[House Hearing, 113 Congress]
[From the U.S. Government Printing Office]



 
  CHALLENGES AND OPPORTUNITIES FACING AMERICA'S SCHOOLS AND WORKPLACES

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

            HEARING HELD IN WASHINGTON, DC, FEBRUARY 5, 2013

                               __________

                            Serial No. 113-1

                               __________

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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Robert E. Andrews, New Jersey
Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Tom Price, Georgia                   Ruben Hinojosa, Texas
Kenny Marchant, Texas                Carolyn McCarthy, New York
Duncan Hunter, California            John F. Tierney, Massachusetts
David P. Roe, Tennessee              Rush Holt, New Jersey
Glenn Thompson, Pennsylvania         Susan A. Davis, California
Tim Walberg, Michigan                Raul M. Grijalva, Arizona
Matt Salmon, Arizona                 Timothy H. Bishop, New York
Brett Guthrie, Kentucky              David Loebsack, Iowa
Scott DesJarlais, Tennessee          Joe Courtney, Connecticut
Todd Rokita, Indiana                 Marcia L. Fudge, Ohio
Larry Bucshon, Indiana               Jared Polis, Colorado
Trey Gowdy, South Carolina           Gregorio Kilili Camacho Sablan,
Lou Barletta, Pennsylvania             Northern Mariana Islands
Martha Roby, Alabama                 John A. Yarmuth, Kentucky
Joseph J. Heck, Nevada               Frederica S. Wilson, Florida
Susan W. Brooks, Indiana             Suzanne Bonamici, Oregon
Richard Hudson, North Carolina
Luke Messer, Indiana

                      Barrett Karr, Staff Director
                 Jody Calemine, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on February 5, 2013.................................     1

Statement of Members:
    Kline, Hon. John, Chairman, Committee on Education and the 
      Workforce..................................................     2
        Prepared statement of....................................     3
    Miller, Hon. George, senior Democratic member, Committee on 
      Education and the Workforce................................     3
        Prepared statement of....................................     6

Statement of Witnesses:
    Bernstein, Jared, senior fellow, Center on Budget and Policy 
      Priorities.................................................    16
        Prepared statement of....................................    17
    Fornash, Hon. Laura W., secretary of education, Commonwealth 
      of Virginia................................................    11
        Prepared statement of....................................    13
    Herbert, Hon. Gary R., Governor, State of Utah...............     8
        Prepared statement of....................................    10
    Timmons, Jay, president & CEO, National Association of 
      Manufacturers..............................................    22
        Prepared statement of....................................    24

Additional Submissions:
    Davis, Hon. Susan A., a Representative in Congress from the 
      State of California, article dated Nov. 20, 2012, from the 
      New York Times, ``Skills Don't Pay the Bills''.............    53
    Ms. Fornash:
        Report, ``The American Dream 2.0: How Financial Aid Can 
          Help Improve College Access, Affordability, and 
          Completion,'' Internet address to......................    64
        Response to questions submitted for the record...........    61
    Governor Herbert, addendum to testimony......................    65
    Messer, Hon. Luke, a Representative in Congress from the 
      State of Indiana, questions submitted for the record to:
        Ms. Fornash..............................................    60
        Mr. Timmons..............................................    62
    Mr. Miller, prepared statement of the National Disability 
      Rights Network (NDRN)......................................    63
    Rokita, Hon. Todd, a Representative in Congress from the 
      State of Indiana, document, ``Why Utah''...................    39
    Mr. Timmons, response to questions submitted for the record..    62


  CHALLENGES AND OPPORTUNITIES FACING AMERICA'S SCHOOLS AND WORKPLACES

                              ----------                              


                       Tuesday, February 5, 2013

                     U.S. House of Representatives

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The committee met, pursuant to call, at 10:05 a.m., in room 
2175, Rayburn House Office Building, Hon. John Kline [chairman 
of the committee] presiding.
    Present: Representatives Kline, Wilson of South Carolina, 
Foxx, Thompson, Salmon, DesJarlais, Rokita, Bucshon, Barletta, 
Roby, Heck, Brooks, Hudson, Messer, Miller, Andrews, Scott, 
Hinojosa, McCarthy, Tierney, Holt, Davis, Courtney, Fudge, 
Polis, Yarmuth, Wilson of Florida, and Bonamici.
    Staff Present: Katherine Bathgate, Deputy Press Secretary; 
James Bergeron, Director of Education and Human Services 
Policy; Casey Buboltz, Coalitions and Member Services 
Coordinator; Owen Caine, Legislative Assistant; Theresa Gambo, 
Office Administrator; Ed Gilroy, Director of Workforce Policy; 
Benjamin Hoog, Legislative Assistant; Amy Jones, Education 
Policy Counsel and Senior Advisor; Marvin Kaplan, Workforce 
Policy Counsel; Barrett Karr, Staff Director; Rosemary Lahasky, 
Professional Staff Member; Nancy Locke, Chief Clerk; Brian 
Melnyk, Professional Staff Member; Brian Newell, Deputy 
Communications Director; Krisann Pearce, General Counsel; Molly 
McLaughlin Salmi, Deputy Director of Workforce Policy; Emily 
Slack, Legislative Assistant; Alexandra Sollberger, 
Communications Director; Brad Thomas, Senior Education Policy 
Advisor; Joseph Wheeler, Professional Staff Member; Aaron 
Albright, Minority Communications Director for Labor; Tylease 
Alli, Minority Clerk; Jeremy Ayers, Minority Education Policy 
Advisor; Kelly Broughan, Minority Education Policy Associate; 
Jody Calemine, Minority Staff Director; John D'Elia, Minority 
Labor Policy Associate; Jamie Fasteau, Minority Director of 
Education Policy; Daniel Foster, Minority Fellow, Labor; Daniel 
Hervig, Minority Fellow, Labor; Livia Lam, Minority Senior 
Labor Policy Advisor; Brian Levin, Deputy Press Secretary/New 
Media Coordinator; Celine McNicholas, Minority Labor Counsel; 
Richard Miller, Minority Senior Labor Policy Advisor; Megan 
O'Reilly, Minority General Counsel; Michele Varnhagen, Minority 
Chief Policy Advisor/Labor Policy Director; Rich Williams, 
Minority Education Policy Advisor; and Michael Zola, Minority 
Senior Counsel.
    Chairman Kline. A quorum being present, the committee will 
come to order. Good morning and welcome to the first hearing of 
the 113th Congress. I would like to thank our witnesses for 
being with us today. I would like to extend a special welcome 
to Governor Herbert, who traveled out from Utah, some distance.
    The subject of today's hearing has become somewhat of a 
tradition for the Education and the Workforce Committee. It is 
important to start a new Congress with a fresh look at the 
challenges and opportunities confronting America's schools and 
workplaces. We have been fortunate over the years to have 
governors and education and business leaders share their views 
on the issues facing the country, and I am pleased they are 
represented today as well.
    During his inaugural address President Obama noted, quote, 
``This generation of Americans has been tested by crises that 
steeled our resolve and proved our resilience,'' close quote. 
Our Nation has always shown its true greatness in the most 
difficult of circumstances. This certainly defines the last 
recession and the challenges we continue to face. In our 
classrooms, one out of four students will drop out of high 
school before they have earned a diploma. Students and families 
across the country are being buried under a mountain of college 
debt that now exceeds a trillion dollars. Meanwhile, confusion 
and uncertainty surrounding the direction of the Nation's 
education system has only been exacerbated by the 
administration's convoluted waiver scheme. Those who complete 
their education are finding a difficult academic climate has 
been replaced by an even more difficult job market. Roughly 8 
million workers have been forced to accept part-time work when 
what they need is a full-time job.
    The cost of a family health care plan is expected to 
increase this year by $992, and let us not forget the more than 
12 million Americans who remain unemployed and searching for 
work, now close to 4 years since the recession officially 
ended. Some say we are currently stuck in a jobless recovery. 
Others suggest this is the worst recovery since the Great 
Depression. And following reports of negative economic growth 
in the final months of 2012 and a new uptick in unemployment, 
new concerns have emerged about whether we remain in a recovery 
at all.
    No one questions the ability of the American people to rise 
above these tough times and work toward a brighter future. The 
question is whether their elected government can do so as well. 
As policymakers, we have a lot of work ahead of us. Several key 
laws have expired and are in desperate need of reform, Federal 
deficits and debt continue to spiral out of control, 
undermining our economic growth and threatening the prosperity 
of future generations. Programs that serve our most vulnerable 
are on the path to bankruptcy, and the public's confidence in 
our ability to tackle these tough issues continues to fall.
    I hope in this new year we can begin a new era of reform. A 
critical part of that effort will be led by our State leaders 
and local officials, the men and women who remain constantly 
engaged in America's workers and job creators. Their ideas, 
expertise, and common sense are imperative as we work to 
advance responsible solutions that will serve the best 
interests of the country today and in the future.
    I know there are sharp differences on the committee, in the 
Congress, and across the capital city. Despite these 
differences, I am hopeful our vigorous debates will lead to 
meaningful action.
    Again, I would like to thank our witnesses for joining us, 
and I will now recognize my distinguished colleague, George 
Miller, the senior Democratic member of the committee, for his 
opening remarks.
    [The statement of Chairman Kline follows:]

