Call to Order and Roll Call
The 3rd meeting of the Interim Joint Committee on Economic Development and Workforce Investment was held on Thursday, August 17, 2017, at 10:00 AM, in Room 154 of the Capitol Annex. Senator Alice Forgy Kerr, 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 Perry B. Clark, Rick Girdler, Denise Harper Angel, Ernie Harris, Jimmy Higdon, Stephen Meredith, Wil Schroder, and Reginald Thomas; Representatives Lynn Bechler, McKenzie Cantrell, Daniel Elliott, Al Gentry, Dennis Horlander, Joni L. Jenkins, James Kay, 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, Scott Wells, and Addia Wuchner.
Guests: Deputy Secretary Brad Montell, Education and Workforce Development Cabinet; Jessica Fletcher, Executive Director of Communications, Education and Workforce Development Cabinet; Andy Hightower, Senior Policy Advisor, Education and Workforce Development Cabinet; Mardi Montgomery, Legislative Liaison, Education and Workforce Development Cabinet; Taylor Sawyer, Government Affairs Director, Big Ass Fans Company; Judy Taylor, Legislative Agent, Big Ass Fans Company; and Amy Porter, Plant Manager, Corning Incorporated.
LRC Staff: Carla Montgomery, Andrew Manno, and Sasche Allen.
Approval of Minutes
A motion to approve the minutes of the June 15, 2017 meeting was made by Senator Denise Harper Angel, seconded by Representative Dennis Horlander, and approved by voice vote. A motion to approve the minutes of the July 5, 2017 meeting was made by Representative Russell Webber, seconded by Representative Wilson Stone, and approved by voice vote.
Consideration of Referred Administrative Regulation
The following administrative regulation from the Education and Workforce Development Cabinet was on the agenda for consideration: 787 KAR 2:040 & E. The amendments set forth a policy for hiring staff of local workforce development boards and required a written agreement for entities performing with more than one function for a local workforce development board. The amendments also updated two incorporated materials. A motion to accept the referred administrative regulation was made by Senator Ernie Harris, seconded by Representative Rob Rothenburger, and approved by voice vote.
Education and Workforce Development Cabinet Update
Deputy Secretary Brad Montell asserted that although the state has recently made significant announcements and progress in the area of economic development, that momentum will be halted if Kentucky does not have a skilled workforce to fill the positions that will become available with new and expanding companies. Statistics compiled in 2015 showed that 15 percent of jobs in Kentucky were low skill level jobs, 58 percent were middle skill level jobs, and 27 percent required a high skill level. A low skill level job is one that requires a high school diploma or less. Only one in 100 of newly created jobs is a low skill level job according to Deputy Secretary Montell. A middle skill level job is one that requires above a high school diploma but less than a baccalaureate degree. The state has about 10 percent less middle skill workers than middle skill jobs, which equates to about 150,000 unfilled positions. A high skill level job would be one that requires a four year degree and above. There are almost an equal amount of high skill workers and high skill jobs in the state. Alternatively, there are far more low skill level workers than there are low skill level jobs.
The Cabinet has started to use a 360-Degree Approach to continue to grow jobs and face the challenge of building a skilled workforce. The first component is the Dual Credit Program that allows for students to be engaged and guided towards a particular pathway while still in high school. In comparison to the 2015-2016 school year, there was a 51 percent increase in students enrolled in dual credit courses in the 2016-2017 school year. In the 2015-2016 school year there were 42,384 dual credit courses taken compared to 73,338 dual credit courses taken in the state for the 2016-2017 school year. Deputy Secretary stated that the Cabinet would like for dual credit courses to become a high school graduation requirement.
In 2016 the General Assembly approved a $98.9 million bond pool for the Work Ready Skills Initiative to be invested in the infrastructure of the state’s training facilities to provide top of the line training to more than 47,000 Kentuckians annually in five core sectors. There were more than $500 million in requests and 40 projects were approved for funding. The awards leverage at least $146.2 million in matching funds, for a total of just under a quarter of a billion dollars invested. Overall, there will be 29,372 additional individuals trained annually with an average expected wage of $34,413 for an annual total of over $1 billion.
The Work Ready Scholarship was approved in 2016 in the amount of $15.9 million. The scholarship is administered by the Kentucky Higher Education Assistance Authority (KHEAA) and offers tuition for up to 32 credit hours for a job certification in more than 60 careers in five high demand industry sectors. It is unique in that it is for adults and is a skills training scholarship. Any Kentuckian with a high school diploma or GED without an associate’s degree or higher is eligible for the scholarship. The scholarship is a last dollar scholarship, which means any student that applies for the scholarship must complete a Free Application for Federal Student Aid (FAFSA) application and use any Pell Grant funds if eligible before the Work Ready Scholarship could be used. Deputy Secretary Montell highlighted the Help Wanted Campaign, which is the Cabinet’s educational outreach campaign.
