Call to Order and Roll Call
The 2nd meeting of the Interim Joint Committee on Economic Development and Workforce Investment was held on Wednesday, July 5, 2017, at 1:00 PM, in Room 154 of the Capitol Annex. Representative Jim DeCesare, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Alice Forgy Kerr, Co-Chair; Representative Jim DeCesare, Co-Chair; Senators Rick Girdler, Denise Harper Angel, Ernie Harris, Jimmy Higdon, Stephen Meredith, Reginald Thomas, and Mike Wilson; Representatives McKenzie Cantrell, Daniel Elliott, Al Gentry, Toby Herald, Dennis Horlander, Joni L. Jenkins, James Kay, Kim King, Adam Koenig, Russ A. Meyer, Jerry T. Miller, C. Wesley Morgan, Jason Nemes, Jason Petrie, Phillip Pratt, Steve Riley, Rob Rothenburger, Dean Schamore, Diane St. Onge, Wilson Stone, Russell Webber, and Scott Wells.
Guests: Secretary Derrick Ramsey, Labor Cabinet; Deputy Secretary Mike Nemes, Labor Cabinet; Acting Commissioner Robert Swisher, Department of Workers’ Claims, Labor Cabinet; Commissioner Ervin Dimeny, Department of Workplace Standards, Labor Cabinet; Hal B. Goode, President and CEO, Kentucky Association for Economic Development; Sierra Enlow, Director and Board Member, Kentucky Association for Economic Development; and Brad Thomas, Director and Board Member, Kentucky Association for Economic Development.
LRC Staff: Carla Montgomery, Andrew Manno, and Sasche Allen.
Labor Cabinet Update
Members of Labor Cabinet leadership gave an update on various Cabinet programs and an overview of progress and improvements for different divisions within the Cabinet. Secretary Ramsey went over some of the major highlights of the Cabinet. He briefly discussed the new claim filing system within the Department of Workers’ Claims (DWC) that allows parties to file necessary documents online. He said that over the past year the Division of Wage, Hour and Mediation in the Department of Workplace Standards completed over 2,376 cases and collected $2,150,000 in restitution for 2,128 employees. The Cabinet has made efforts to improve the Division of Occupational Safety and Health within the Department of Workplace Standards after receiving feedback from employers across the state. Secretary Ramsey expressed the Cabinet’s excitement about its Apprenticeship Program that now has over 3,000 participants. Notably, the Cabinet recently announced Norton Healthcare’s Student Nursing Apprenticeship Program, which is the first healthcare apprenticeship program in the country.
Deputy Secretary Mike Nemes gave an overview of legislation that was passed in the 2017 Regular Session including House Bill 1, which made Kentucky a right to work state, and House Bill 3, which repealed Kentucky’s prevailing wage law. House Bill 206 allows for Kentucky Education Excellence Scholarship (KEES) funds to be used when a student is enrolled in a registered apprenticeship program. Deputy Secretary Nemes also discussed House Bill 299, which reorganized the Workers’ Compensation Nominating Committee; House Bill 293, a reorganization bill that renamed several departments within the Cabinet; House Bill 377, relating to the Workers’ Compensation Funding Commission; and House Bill 378, a housekeeping matters for the Cabinet. He noted that House Bill 377 has saved numerous jobs in the coal industry in Kentucky. Deputy Secretary Nemes reiterated the progress of the Apprenticeship Program and the enhancements in the Kentucky Safety and Health (OSH) Program. Secretary Ramsey added that programs such as the Apprenticeship Program thrive due to the partnership with other cabinet secretaries such as Cabinet for Economic Development Secretary Terry Gill and Education and Workforce Development Cabinet Secretary Hal Heiner.
Acting Commissioner Bob Swisher for the Department of Workers’ Claims went in to further detail about the recent changes in the DWC. During 2016 six administrative law judge positions remained vacant due to ongoing litigation in Franklin County Circuit Court. However, the Department recently welcomed seven new administrative law judges. Despite only operating with 11 administrative law judges for most of 2016, the department operated without delays and resolved claims on a timely basis. He said that all of the new administrative law judges are competent and highly qualified. The new Chief Administrative Law Judge is Douglas Gott. Commissioner Swisher confirmed that the DWC has a new Louisville hearing site being constructed between Hurstbourne Parkway and Shelbyville Road, which will offer free parking for claimants. The new site will be open in the next three to four months. The Commissioner discussed the medical dispute program which dedicates two administrative law judges to the medical dispute docket. This program began in 2013 but was suspended due to the shortage of judges with the department. Now, with a fully operating staff of administrative law judges, the medical dispute program has been reinstated.