            Prepared Statement of Hon. John Kline, Chairman,
                Committee on Education and the Workforce

    The subject of today's hearing has become somewhat of a tradition 
for the Education and the Workforce Committee. It's important to start 
a new Congress with a fresh look at the challenges and opportunities 
confronting America's schools and workplaces. We've been fortunate over 
the years to have governors and education and business leaders share 
their views on the issues facing the country, and I am pleased they are 
represented today as well.
    During his inaugural address, President Obama noted, ``This 
generation of Americans has been tested by crises that steeled our 
resolve and proved our resilience.'' Our nation has always shown its 
true greatness in the most difficult of circumstances. This certainly 
defines the last recession and the challenges we continue to face.
    In our classrooms, one out of four students will drop out of high 
school before they've earned a diploma. Students and families across 
the country are being buried under a mountain of college debt that now 
exceeds $1 trillion. Meanwhile, confusion and uncertainty surrounding 
the direction of the nation's education system has only been 
exacerbated by the administration's convoluted waiver scheme.
    Those who complete their education are finding a difficult academic 
climate has been replaced by an even more difficult job market. Roughly 
eight million workers have been forced to accept part-time work when 
what they need is a full-time job. The cost of a family health care 
plan is expected to increase this year by 992 dollars. And let us not 
forget the more than 12 million Americans who remain unemployed and 
searching for work--now close to four years since the recession 
officially ended.
    Some say we are currently stuck in a ``jobless recovery.'' Others 
suggest this is the worst recovery since the Great Depression. And 
following reports of negative economic growth in the final months of 
2012 and a new uptick in unemployment, new concerns have emerged about 
whether we remain in a recovery at all.
    No one questions the ability of the American people to rise above 
these tough times and work toward a brighter future. The question is 
whether their elected government can do so as well.
    As policymakers, we have a lot of work ahead of us. Several key 
laws have expired and are in desperate need of reform. Federal deficits 
and debt continue to spiral out of control, undermining our economic 
growth and threatening the prosperity of future generations. Programs 
that serve our most vulnerable are on the path to bankruptcy. And the 
public's confidence in our ability to tackle these tough issues 
continues to fall.
    I hope in this new year we can begin a new era of reform. A 
critical part of that effort will be led by our state leaders and local 
officials--the men and women who remain constantly engaged with 
America's workers and job creators. Their ideas, expertise, and common 
sense are imperative as we work to advance responsible solutions that 
will serve the best interests of the country today and into the future.
    I know there are sharp differences on the committee, in the 
Congress, and across the capital city. Despite these differences, I am 
hopeful our vigorous debates will lead to meaningful action.
                                 ______
                                 