The last two components of the 360-Degree Approach of the Cabinet were briefly discussed. The Kentucky Work Matters Task Force was established to develop policies and review practices that make the workforce more inclusive and accessible for people with disabilities, people who have been incarcerated, and citizens who have successfully battled substance abuse. The Medicaid Community Engagement is intended for adults without dependents who are not pregnant or medically frail. The Medicaid waiver has been applied for and is awaiting approval. In order to qualify a person must work, attend school, or study at least 20 hours a week. The initiative will be driven through career centers, which have recently been reorganized due to Workforce Innovation and Opportunity Act (WIOA) regulations. There are now 20 career center offices, 12 being hub offices and eight being satellite offices.
Deputy Secretary Montell closed by giving an update on the Unemployment Insurance Trust Fund. In January 2012 the trust fund was at a -$948.7 million deficit but as of July 2017 the balance was $401.7 million. In previous years employers were responsible for paying a surcharge to pay back interest on the loan but due to the progress in recent years, that surcharge was removed this year. Employer tax rates have decreased and benefits have increased. He noted the goal was to increase the balance to at least $80 million.
After Representative Dean Schamore expressed several concerns regarding the Work Ready Scholarship funds not being allocated until September, Ms. Fletcher said that KHEAA has been working with FAFSA to calculate what funds will be available after the last dollar is utilized. Deputy Secretary Montell said that with the program being new there is a delay in the funds but it is a problem that needs to be resolved. Answering a follow up question, he said that eventually unemployment insurance assistance at the career centers will be over the phone.
Responding to Senator Stephen Meredith, Mr. Hightower said a mobile based technology based system is being developed to make it easier for Medicaid recipients to access services. Additionally, the Department of for Community Based Services and the career centers are being analyzed to determine where the best locations are for additional offices. Addressing another question, Mr. Hightower said that the individuals involved with the Work Ready Communities Initiative are meeting regularly to design what will be what will be the next generation of a Work Ready Community.
Replying to Representative Addia Wuchner, Ms. Mardi Montgomery said the Cabinet had received 16 inquiries regarding the reduction of career and technical education classes through KCTCS and Secretary Hal Heiner had met with school administrators in an effort to find a solution, along with the Council on Post-Secondary Education. This reduction has effected the Dual Credit Program and the Work Ready Skill Initiative.
Representative Jerry Miller expressed concerns about the functioning of KCTCS and the approval of eligibility for dual credit courses and stated any issues needed to be resolved as soon as possible.
Answering an inquiry from Senator Jimmy Higdon, Ms. Mardi Montgomery explained that last year the Cabinet received funding called the New Skills Youth Initiative Grant which has components similar to the Work Ready Skills Initiative with collaboration with area technology centers, KCTCS sites, and the workforce.
Responding to Representative Joni Jenkins, Ms. Mardi Montgomery said that AmeriCorps is a federally funded program that is not involved with the Dual Credit Program, but it is a program that the state utilizes. Mr. Hightower said the AmeriCorps is a required partner in the American Job Center system.
Big Ass Fans Company
Mr. Sawyer stated that Big Ass Fans started in 1999 as HVLS Fan Company and produced high volume, low speed fans with diameters of 18, 20, and 24 feet. In 2003 the company changed its name to Big Ass Fans Company. In its early years, the company had clients predominately in the agriculture industry but now has more than 350,000 Big Ass Fans and 167,000 Big Ass Lights installed worldwide. It is the only fan company to design, engineer, manufacture, test, and install all of its products and is a leader in innovation with over 230 patents.
U.S. based operations include its headquarters located in Lexington, which is made up of locations dedicated to research and development, which are LEED Gold Certified, manufacturing, and administrative offices. There are also field offices in Texas, Florida, Georgia, and California. International operations include subsidiary offices in Australia, Canada, Malaysia, and Singapore. Its fans are sold in more than 160 countries. A factory direct business model is used which allows for direct access to customers to plan and problem solve. In 2016 it generated $240 million through Big Ass Fans, Big Ass Lights, and Haiku, which is the residential division. There are over 700 Kentucky based employees that include over 60 engineers and 175 production employees and field service technicians. The starting salary of an employee is 33 percent higher than the Kentucky state average and Big Ass Fans is an eight time “Best Places to Work in Kentucky” recipient.