The DWC has developed the Litigation Management System (LMS), and it became mandatory for all claims July 1, 2017. This program requires paperless online filings to initiate workers’ compensation claims and submit litigation related documents. All parties to a claim can access LMS to view claim details and monitor activity. The system is also a way for the Department to track data and compile statistics. A training team was put together to train attorneys and their staff members, adjusters, third party administrators, and court reporters.
Since January 2014, 2,158 Coal Worker’s Pneumoconiosis (CWP) claims have been resolved either by administrative law judge decision or agreement. Approximately 530 claim are temporarily assigned to Chief Administrative Law Judge Gott, while 304 claims are assigned to Administrative Law Judge Roland Case. House Bill 377 mandated that the CWP Fund, which paid 50 percent of all income benefits for CWP claims, be transferred to Kentucky Employees’ Mutual Insurance (KEMI). There has been an efficient transition to KEMI with no delay of benefits to CWP claimants.
Commissioner Ervin Dimeny went over some of the details concerning the improvements that have been made in the Department of Workplace Standards that addressed professionalism, training, accountability and results. A business plan was developed specific for each division of the Department, and there are currently follow up meeting done on a monthly basis to ensure progress of those new procedures and strategies. The Commissioner said there has been a major culture transformation due to the recent changes. He also highlighted that 2016 had the lowest injury rate in Kentucky’s history. Commissioner Dimeny echoed previous comments regarding the Apprenticeship Program and added that advancement can be attributed to making the program industry driven by further addressing business needs. Over the past year, approximately 1,000 new apprentices joined the program and about 300 graduated. There are over 500 youth apprentices and around 80 veteran apprentices. The Commissioner discussed a new program offering apprenticeship opportunities to foster children within the state who have aged out of the system. There are 179 sponsors of the program, 173 companies that are on the job training providers, and 1,200 companies that use apprentices across various sectors in the state covering 41 registered skills.
Addressing a question from Representative Jerry Miller, Commissioner Swisher said that the 2016 spike in hearing loss claims, CWP claims and cumulative trauma or injury claims is a direct result of coal mine closures. He said he anticipates those filings to decrease in the next several years. In response to a follow up question, Commissioner Swisher said that LMS will allow the Department to capture data and draw statistical analysis, but the system was not designed to provide any information that may prevent workplace injuries.
Responding to Representative Diane St. Onge, Commissioner Dimeny stated the Department has been working with Colonel Blaine Hedges, the Executive Director of the Kentucky Commission on Military Affairs, and officials at Fort Knox and Fort Campbell to offer more opportunities in the Apprenticeship Program to veterans.
In response to Representative Scott Wells, Commissioner Swisher said that although the LMS program became mandatory July 1, 2017, the Department will still accept paper filings from unrepresented litigants.
Replying to Representative McKenzie Cantrell, Deputy Commissioner Nemes stated that the amount of funds collected by the Division of Wage, Hour and Mediation from employers is posted on the Labor Cabinet’s webpage. Commissioner Dimeny added that there are currently 13 investigators that respond to complaints, but the cabinet does not compile statistics on specific sectors that are affected by wage theft. Responding to a follow up question, Deputy Secretary Nemes said that investigators will now have additional tome to be able to concentrate more on the backlog due to the repeal of the prevailing wage law.
Senator Jimmy Higdon commended the Cabinet for its Apprenticeship Program and the KY FAME Program. He said the programs help youth to develop soft skills and to get adjusted to a work environment. Senator Higdon said the future of developing the state’s workforce starts with exposing youth to a work environment. Secretary Ramsey noted that there needs to be culture change in the state and more programs like the Apprenticeship Program should be encouraged. He also spoke about career exploration youth program in Switzerland that he had observed, and there will be a similar pilot program tested in Bowling Green.
Replying to Senator Mike Wilson, Secretary Ramsey said that once someone is certified in Kentucky as a journeyperson, that person is able to use the certification in all other states, Australia and Canada. Deputy Secretary Nemes added that when a person comes to Kentucky who is a certified journeyperson from another state, the person does must complete a program but at a shorter length of time. Reciprocity and licensing of those coming from other states would be a legislative issue.