    Mr. Miller. Thank you, Mr. Chairman. And thank you for 
convening this hearing this morning for this overview. And I 
want to thank all of the witnesses for agreeing to join our 
panel. I would like to welcome Governor Herbert for traveling 
here also.
    I tried to travel to your State last week. I saw a lot of 
Colorado Springs Airport and a little bit of Salt Lake City 
Airport and none of the elementary schools I was going to 
visit, so we will talk later. It was a wonderful experience. 
But anyway, I am glad you came this way free of trouble.
    By any measures, the American economy has been slowly but 
surely recovering from the great recession. Corporate profits 
are up, the Dow Jones is booming, and we have seen the average 
of 180,000 jobs created each month last year. Nevertheless, 
many working families continue to struggle with unemployment 
and stagnant wages. I hope that we can all agree that a fair 
and sustainable recovery is one that is broadly shared, that 
helps all of those who have created it.
    On that front, we still have much work to do. We in 
Congress, and this committee in particular, have a role to 
play. If we want to help this recovery along and to build for 
the future, there are some things that we need to be doing.
    First, we need to make and protect the critical investments 
in people. I am talking about the sorts of investments that put 
the American dream within the reach of every individual. This 
begins with reforming our education system so that every child, 
regardless of their background, has the opportunity to succeed. 
From a child's earliest years all the way to higher education, 
quality instruction with high standards pays off both in 
economic and social terms.
    But at this time States and school districts and teachers 
are being held back by the failure of this Congress to rewrite 
No Child Left Behind. The Department of Education's waiver 
program has provided important breathing room for States, but 
cannot be a substitute for the Congress updating the law to 
meet the high skills and critical thinking demands of this 
recovery and of a new economy. Additionally, we must maintain a 
laser-like focus on equity to ensure that our education system 
remains an economic driver, and we need to invest in rebuilding 
and modernizing our schools and community colleges. An 
investment like that will create good jobs in construction 
right now, while providing American students with modern 
learning environments for the long run.
    We also know that a strong economy depends on whether or 
not we are giving all Americans access to higher education or 
job training necessary to compete in a global economy. The 
share of American jobs that require a postsecondary education 
will increase to 63 percent by 2018, not even a decade from 
now, and I think the Governor speaks to that point in his 
testimony. But college tuition continues to grow faster than 
the economy, community colleges are oversubscribed and 
underfunded.
    Addressing access and affordability needs, needs to be a 
priority, just as a complete rewriting of the Workforce 
Investment Act. Both sides of the aisle agree that workforce 
training programs should be better aligned to meet worker and 
employer needs. If we agree, then let's do something about it. 
Let's make sure that there is a seamless partnership among 
workforce boards, local community colleges, businesses, and 
workers. Let's make sure that there is a real accountability 
for these programs and ensure that all stakeholders can 
participate, and let's make sure that there are sufficient 
resources available so these programs work.
    Better educational and training opportunities will help 
rebuild inequalities in the economy, but creating those 
opportunities are insufficient by themselves. That is why the 
Congress must address the growing gap between working people's 
wages and corporate profits, between rising productivity and 
falling compensation. For decades when workers' productivity 
rose, so did their wages, creating and sustaining the American 
middle class, but that link has been broken over the last few 
decades. Working people are not sharing in the prosperity that 
they helped to create.
    Today those who suffered the least during the great 
recession are the ones benefiting the most. Wages of the top 1 
percent have grown by 8.2 percent during 2009 to 2011 recovery, 
but the wages of the 90 percent fell 1.2 percent over that same 
time. This is not sustainable. A vibrant economy and a 
democracy cannot survive if all of the economic gains go to a 
very few at the very top.
    Finally, Congress must end this whole notion of governing 
by fiscal cliff to fiscal cliff. Governing from one 
artificially created crisis to another is no way to instill 
certainty for business or the confidence of consumers. Instead, 
it has done great harm to our Nation's recovery. It started 
with the brinksmanship during the 2011 debt ceiling debacle. 
Consumer confidence plummeted by 25 percent in August 2011, 
economic growth and job growth slowed to almost half, and the 
debate resulted in America's credit rating being lowered for 
the first time in history.
    Then, as last year's fiscal cliff loomed, we saw similar 
pullbacks. The National Association of Business Economics 
recently reported that uncertainty surrounding the fiscal cliff 
led to postponing hiring and capital spending in the last 3 
months of 2012. More than a quarter of the businesses reported 
that they postponed some or all hiring in the fourth quarter. 
Even worse, the artificial crises were designed to force an 
agenda of austerity on the country, and at that time our 
economy can ill afford it. The policy of leaping from fiscal 
cliff to fiscal cliff is holding the jobs and the American 
economy hostage to that political decision.
    In Great Britain we can see the results of a hardheaded 
austerity agenda. They are heading for a triple-dip recession, 
and their debt problems are only getting worse. Despite the 
drastic cuts, their debt levels have risen from 61 percent to 
GDP to 84 percent of GDP. What America's economy needs is 
growth and not manufactured double-dip and triple-dip 
recessions. Growth will both create good jobs and reduce the 
deficit, growth that encourages a fair and sustainable 
recovery, that builds the ladders of opportunity for every 
American.
    I understand that there are real policy differences 
regarding the challenges I mentioned earlier, but the 
bipartisan consensus on some of these issues should still be 
possible. The American people expect this body to try and to 
find common ground. This committee should be in the business of 
advancing policy that becomes law and that makes a real 
difference in working families' lives. I hope that our 
witnesses will help us to identify the challenges and the 
opportunities that present themselves where we can work 
together to make a difference.
    And I thank you very much and I yield back the balance of 
my time.
    Chairman Kline. I thank the gentleman.
    [The statement of Mr. Miller follows:]

  Prepared Statement of Hon. George Miller, Senior Democratic Member, 
                Committee on Education and the Workforce

    Good morning, Chairman Kline. Thank you for holding this hearing.
    I would like to welcome Governor Herbert and all of our witnesses 
to the committee. I'm looking forward to your testimony.
    By many measures, the American economy has been slowly but surely 
recovering from the Great Recession.
    Corporate profits are up. The Dow Jones is booming. We've seen an 
average of 180,000 jobs created each month last year.
    Nevertheless, many working families continue to struggle with 
unemployment or stagnant wages.
    I hope we can all agree that a fair and sustainable recovery is one 
that is broadly shared by those who help to create it.
    On that front, we still have much work to do.
    We in Congress--and on this committee in particular--have a role to 
play. If we want to help this recovery along and build for the future, 
there are some things we need to be doing.
    First, we need to make and protect critical investments in people. 
I'm talking about the sorts of investments that put the American Dream 
within reach of every individual.
    This begins with reforming our education system so that every child 
regardless of their background has the opportunity to succeed.
    From a child's earliest years all the way to higher education, 
quality instruction with high standards pays off in both economic and 
social terms.
    But at this time, states, school districts and teachers are being 
held back by the failure of this Congress to rewrite No Child Left 
Behind.
    The Department of Education's waiver program has provided important 
breathing room for states but cannot be the substitute for Congress 
updating the law to meet the high skill and critical thinking demands 
of the new economy.
    Additionally, we must maintain a laser-like focus on equity to 
ensure our education system remains an economic driver.
    And we need to invest in rebuilding and modernizing our schools and 
community colleges. An investment like that will create good jobs in 
construction right now, while providing American students with modern 
learning environments for the long-run.
    We also know that a strong economy depends on whether we are giving 
all Americans access to the higher education or job training necessary 
to compete in the global economy.
    The share of American jobs that require some postsecondary 
education will increase to 63 percent by 2018, not even a decade from 
now.
    But college tuition continues to grow faster than the economy. 
Community colleges are oversubscribed and underfunded.
    Addressing access and affordability needs to be a priority, just as 
completing a rewrite of the Workforce Investment Act.
    Both sides of the aisle agree that workforce training programs 
should be better aligned to meet worker and employer needs.
    If we agree, then let's do something about it.
    Let's make sure there is a seamless partnership among workforce 
boards, local community colleges, businesses and workers.
    Let's make sure that there is real accountability for these 
programs and ensure that all stakeholders can participate.
    And let's make sure there are sufficient resources available so 
that these programs work.
    Better educational and training opportunities will help to reduce 
inequalities in the economy. But creating those opportunities are 
insufficient by themselves.
    That's why Congress must address the growing gap between working 
peoples' wages and corporate profits, between rising productivity and 
falling compensation.
    For decades, when workers' productivity rose, so did their wages, 
creating and sustaining the American middle class.
    But that link was broken over the last few decades. Working people 
are not sharing in the prosperity they help to create.
    Today, those who suffered the least during the Great Recession are 
the ones benefitting from the most.
    Wages for the top one percent have grown by 8.2 percent during the 
2009 to 2011 recovery. But, wages for the 90 percent fell 1.2 percent 
over the same time.
    This is not sustainable. A vibrant economy and a strong democracy 
cannot survive if all the economic gains go to the very few at the very 
top.
    Finally, Congress must end this whole notion of governing fiscal 
cliff to fiscal cliff.
    Governing from one artificially created crisis to another is no way 
to instill certainty for businesses or confidence for consumers. 
Instead, it has done great harm to the nation's recovery.
    It started with the brinksmanship during the 2011 debt ceiling 
debacle.
    Consumer confidence plummeted by 25 percent in August 2011. 
Economic growth and job growth slowed by almost half.
    And the debate resulted in America's credit rating being lowered 
for the first time in history.
    Then, as last year's fiscal cliff loomed, we saw similar pullbacks. 
The National Association of Business Economics recently reported that 
``uncertainties surrounding the fiscal cliff led to postponed hiring 
and capital spending in the last three months of 2012.''
    More than a quarter of businesses reported that they ``postponed 
some or all hiring in the 4th quarter.''
    The proof is in the pudding. Governing by crisis hurts our economy.
    Even worse, the artificial crises are designed to force an agenda 
of austerity on the country, at a time that our economy can ill afford 
it.
    In Great Britain, we can see the results of a hard-headed austerity 
agenda.
    They are heading for a triple-dip recession, and their debt 
problems are only getting worse. Despite the drastic cuts, their debt 
level has risen from 61 percent of GDP to 84 percent of GDP.
    What America needs is growth, not a double-dip or triple-dip 
recession.
     Growth that will both create good jobs and reduce the 
deficit;
     Growth that encourages a fair and sustainable recovery 
that rebuilds the ladders of opportunity for every American.
    The American people aren't interested in another year of artificial 
crisis after artificial crisis. I'm not interested either.
    I understand there are real policy differences regarding the 
challenges I mentioned earlier. But bipartisan consensus on some of 
these issues should be possible.
    The American people expect this body to try to find that common 
ground.
    This committee should be in the business of advancing policy that 
becomes law and makes a real difference in working families' lives.
    I hope our witnesses will help us identify where the challenges and 
opportunities lie, where we can work together to make that difference.
    Thank you and I yield back.
                                 ______
                                 
