New Federal Funding to Serve Unemployed Entrepreneurs in Your Community

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1 New Federal Funding to Serve Unemployed Entrepreneurs in Your Community Small businesses not only drive the economy and job growth, they also provide a pathway for business owners particularly minorities, immigrants and the economically disadvantaged to join America s middle class. Business equity is second only to homeownership as a source of net worth. For that reason, advancing policies that support new business formation and low- and moderate-income entrepreneurs is a critical component of asset-building advocacy. In the current economic environment, these policies are even more important as entrepreneurship is, for many unemployed workers, the best opportunity to recover. Indeed, starting a business allows these individuals to create their own new jobs. The federal Self-Employment Assistance (SEA) Program allows unemployed workers who are interested in entrepreneurship to receive unemployment insurance benefits while they get their businesses started and participate in training to help them succeed. Advocating for SEA can deliver new resources to the field through partnerships with state workforce and labor agencies, which often contract with microenterprise development organizations to provide training. A Policy Guide for Microenterprise and Asset-Building Advocates This brief is a step-by-step guide for the microenterprise and asset-building fields to use in advocating for their states to offer new expansions of the federal Self- Employment Assistance (SEA) Program. It will: Explain how the new federal expansion of SEA works Identify the policymakers and advocates you should partner with to make an effective case for SEA Offer recommendations for next steps based on current laws in your state Provide links to additional helpful resources Self-Employment Assistance Program: Entrepreneurship as a Reemployment Strategy The federal Self-Employment Assistance (SEA) Program, created in 1992, authorizes states to support unemployed workers interested in entrepreneurship by providing training and paying benefits while they start their businesses. In February 2012, Congress expanded the SEA Program via legislation to extend federal unemployment benefits. On May 24, the Department of Labor (DOL) Employment and Training Agency (ETA) sent a letter 1 to state departments of labor and workforce agencies providing guidance on the implementation of the expanded SEA Program. The federal expansion makes SEA available to the long-term unemployed for the first time. Previously, SEA was only available to workers collecting the first 26 weeks of regular state unemployment benefits. The program was further limited by the requirement that each state legislature enact legislation to create a state program. Now, states can make SEA available to people who receive Emergency Unemployment Compensation (EUC), the federally-funded unemployment benefit extension that allows unemployed workers to collect an additional 20 to 53 weeks of benefits. 2 In addition, the mechanism by which a state can create a SEA Program has been simplified and federal funding is available for states to start, improve or expand a SEA Program. Page 1

2 All a state must to do to offer SEA to recipients of EUC is opt into the program Governors simply need to sign a memorandum of understanding with DOL once their agencies have developed an implementation plan. The DOL guidance letter describes the process states should follow. DOL has also provided model legislation that states can pass to begin new SEA programs for recipients of regular unemployment benefits (those paid in the first 26 weeks). Optimally, states that do not currently offer SEA will both opt into the program for EUC recipients and also pass the model legislation to start offering SEA to recipients of regular unemployment benefits. Of course, your advocacy can help make this happen. Thirty-five million dollars in federal funding is available The federal SEA expansion provides $35 million in grants for states to start, improve or expand SEA programs, including working in partnerships with entrepreneurship training and microenterprise organizations. Making these grants available to states that do not yet have SEA is intended to spur more states to enact the program through the regular unemployment insurance system. The DOL guidance letter informs states how to implement new law s provisions, shares potential funding allocations by state, provides grant application materials, and establishes June 30, 2013 as the deadline for receiving grant applications. The grant amounts were set by a formula; the table at the end of this document lists how much money your state can receive. Advocating for SEA: Where to Start 1. Talk to your state legislators, governor, and state unemployment insurance and workforce agencies. Let them know the federal government will pay for implementation and cover most, if not all, of the cost of training and development services. Share DOL s model legislation. State legislatures can pass these draft bills to participate in various parts of the program, from the standard SEA program available under regular unemployment insurance to the new extension. 2. Coordinate with other microenterprise and asset-building organizations. Coordinating with networks of service providers can amplify your collective voices. Developing a joint strategy for advocacy can be an effective way to persuade more policymakers to support SEA. Contact your State Microenterprise Association and local or state Asset Building Coalition to maximize your impact. Consider sharing resources such as lists and media contacts, or host joint outreach events to educate policymakers and stakeholders. Demonstrate that a variety of service providers have the capacity and desire to deliver entrepreneurship training through SEA. 3. Enlist support from city and county policymakers and officials. Job creation and unemployment are major issues for local governments, as well as state and federal policymakers. Page 2