Addressing Representative Rob Rothenburger, Commissioner Dimeny said it may be possible for Kentucky OSH training courses to be available for high school students to receive college credit.
Co-Chair Jim DeCesare commented about the strong partnerships among cabinets and said that Kentucky must increase labor participation.
Senator Ernie Harris cautioned about starting career exploration for children at such a young age so as not to lock a student into one particular area so early in their lives. Secretary Ramsey said different approaches must be utilized to increase workforce participation. Deputy Secretary Nemes added that children should be exposed to new possibilities to help them to identify possible career paths for their future.
Kentucky Association for Economic Development
Hal B. Goode, President and CEO of the Kentucky Association for Economic Development (KAED), and Sierra Enlow and Brad Thomas, both of whom are association directors and board members, discussed KAED. KAED is a professional economic development association that connects public sector and private industry professionals. It offers professional development, networking with economic development professionals from across the state, and solutions for cross-marketing in Kentucky. Mr. Goode said KAED works very closely with the Cabinet for Economic Development to assist with facilitating job retention, growth, and creation of entirely new opportunities.
KAED’s three main goals are to advocate, educate and connect. The organization holds weekly public policy conference calls with key legislators, lobbyists and policy makers. It educates its members at annual conferences with top consultants from all over the country and offers webinars that provide hands on experience on the how-to in economic development. Mr. Goode mentioned the upcoming fall conference that will be held in Bowling Green November 8, 9 and 10, 2017. KAED keeps its members connected so they have access to valuable resources that will assist in their day to day business needs by offering networking and marketing opportunities. Due to education and professional development, KAED saw a 213 percent increase in fall conference attendance and a 54 percent increase in spring conference attendance from 2012 to 2016. Currently the organization has 525 members with 307 different companies that are represented.
Ms. Enlow spoke about the Kentucky Institute for Economic Development (KIED), which is a course that educates participants in the fundamental and emerging concepts of comprehensive economic development. Its upcoming event will be August 21, 22, 23 and 24, 2017 in Lexington. The KIED course will include topics such as marketing and attraction; business retention and expansion; and entrepreneurial and small business development. Ms. Enlow said this event is a great opportunity for young professionals to get involved with economic development.
Mr. Goode commented on Kentucky United, which is a public-private partnership that was developed in 2008. This occurred after KAED took a nationwide survey of about 500 consultants across the country regarding marketing perceptions of Kentucky. The organization is devoted to promoting Kentucky’s business climate. In 2016, Kentucky United secured a major project for the Owensboro area called Alorica, which is a $200 million investment with a potential of 830 new jobs. Mr. Thomas explained that after traveling to various other states and countries, there will be more investments to come in the future in Kentucky.
Mr. Goode closed by giving an overview of some previously mentioned upcoming events and showing a short video about KAED with interviews of several members of the organization.
Senator Jimmy Higdon commented on the changes of the state’s economic development over the years and thanked KAED for its work.
After a question from Representative Kim King, Mr. Goode said that when a company is deciding to locate to a particular state, right to work laws definitely are a factor. He said it will take time to analyze the economic impact of passing right to work legislation. Mr. Thomas added that in the past Kentucky was competing with other states, but now the competition is between Kentucky counties. Mr. Goode said KAED would be willing to be involved with discussion on comprehensive tax reform as it relates to economic development.
Replying to Representative Wilson Stone, Mr. Goode said economic developers can get creative with incentives for companies locating in Kentucky that are not necessarily tax incentives. Mr. Thomas agreed and noted that every state offers tax incentives for businesses, but equally important is ensuring the longevity of companies in the Kentucky communities and making sure the companies are supplied with a skilled workforce.
Representative C. Wesley Morgan said that since the prevailing wage has been repealed the Madison County School District has been able to save $1.2 million in construction costs for a new high school.
Responding to Representative St. Onge, Mr. Goode confirmed that KAED would be able to help her facilitate a twin cities program.
Representative Jason Nemes said that Louisville was recently named as the number one place for manufacturing in the country and that although new companies should be recruited from out of state, attention should still be given to existing Kentucky employers and employees, especially those at Ford Motor Company and its union--UAW.
With no further business to come before the committee, the meeting was adjourned at 2:48 p.m.