    Chairman Kline. Pursuant to committee rule 7(c), all 
committee members will be permitted to submit written 
statements to be included in the permanent hearing record. 
Without objection, the hearing record will remain open for 14 
days to allow statements, questions for the record, and other 
extraneous material referenced during the hearing to be 
submitted in the official hearing record.
    Well, we have a terrific panel of witnesses here today to 
help us get started. Many of them known to members of this 
committee for a long time. We have the Honorable Gary R. 
Herbert, 17th Governor of the State of Utah. He was sworn in on 
August 11, 2009. The Honorable Laura W. Fornash is the 
Secretary of Education for the Commonwealth of Virginia; Dr. 
Jared Bernstein is senior fellow at the Center on Budget and 
Policy Priorities in Washington, D.C., and Mr. Jay Timmons is 
president and CEO of the National Association of Manufacturers 
here in Washington, D.C.
    Welcome to you all.
    Before I recognize you to provide your testimony, let me 
briefly explain our lighting system. It is not really very high 
tech. You each will have 5 minutes to present your testimony. 
When you begin, the light in front of you will turn green. When 
1 minute is left, the light will turn yellow, and when your 
time has expired the light will turn red, at which point I ask 
that you wrap up your remarks as best you are able. I am a 
little reluctant to gavel down witnesses, any witnesses, 
particularly a panel as distinguished as this, but we do need 
to keep it moving. After everyone has testified, members will 
each have 5 minutes to ask questions, and I will be much more 
prompt in dropping the gavel for members.
    So let's get started. Governor Herbert, you are recognized.