Mr. Sawyer gave an overview of the product time line of Big Ass Fans. The introduction of the first research and development facility was made in 2009. In 2012 production of an electromagnetic motor began to offer silent operation for public locations such as churches, schools, and libraries. The Haiku division was also developed during this time which are residential fans, and later in 2014 the company launched Big Ass Lights to its product line which include LED fixtures. The Artisan line of Haiku was introduced in 2017 that incorporates artwork from Lexington artists. Mr. Sawyer closed by going over particular projects that Big Ass Fans has worked on throughout the state such as Woodall Dairy Farms in Lewisburg, Montgomery County High School in Mount Sterling, Kentucky National Guard, and Ethereal Brewery in Lexington.
Answering a question from Representative Diane St. Onge, Mr. Sawyer said Big Ass Fans is not developing technology itself that will allow the fans to run off of a battery back up in the case of a black out or brown out, but they are being designed to be connected to that type of technology.
Responding to Representative Jerry Miller, Mr. Sawyer said a convention center would be a perfect application for the commercial line that are silent in operation. Replying to a follow up question, he said that it can be difficult finding skilled employees to fil certain positions.
Addressing Representative Wilson Stone, Mr. Sawyer explained that although the company will continue to service its agricultural and industrial client, it will also continue to expand its residential line of products. Big Ass Fans has most recently been working with Apple and Google on its Haiku line. Ms. Taylor extended an invitation to the committee to tour the facilities in Lexington.
Corning Incorporated
Ms. Porter explained Corning Inc. is one of the world’s leaders in glass science, ceramics, and optical physics. It was founded in 1851 in Corning, New York and now has approximately 45,000 employees worldwide. Corning’s core sales for 2016 were $9.7 billion. It ranked 298 on the 2017 Fortune 500 Rankings. A large portion of funds are invested in research and development that takes place in Corning’s Harrodsburg, KY plant. The company initially began using a high speed process to produce light bulbs and has continued to build on its development of glass over the years by producing products such as LCD glass, glass for consumer electronics, and glass particle filters.
Over the years the focus of the company has adapted due to business needs, and it now concentrates on five core areas which include display technologies, optical communications, environmental technologies, life sciences, and specialty materials. In the 1980s and 1990s the Harrodsburg plant produced LCD glass for televisions and computers but now mainly focuses on display technologies and specialty materials such as Corning Gorilla Glass. The optical communications developments center on fiber cable and conductivity solutions. The environmental technologies area deals with ceramic substrates. Lastly, the life sciences division has been a part of Corning’s foundation that started in the early 1900s supporting pharmaceutical and lab wear with Pyrex glass and has transitioned into other areas over the years. Corning operates on what it calls the 3-4-5 framework that includes its core technologies, manufacturing and engineering platforms, and market access platforms. The core areas of technology for the company are glass, ceramics, and opticals. The four platforms of manufacturing and engineering are vapor deposition, fusion forming, precision forming, and extrusion. The five areas of market access include optical communication, mobile consumer electronics, display, automotive, and life sciences.
Ms. Porter went into further detail about the production and understanding of Corning Gorilla Glass. Gorilla Glass is a chemically strengthened cover glass that is virtually scratch and break resistant and was first produced in Harrodsburg in 2007 for the iPhone. A majority of the Harrodsburg production is dedicated to Gorilla Glass. It is currently on 5 billion devices and over 40 major brands. Corning is continuously improving this product and has developed Gorilla Glass 5 which is the strongest cover glass for drop performance by offering damage resistance, optical clarity, and touch sensitivity. It was recently announced that Apple has awarded Corning an advanced manufacturing fund investment of $200 million to support glass production methods.
The Corning Harrodsburg plant has been in operation since 1952 and has provided continuous production of specialty glass. The plant has received numerous accolades for environmental stewardship and a positive work environment. In 2015 it participated in the Energy Star Challenge where they were tasked with improving energy intensity by five percent in 10 years. The Corning Harrodsburg surpassed that amount with a 30 percent reduction in two years. It also received the 2017 Energy Star Award for Partner of the Year in Sustained Excellence. Nine out of the last 10 years the plant has been ranked one of the Best Places to Work in Kentucky. The plant’s workforce has an average of 14 years of service with over 80 percent holding at least a bachelor’s degree and 26 percent holding at least a master’s degree. Ms. Porter closed by expressing the need for a well trained workforce and the difficulties that Corning faces when hiring trained mechanical and electrical journeymen. She showed a short video about the Corning Harrodsburg plant.
Chairman Jim DeCesare voiced his excitement about the recent investments and Corning’s research and development.
With no further business to come before the committee, the meeting was adjourned at 11:56 a.m.