3 Local governments already have established relationships with state-level decision makers. Partnering with them can amplify your voice and help you reach the right people. 4. Reach out to the state and local Workforce Investment Boards (WIBs). WIBs are important partners for you because they coordinate with state and local governments to oversee the local One Stop Career Centers that provide resources to unemployed workers. SEA is implemented through these sites. WIBs are key stakeholders in developing workforce training strategies that meet the needs of the local economy. Enlisting them to support a self-employment training strategy helps make the case for SEA as an engine of job creation. Working with WIBs will expand your capacity to develop buy-in with One Stop sites, which is the primary conduit for SEA referrals. 5. Cultivate SEA champions within local One Stop Career Centers. While WIBs and local governments determine policy priorities and strategies for workforce development and reemployment training, One Stop Centers are the front lines of implementation. These sites offer a range of services to unemployed workers and local residents who want to develop new skills. They are the first point of contact for most potential SEA participants: They screen potential candidates for participation in SEA and refer them to service providers. They offer career counseling and financial education that could complement your services. Working closely with WIBs to implement SEA expansion could help everyone involved to reach new clients. 6. Connect with SBA-supported training and technical assistance centers throughout your state. Having Small Business Administration (SBA) centers as partners will make your outreach to state officials even more compelling because DOL and SBA plan to offer some SEA resources jointly. SBA s Small Business Development Centers, Women s Business Centers and SCORE mentoring networks may participate. These entities often serve limited geographic regions or have the capacity to help certain types of entrepreneurs (often those who have established businesses rather than firms just getting off the ground). You can partner with SBA sites to cross-refer clients based on various training and technical assistance offerings available from different organizations. 7. Position yourself as a resource for entrepreneurship training. Use DOL s guidance as a tool to help you explain your value to policymakers and partners. Think creatively about how your organization could contribute to SEA. DOL encourages states to test new, innovative strategies such as targeting young unemployed workers or seniors. Do you provide unique, specialized training for an underserved group in your state? Page 3

4 Determining Grant Eligibility: Does Your State Qualify? Grant eligibility varies by state. To determine your state s eligibility, answer the following questions. 1. Do you live in a state that has enacted SEA and has an active program? Delaware Maine New Jersey New York Oregon If so, your state is eligible to apply immediately for the grants available from DOL. The sooner you start working with state officials, the sooner money could be available. 2. Do you live in a state that has enacted SEA but does NOT have an active program? California Louisiana Maryland Pennsylvania Washington 3 If so, your state has cleared the first hurdle but is not yet eligible to apply for the grant funds. To apply, your state must first activate its SEA program by providing the funds necessary to administer the program. It must establish processes for One Stop Centers to screen candidates and identify preliminary service providers and training resources for SEA participants. For all other states, start with outreach: educate your governor, state legislators and agencies for workforce, labor, small business and/or economic development. Share the model legislation with elected officials and ask them to introduce it in the state legislature. Remember, CFED can help! If you have questions about these regulations or would like help connecting to various stakeholders, contact Katherine Lucas-Smith, Federal Policy Analyst (klucas-smith@cfed.org, ) or Jennifer Brooks, Director of State & Local Policy (jbrooks@cfed.org; ). 1 See 2 The number of additional weeks available to a worker depends on the unemployment rate in his/her state of residence. In September 2012, the number of weeks of additional benefits available through EUC is scheduled to decrease by six weeks, or 14 to 47 weeks depending on the state. The program will expire entirely on January 1, 2013, unless Congress reauthorizes it. Since 2008, Congress has reauthorized EUC 11 times for varying durations. The new federal law also permits states to make SEA available to workers who are collecting an additional weeks of unemployment insurance under another unemployment benefits extension program, Extended Benefits (EB). EB is jointly funded by the federal and state governments; in recent months many states have phased out the EB program. All states are expected to do so by September For that reason, this advocacy guide focuses only on the regular unemployment compensation system and EUC. 3 Washington currently has an active program but it will expire on July 1, The state must reauthorize its program to be eligible for the grant funding. Page 4

