, state grant funds can pay for program creation and equipment at a scale operating budgets cannot reach, and federal grants and philanthropy can back the larger strategies. Over time, a dedicated state fund for sector strategies can make the funding durable, so that money is in place when a sector brings a recommendation forward. The largest source is money the state already spends: program dollars that flow every year to career and technical education, colleges, and apprenticeship can go to the programs that align with the sector’s demand picture and deliver the outcomes employers and students both want.
Payment for results when the intermediary operates programs itself.
The funding pays for the intermediary to operate programs, or to serve as the intermediary for programs others run – classroom training, on-the-job training, apprenticeship, and other earn-and-learn pathways.
Programs can be paid for in more than one way at the start. Pay-for-performance contracts can pay the intermediary for each outcome it achieves, such as an apprentice who completes a probationary period or a graduate placed in a job. Grants and philanthropy can cover the startup costs of a new program before there are outcomes to pay for. Over time, pay-for-performance can sustain the programs on its own, because a program that places people generates the payments that keep it running.
Six sources can pay for this work. Each is described on its own terms – what it is, how it moves, and what it is good for – with an example where one exists.