        STATEMENT OF HON. GARY HERBERT, GOVERNOR OF UTAH

    Governor Herbert. Thank you, Mr. Chairman, and members of 
the committee, I am honored to be here with you today, and 
thank you for the opportunity to address you.
    Never in recent history has workforce development and the 
work of this committee been more important. My number one 
priority as Governor of Utah is to foster an environment where 
the private sector can create jobs. Utah's focus on building a 
strong economy has yielded accolade after accolade, including 
Forbes magazine naming us the best State for business and 
careers for the third year in a row.
    Utah achieves this success because we focus on a growing 
economy and a recognition of the importance of education. These 
two priorities are inextricably linked. Utah's economy demands 
an educated, skilled workforce, and I am sure the same is true 
for all States. Software giant Adobe recently finished building 
a massive facility in Utah's high-tech corridor, and it is just 
part one of a three-phase project. They were drawn to our State 
in part because of our highly educated workforce and proximity 
to more than 100,000 students at nearby institutions of higher 
learning. We have five universities within a 25-mile radius.
    As more companies like Adobe continue to move and to expand 
in Utah, we recognize the economic imperative to align what 
business needs from the workforce with the skills and degrees 
our education system is producing. So in my remarks today, I 
want to focus on three major initiatives that we are pursuing 
in Utah.
    The first initiative is what we call 66 by 2020. Based on a 
comprehensive study by Georgetown University's Center on 
Education and Workforce, two-thirds of the jobs in Utah will 
require some form of postsecondary education by the year 2020. 
Right now only 43 percent of Utah's workforce meets this 
education standard. The infusion of technology in both the 
workplace and career sectors will drive this Nation's economic 
transformation. Across all industries and economic sectors, 
market demand for college-educated workers will outpace supply 
by 300,000 employees annually. If nothing changes by 2018, the 
Nation's postsecondary system will have produced 3 million 
fewer college graduates than the labor market needs. As the 
Georgetown study put it, ``In short, the economic history of 
the United States is one of lockstep progression between 
technology and educational attainment.''
    Utah is looking ahead and taking the steps now to ensure 
our workforce has the right education level for the future 
demands of the private sector. We have proactively engaged all 
major stakeholders and leaders on every front, including 
education and business, to unite behind and to commit to our 
goal of 66 by 2020.
    The second initiative is pursuing its STEM education. More 
than simply having an education, Utahans must have the right 
kind of education, in areas that are valued in the marketplace. 
Much like hockey great Wayne Gretzky, who said the key to his 
success was that he would skate to where the puck would be, 
Utah is educating for where the jobs will be. With the rise of 
a technology-oriented economy, Utah has a renewed focus on STEM 
education--science, technology, engineering, and math--because 
that is where the jobs will be. Sound analysis demonstrates 
that in our future economy the most intense concentrations of 
postsecondary workers will be in five main sectors and 
represent more than 30 percent of total occupational employment 
and about 45 percent of all jobs for postsecondary workers.
    It is no coincidence that these five sectors, as they tap 
into our new knowledge economy, are also the fast-growing areas 
of our labor market. STEM-related jobs are a top tier priority 
in Utah's entire education system now, K-16.
    The third initiative I wish to highlight today is Utah's 
expansion of dual-immersion education. Utah's dual-immersion 
programs in Spanish, French, and Chinese teach our students 
cultural literacy and prepare them for the global economy. 
Dual-immersion students also perform better on standardized 
testing, they show improved memory skills, better attention 
control, and higher problem-solving ability. Utah is a leader 
in foreign language classes. In fact, one-third of all Mandarin 
Chinese classes taught in the entire United States are taught 
in Utah.
    You may be surprised to know that there are 658 languages 
spoken in Utah. A large component of that is our culture. We 
have many residents who serve as missionaries for the Church of 
Jesus Christ of Latter Day Saints, the Mormon church around the 
world, and they often gain language skills abroad. Our 
multilingual students become a key part of our workforce, and 
that attracts business to our State, such as Goldman Sachs, 
whose office now is the second largest in the Americas and the 
fastest growing in the world.
    It is clear that States are leading the way to economic 
recovery. For example, Utah's economy is growing at twice the 
national average. Our unemployment rate is 5.2 percent, far 
below the national average of 7.8 percent. Despite our success, 
Federal policies complicate Utah's ability to grow and align a 
workforce with market demands. Governors no longer have access 
to the Workforce Investment Act's discretionary funds that we 
were able to cater for unique solutions for our States. Now all 
workforce investment money either covers administrative costs 
or goes directly to the grant programs.
    Because we no longer have flexibility and access to this 
money, the State of Utah has had to apply for individual grants 
through the Workforce Innovation Fund. As of last April, Utah 
spent more than 4 months, 550 staff hours, and $48,000 just to 
apply for the grant. Now, I fully support oversight and 
accountability, but I do not support excessive bureaucratic red 
tape that limits my State's ability to invest funds in the most 
effective way.
    In conclusion, if States are to optimize alignment between 
our future educational outcomes and the labor demands of the 
market, it is essential that Congress now provide States 
maximum flexibility to implement programs and tailor solutions 
in a way that they see fit. No one understands State challenges 
and demographics better than the people who reside and govern 
there. No one is more committed to the most effective use of 
limited resources for the best possible outcome for both our 
students and our employers. And no one is more committed to 
growing local economies, thus ensuring economic recovery, 
prosperity, and job growth.
    I thank you for the opportunity to be with you here today.
    Chairman Kline. Thank you, Governor.
    [The statement of Governor Herbert follows:]

              Prepared Statement of Hon. Gary R. Herbert,
                        Governor, State of Utah

    Members of the committee, thank you for the opportunity to address 
you today. Never in recent history has workforce development, and the 
work of this committee, been more important.
    My number one priority as Governor of Utah is to foster an 
environment where the private sector can create jobs. Utah's focus on 
building a strong economy has yielded accolade after accolade, 
including Forbes Magazine naming us the best state for business and 
careers for the third year in a row.
    Utah achieves this success because we focus on growing the economy 
and investing in education. Those two priorities are inextricably 
linked. Utah's economy demands an educated, skilled workforce, and I'm 
sure the same is true for all states.
    Software giant Adobe recently finished building a massive facility 
in Utah's high tech corridor, and it's just part one of a three-phase 
project. They were drawn to our state in part because of our highly 
educated workforce and proximity to more than 100,000 students at 
nearby institutions of higher learning.
    As more companies like Adobe continue to move to and expand in 
Utah, we recognize the economic imperative to align what business needs 
from the workforce, with the skills and degrees our education system is 
producing.
    So in my remarks today, I want to focus on three major initiatives 
we are pursuing in Utah. The first initiative is what we call 66% by 
2020.
    Based on a comprehensive study by Georgetown University's Center on 
Education and Workforce, two-thirds of the jobs in Utah will require 
some form of post-secondary education by the year 2020. Right now only 
43% of Utah's workforce meets this education standard.
    The infusion of technology in both the workplace and career sectors 
will drive this nation's economic transformation. Across all industries 
and economic sectors, market demand for college-educated workers will 
outpace supply by 300,000 employees annually.
    If nothing changes, by 2018 the nation's post-secondary system will 
have produced three million fewer college graduates than the labor 
market needs.
    As the Georgetown study put it, ``In short, the economic history of 
the United States is one of lock-step progression between technology 
and educational attainment.''
    Utah is looking ahead and taking the steps now to ensure our 
workforce has the right education level for the future demands of the 
private sector. We have proactively engaged all major stakeholders and 
leaders on every front, including education and business, to unite 
behind and commit to our goal of 66% by 2020.
    The second initiative Utah is pursuing is STEM education.
    More than simply having an education, Utahns must get the right 
kind of education in areas that are valued in the marketplace. Much 
like hockey great Wayne Gretzky said he would skate to where the puck 
will be, Utah is educating for where the jobs will be.
    With the rise of a technologically-oriented economy, Utah has a 
renewed focus on STEM education: science, technology, engineering, and 
math, because that is where the jobs will be.
    Sound analysis demonstrates that, in our future economy, the most 
intense concentrations of post-secondary workers will be in five main 
sectors, and represent more than 30% of total occupational employment 
and about 45% of all jobs for post-secondary workers. It's no 
coincidence that these five sectors, as they tap into our new knowledge 
economy, are also the fast growing areas of our labor market.
    STEM-related jobs are a top tier priority in Utah's entire 
education system, K-16.
    The third initiative I wish to highlight today is Utah's expansion 
of dual immersion education. Utah's dual immersion programs in Spanish, 
French, and Chinese teach our students cultural literacy and prepare 
them for a global economy. Dual immersion students also perform better 
on standardized testing. They show improved memory skills, better 
attention-control, and higher problem-solving ability.
    Utah is a leader in foreign language classes. In fact, one third of 
all Mandarin Chinese classes taught in the entire United States are 
taught in Utah. You may be surprised to know that there are 658 
languages spoken in Utah. A large component of that is our culture; we 
have many residents who serve a Mormon mission for the LDS Church and 
they often gain language skills abroad.
    Our multi-lingual students become a key part of our workforce, and 
that attracts business to our state, including Goldman Sachs, whose 
Utah office is its second largest in the America's and fastest growing 
in the world.
    It is clear that states are leading the way to economic recovery. 
For example, Utah's economy is growing at more than twice the national 
average. Our unemployment rate is 5.2%, far below the national average 
of 7.8%.
    Despite our success, federal policies complicate Utah's ability to 
grow and align our workforce with market demands.
    Governors no longer have access to the Workforce Investment Act's 
discretionary funds that we were able to tailor for unique solutions 
for our states. Now, all workforce investment money either covers 
administrative costs, or goes directly to the grant programs.
    Because we no longer have flexibility with this money, the State of 
Utah had to apply for an individual grant through the Workforce 
Innovation Fund. As of last April, Utah spent more than four months, 
550 staff hours, and $48,000 dollars just to apply for the grant.
    Now, I fully support oversight and accountability. But I do not 
support excessive bureaucratic red tape that limits my state's ability 
to invest funds in the most effective way. If states are to optimize 
alignment between our future educational outcomes and the labor demands 
of the market, it is essential that Congress now provide states maximum 
flexibility to implement programs and tailor solutions in the way we 
see fit.
    No one understands state challenges and demographics better than 
the people who reside and govern there. No one is more committed to the 
most effective use of limited resources for the best possible outcome, 
for both our students and our employers. And no one is more committed 
to growing local economies, thus ensuring economic recovery, prosperity 
and job growth.
    Thank you for the opportunity to be with you today.
                                 ______
                                 