5 Available Self-Employment Assistance Grants Purpose State Agency Total Available Establishment or Improved Administration Promotion and Enrollment Alabama Alabama Department of Industrial Relations $479,840 $411,291 $68,549 Alaska Alaska Department of Labor and Workforce Development $69,071 $59,204 $9,867 Arizona Arizona Department of Economic Security $711,300 $609,686 $101,614 Arkansas Arkansas Department of Workforce Services $276,319 $236,845 $39,474 California California Employment Development Department $5,388,572 $4,618,776 $769,796 Colorado Colorado Department of Labor and Employment $562,343 $482,008 $80,335 Connecticut Connecticut Department of Labor $415,008 $355,721 $59,287 Delaware Delaware Department of Labor $80,608 $69,093 $11,515 District of Columbia District of Columbia, Department of Employment Services $89,317 $76,557 $12,760 Florida Florida Department of Economic Opportunity $2,400,953 $2,057,960 $342,993 Georgia Georgia Department of Labor $1,156,906 $991,634 $165,272 Hawaii Hawaii State Unemployment Insurance $111,120 $95,246 $15,874 Idaho Idaho Department of Labor $167,546 $143,611 $23,935 Illinois Illinois Department of Employment Security $1,615,519 $1,384,731 $230,788 Indiana Indiana Department of Workforce Development $720,577 $617,637 $102,940 Iowa Iowa Workforce Development $242,970 $208,260 $34,710 Kansas Kansas Department of Labor $249,408 $213,778 $35,630 Kentucky Kentucky Office of Employment & Training $488,417 $418,643 $69,774 Louisiana Louisiana Workforce Commission $376,976 $323,122 $53,854 Maine Maine Department of Labor $132,233 $113,343 $18,890 Maryland Maryland Department of Labor, Licensing and Regulation $541,360 $464,023 $77,337 Massachusetts Massachusetts Executive Office of Labor and Workforce Development $632,631 $542,255 $90,376 Michigan Michigan Department of Licensing and Regulatory Affairs $1,178,691 $1,010,307 $168,384 Minnesota Minnesota Department of Employment and Economic Development $471,045 $403,753 $67,292 Mississippi Mississippi Department of Employment Security $356,732 $305,770 $50,962 Missouri Missouri Department of Labor & Industrial Relations $638,248 $547,070 $91,178 Montana Montana Department of Labor & Industry $85,942 $73,665 $12,277 Nebraska Nebraska Department of Labor $111,006 $95,148 $15,858 Nevada Nevada Department of Employment, Training and Rehabilitation $465,817 $399,272 $66,545 New Hampshire New Hampshire Employment Security $100,300 $85,971 $14,329 New Jersey New Jersey Department of Labor & Workforce Development $1,070,511 $917,581 $152,930 New Mexico New Mexico Department of Workforce Solutions $173,222 $148,476 $24,746 New York New York State Department of Labor $1,978,999 $1,696,285 $282,714 North Carolina North Carolina Department of Commerce $1,228,623 $1,053,105 $175,518 North Dakota Job Service North Dakota $33,347 $28,583 $4,764 Ohio Ohio Department of Job and Family Services $1,238,931 $1,061,941 $176,990 Oklahoma Oklahoma Employment Security Commission $274,350 $235,157 $39,193 Oregon Oregon Employment Department $468,830 $401,854 $66,976 Pennsylvania Pennsylvania Department of Labor & Industry $1,273,656 $1,091,705 $181,951 Puerto Rico Puerto Rico Labor Department Administration $504,523 $432,448 $72,075 Rhode Island Rhode Island Department of Labor and Training $159,734 $136,915 $22,819 South Carolina South Carolina Department of Employment and Workforce $548,432 $470,085 $78,347 South Dakota South Dakota Department of Labor and Regulation $51,445 $44,096 $7,349 Tennessee Tennessee Department of Labor and Workforce Development $709,202 $607,887 $101,315 Texas Texas Workforce Commission $2,457,874 $2,106,749 $351,125 Utah Utah Department of Workforce Services $218,841 $187,578 $31,263 Vermont Vermont Department of Labor $49,329 $42,282 $7,047 Virginia Virginia Employment Commission $671,010 $575,151 $95,859 Virgin Islands U.S. Virgin Islands Department of Labor $9,718 $8,330 $1,388 Washington Washington Employment Security Department $791,014 $678,012 $113,002 West Virginia WorkForce West Virginia $157,955 $135,390 $22,565 Wisconsin Wisconsin Department of Workforce Development $568,929 $487,653 $81,276 Wyoming Wyoming Department of Workforce Services $44,750 $38,357 $6,393 Totals $35,000,000 $30,000,000 $5,000,000 Page 5