    Chairman Kline. Secretary Fornash, you are recognized.

   STATEMENT OF HON. LAURA FORNASH, SECRETARY OF EDUCATION, 
                    COMMONWEALTH OF VIRGINIA

    Ms. Fornash. Good morning, Chairman Kline and members of 
the committee. Thank you for the opportunity to join you today 
to talk about the education reform efforts that the 
Commonwealth has taken under the leadership of Governor Bob 
McDonnell. I think you will hear many similar themes as to 
those that were just presented by Governor Herbert.
    Since taking office in January of 2010, the Governor has 
made education and education reform a top priority of his 
administration, with a laser focus on college and career 
readiness. We are raising standards, focusing on literacy, 
strengthening our high school diploma requirements, and 
ensuring access to dual-enrollment classes that lead to 
credentials which transfer to our public and private 4-year 
institutions.
    Beginning in March of 2010, the Governor issued an 
executive order establishing a Governor's Commission on Higher 
Education, Reform, Innovation and Investment. The commission, 
comprised of business, education, community leaders from across 
the Commonwealth, helped to develop a strategic vision and 
recommendations that turned into the Virginia Higher Education 
Opportunity Act of 2011 or the Top Jobs for the 21st Century 
higher education legislation. This landmark reform legislation 
provides a roadmap to ensure the college dream is affordable 
and accessible for all Virginians. Our bold statutory goal of 
100,000 new degrees over the next 15 years with a focus on 
STEM-H degrees is supported by over $350 million the last 3 
years, which has been proposed by Governor Bob McDonnell and 
supported by the Virginia General Assembly. Additionally, we 
are using a points-based performance funding model to 
incentivize our institutions in a variety of areas, including 
increased associate and bachelor's degree production, 
especially for underrepresented populations, increased growth 
of STEM-H degrees, and accelerated time to degree programs.
    Our institutions are rising to the challenge of these 
goals, and our reforms are working. Over the past 2 years we 
have added an additional 3,800 slots for undergraduate in-state 
students, and last year we recorded the lowest average yearly 
tuition increase of 4 percent at our public colleges and 
universities in over a decade. In Virginia we believe more 
diplomas mean a stronger economy and more jobs, and we are 
implementing policies to strengthen this connection.
    We have also been working collaboratively with our K-12 
higher education and workforce partners to develop and 
implement the Virginia Longitudinal Data System. This system 
allows for integrated student-teacher reporting that matches 
individual teachers to students and will soon be able to link 
teachers to their preparation programs and student outcomes. 
This past October, Virginia became one of only a handful of 
States to release wage outcomes data on college graduates down 
to the level of individual major and institution. By August, 
the Commonwealth will include within these reports associated 
statistics on education debt, also down to the level of major 
and institution.
    For the first time, students and families will be able to 
use specific information about the full cost, associated debt, 
and early career wages to make informed choices about 
postsecondary education. We have also used this data to create 
a workforce report card to benchmark program outcomes and 
eventually evaluate program effectiveness.
    Great teachers in great schools make great students and 
citizens. A great teacher makes all the difference in the life 
of a young person. We are working hard to recruit, incentivize, 
retain, and reward excellent teachers and treat them like the 
professionals they are.
    This year the Governor introduced the Educator Fairness Act 
that will streamline the bureaucratic grievance procedure to 
benefit teachers, principals, and ultimately students. This 
legislation extends the probationary period for new teachers to 
between 3 and 5 years and requires a satisfactory performance 
rating as demonstrated through our new performance evaluation 
system, which includes a component on student academic process 
to keep a continuing contract.
    Further, we want to incentivize our very best teachers to 
excel in the classroom. The Governor proposed $15 million for 
school districts to reward well-performing educators by 
establishing the Strategic Compensation Grant Fund. We want to 
reward the teachers who mentor others, work in hard-to-staff 
schools and subjects, and show significant academic progress 
with their students. This will allow for additional 
compensation for many of our great teachers who go above and 
beyond every day.
    In the Commonwealth we equip low-performing schools with 
turnaround specialists and additional resources from the State 
and private sector. If our schools haven't improved, that is 
unacceptable. Therefore, the Governor has proposed a bold 
initiative to establish a statewide Opportunity Education 
Institution to provide a high-quality alternative for children 
attending any chronically underperforming public elementary or 
secondary school.
    The Opportunity Education Institution will create a new 
statewide school division to turn around our failing schools. 
If a school is consistently failing, the Opportunity Education 
will step in to manage it. The model is working in Louisiana 
and Tennessee, where recovery and achievement districts were 
created and are producing positive results. For a very small 
subset of schools that are failing students, we have no other 
option.
    Our school choice alternatives have focused in the 
Commonwealth on the development of college lab preparatory 
schools, virtual school programs, and public charter schools. 
The Governor has introduced several pieces of legislation to 
strengthen our charter school law and encourage local community 
leaders and charter management organizations to look to the 
Commonwealth for growth. Currently, Virginia only has four 
public charter schools. We will continue to look for ways to 
expand high quality public charter schools to provide families 
with options for their children.
    In the absence of congressional reauthorization of the 
Elementary and Secondary Education Act, Virginia has joined a 
number of States and responded to Secretary Duncan's offer to 
grant flexibility in implementing certain provisions of the No 
Child Left Behind Act of 2001. While Virginia appreciates the 
flexibility afforded States by the Secretary, granting 
temporary waivers of prescriptive No Child Left Behind 
requirements is no substitute for a comprehensive update of the 
law. We believe Congress, not the U.S. Department of Education, 
should make these important decisions that affect every State 
and all public school students.
    As the mother of three young children, Carter, Grace, and 
Wynn, I know the importance of a good education. We must 
continue to raise the bar and end failure, we must continue to 
bring more innovation, accountability, and choices to our 
public school system. An educated workforce helps the 
Commonwealth attract and retain job-creating businesses. With 
these bold initiatives, we will not only strengthen our 
education system but also strengthen and grow our economy and 
help our citizens find the good-paying and rewarding jobs they 
need and deserve. Thank you for the opportunity to speak with 
you today.
    Chairman Kline. Thank you.
    [The statement of Ms. Fornash follows:]

 Prepared Statement of Hon. Laura W. Fornash, Secretary of Education, 
                        Commonwealth of Virginia

    Chairman Kline, members of the committee. I am Laura Fornash, 
Secretary of Education for the Commonwealth of Virginia. In my 
Secretariat, I assist Virginia Governor Bob McDonnell in the 
development and implementation of the state's education and workforce 
policy and oversee Virginia's 16 public universities, the Virginia 
Community College System, five higher education and research centers, 
the Virginia Department of Education, and the state-supported museums. 
Thank you for the opportunity to join you today to talk about the 
education reform efforts that the Commonwealth has taken under the 
leadership of Governor Bob McDonnell.
    Since taking office in January of 2010, the Governor has made 
education and education reform a top priority of his administration, 
with a laser focus on college and career readiness. We are raising 
standards, focusing on literacy, strengthening our high school diploma 
requirements, and ensuring access to dual enrollment classes through 
the local community colleges which leads to credentials that transfer 
to our public and private four year institutions.
    Beginning in March of 2010, the Governor issued an executive order 
establishing the Governor's Commission on Higher Education Reform, 
Innovation and Investment. This commission, comprised of business, 
education and community leaders from across the Commonwealth, helped to 
develop a strategic vision and recommendations that turned into the 
Virginia Higher Education Opportunity Act of 2011 or the ``Top Jobs for 
the 21st Century'' higher education legislation. This landmark reform 
legislation provides a road map to ensure the college dream is 
affordable and accessible for Virginians. Our bold statutory goal of 
100,000 new degrees over the next 15 years, with a focus on STEM-H 
degrees, is supported by more than $350 million over the last three 
years that was proposed by Governor McDonnell and endorsed by the 
Virginia General Assembly. Additionally, we are using a points based 
performance funding model to incentivize our institutions in a variety 
of areas including increased associate's and bachelor's degree 
production especially for underrepresented populations, increased 
growth of STEM-H degrees and accelerated time-to-degree programs. The 
model was developed by policy makers, the business community and 
leadership from our higher education institutions to provide financial 
incentives for outcomes-primarily increased graduates. Our institutions 
are rising to the challenge of these goals and our reforms are working. 
Over the past two years we've added over 3,800 slots for undergraduate 
in-state students, and last year we recorded the lowest average yearly 
tuition increase of 4% at our public college and universities in over a 
decade. In Virginia, we believe that more diplomas mean a stronger 
economy and more jobs and we are implementing policies to strengthen 
this connection.
    States rely on the federal government to assist with higher 
education access through various federal financial aid programs. You 
have made some reforms but more must be done to maximize these federal 
dollars and ensure those who enter our higher education institutions 
exit with employable credentials. As the federal government continues 
to reform its' financial aid programs, I encourage you to review the 
recently released report, ``The American Dream 2.0: How Financial Aid 
Can Help Improve College Access, Affordability, and Completion'' 
supported by a grant from the Bill & Melinda Gates Foundation. It 
provides three key recommendations to help ensure these dollars provide 
student success and completion:
     Make aid simpler and more transparent;
     Spur innovations in higher education that can lower costs 
and meet the needs of today's students; and
     Ask institutions, states, and students to share 
responsibility for producing more graduates without compromising access 
and affordability.
    We have also been working collaboratively with our K-12, higher 
education and workforce partners to develop and implement the Virginia 
Longitudinal Data System. The system allows for integrated student-
teacher reporting that matches individual teachers to students and 
provides certain teachers with estimates of student growth and will 
soon be also able to link teachers to their preparation programs and 
student outcomes.
    This past October, Virginia become one of only a handful of states 
to release wage outcomes data on college graduates, down to the level 
of individual major and institution. By August 2013, the Commonwealth 
will include within these reports associated statistics on education 
debt, also down to the level of major and institution. For the first 
time, students and families will be able to use specific information 
about the full costs, associated debt, and early career wages to make 
informed choices about postsecondary education. We've also used this 
data to create a workforce report card to benchmark program outcomes 
and eventually evaluate program effectiveness.
    We also believe that in order to get a good job and good college 
education, our youth must be prepared for our highly-skilled, highly-
technical workforce and the rigor of postsecondary education 
coursework. Three areas of focus for us in K-12 education reform 
include expanding educational opportunity, ensuring excellence in the 
classroom and increasing innovation and accountability. Through 
legislative and budget proposals, we have increased the percentage of 
K-12 funding going into the classroom from 62% to 64%. We have focused 
on ensuring students can read before being promoted to the fourth 
grade, funded incentives for STEM teachers to keep them in the 
classroom and removed mandates to give local school divisions greater 
flexibility. Even with these initiatives, we continue to look for ways 
to ensure excellence in the classroom and opportunity for our students.
    Great teachers in great schools make great students and citizens. A 
great teacher makes all the difference in the life of a young person. 
We are working to recruit, incentivize, retain and reward excellent 
teachers and treat them like the professionals that they are. This 
year, the governor introduced The Educator Fairness Act that will 
streamline the bureaucratic grievance procedure to benefit teachers, 
principals, ultimately students. This legislation extends the 
probationary period for new teachers to between three to five years, 
and requires a satisfactory performance rating as demonstrated through 
a new performance evaluation system, which includes student academic 
progress as a significant component, to keep a continuing contract.
    Last week this proposal passed the floor of the House of Delegates 
with a bi-partisan vote and unanimously passed from the Senate 
Education and Health committee.
    Further, we want to incentivize our very best teachers to excel in 
the classroom. The governor proposed $15 million for school districts 
to reward well-performing educators by establishing the Strategic 
Compensation Grant Fund. This strategic compensation plan, based on a 
model developed by a local Virginia school system, will be implemented 
through local guidelines that best fit each school division's unique 
characteristics and mission. We want to reward the teachers who mentor 
others, work in hard-to-staff schools and subjects, and show 
significant academic progress with their students. This will allow for 
additional compensation for many of our great teachers who go above and 
beyond every day.
    In the Commonwealth, we equip low performing schools with 
turnaround specialists and additional resources from the state and 
private sector. If our schools haven't improved that's unacceptable. 
Therefore, the governor has proposed a bold initiative to establish a 
statewide Opportunity Educational Institution to provide a high quality 
education alternative for children attending any chronically 
underperforming public elementary or secondary school. The Opportunity 
Educational Institution will create a new statewide school division to 
turnaround our failing schools. If a school is consistently failing, 
the Opportunity Educational Institution will step in to manage it. If 
the school has failed for three years, the Institution can take it over 
and provide a brand new approach to a broken system. This model is 
proven nationally. Louisiana and Tennessee have created Recovery and 
Achievement districts, and their results are positive.
    For the very small subset of schools that are failing Virginia's 
students, we have no other option.
    Other school choice initiatives that we have focused on in the 
Commonwealth include the development of College Partnership Laboratory 
School, Virtual School Programs and Public Charter Schools. During the 
McDonnell administration, the governor has introduced several pieces of 
legislation to strengthen our charter school law and encourage local 
community leaders and charter management organizations to look to the 
Commonwealth for growth. Currently, Virginia only has 4 public charter 
schools. We will continue to look for ways to expand high-quality 
public charter schools to provide families with options for their 
children.
    In the absence of Congressional reauthorization of the Elementary 
and Secondary Education Act (ESEA), Virginia has joined a number of 
states and responded to Secretary Duncan's offer to grant flexibility 
in implementing certain provisions of the No Child Left Behind Act of 
2001. While Virginia appreciates the flexibility afforded states by the 
Secretary, granting temporary waivers of prescriptive NCLB requirements 
is no substitute for a comprehensive update of the law. We believe 
Congress, not the U.S. Department of Education, should make those 
important decisions that affect every state and all public school 
students.
    As the mother of three young children, Carter, Grace and Wynn, I 
know the importance of a good education. We must continue to raise the 
bar and end failure. We must continue to bring more innovation, 
accountability and choices to our public education system. Excellent 
education demands having the courage to try new approaches and the 
Commonwealth is working to implement bold initiatives to ensure a high-
quality education for all students. An educated workforce helps the 
Commonwealth attract and retain job-creating businesses. With these 
bold initiatives we will not only strengthen our education system, but 
also strengthen and grow our economy and help our citizens find the 
good-paying and rewarding jobs they need and deserve.
    Thank you for the opportunity to speak with you today and I am 
happy to take any questions.
                                 ______
                                 
    Chairman Kline. Dr. Bernstein.

          STATEMENT OF JARED BERNSTEIN, SENIOR FELLOW,
             CENTER ON BUDGET AND POLICY PRIORITIES

    Mr. Bernstein. Chairman Kline, Ranking Member Miller, thank 
you for inviting me to testify today.
    From the perspective of working families, the current 
economy is highly imbalanced. The stock market just hit new 
highs last week, boosted by historically high corporate 
profitability, yet as my first chart shows, middle- and low-
wage workers continue to fall behind. In 2012, the real weekly 
earnings of full-time workers were down about 2 percent for 
those at the bottom of the pay scale, flat in the middle, and 
up 2 percent for those at the top.
    Now, greater educational attainment has often been put 
forth as a policy solution to this problem of stagnant earnings 
and inequality, and for a good reason. People with higher 
levels of education enjoy lower unemployment, there is a 
significant wage premium for workers with higher levels of 
education, one that has consistently grown over time, and 
clearly the education of its citizens is a time honored role of 
government, a, quote, ``public good'' that is essential to 
building a strong competitive economy.
    However, an objective observer of today's politics would, I 
fear, be hard pressed to see these concerns reflected in our 
political agenda or our policies. It is hard to see how 
careening from crisis to crisis, from fiscal cliff to debt 
ceiling to sequester, supports the private sector need for both 
a well-educated workforce on the supply side and a stable 
climate of demand for the goods and services they produce.
    In particular, an exclusive focus on deficit reduction 
appears to have wholly crowded out policies devoted to 
educational opportunity or job creation. Worse, spending cuts 
are threatening to reduce the government's commitment to 
supporting education and training while austerity economics is 
hurting a fragile recovery.
    As this committee well knows, spending cuts agreed to so 
far have been almost exclusively from the discretionary side of 
the budget. Within the nondefense discretionary budget, some 
key education programs are already at risk. For example, if the 
Pell Grant appropriation grows only with inflation from its 
2012 funding level, the program will face a funding shortfall 
of about $50 billion over the next decade. Any further cuts to 
this part of the budget will exacerbate this shortfall.
    Still, while these programs must be protected, it would be 
a mistake to think that higher educational attainment alone 
would help ameliorate the economic squeeze so many families 
face. The supply of labor, even of so-called skilled labor, is 
not what is holding back job growth right now. It is inadequate 
labor demand, not enough jobs to meet the supply of workers, 
that has been far more the pressing factor in recent years.
    Our slack demand labor market has hurt even college-
educated workers. I suspect the trend shown in the second 
figure of my testimony will surprise some of the members of the 
committee. It shows that even the wages of workers with a 
bachelor's degree have been losing ground in real terms, and 
not just over the recession, but over the prior expansion as 
well. Yet despite the fact that so many families continue to 
struggle, Congress' sole focus appears to be deficit reduction.
    Now, it is essential to stabilize the growth of the debt in 
the medium term, but a few factors should be considered. First, 
based on the $2.3 trillion in 10-year spending cuts and tax 
increases enacted since 2011, we are $1.2 trillion in further 
policy changes away from stabilizing the debt as a share of GDP 
by 2022. So Congress and the administration have already made 
important progress in this regard.
    Our most pressing near-term economic problem is not the 
budget deficit, it is the jobs deficit. In fact, as I travel 
around the Nation discussing these matters with audiences from 
all walks of life, I constantly hear one refrain: Why isn't 
Washington doing anything about our jobs and our paychecks? So 
in closing out my testimony, I would like to provide the 
committee with a brief and very lightly annotated list of ideas 
that I would urge you to consider.
    Infrastructure investment. Our national stock of public 
goods is in significant disrepair with significant costs to 
productivity and growth. Manufacturing policies. Both offense, 
that is forward-looking investments in areas like clean energy 
where private investment will be undersupplied, and defense, 
fighting back against nontariff barriers, like currency 
manipulation that disadvantage our exports. Helping unions by 
creating a more level playing field for them to organize. 
Minimum wage. Ranking Member Miller has proposed a useful 
increase in the wage floor that would help lift the earnings of 
our lowest wage workers by 85 cents a year for 3 years. More 
rigorous application of labor standards, including overtime 
rules, correct worker classification, and the prosecution of 
wage theft. Strong work supports, both in terms of wage 
subsidies for low-income workers, like the earned income or the 
child tax credits, and assistance with the costs of employment, 
including child care and transportation.
    And finally, better oversight of financial markets. While 
this may seem tangential to jobs for the middle class, it is in 
fact highly relevant. Today's high unemployment rate, even 
years into a GDP recovery, is widely viewed as one consequence 
of the housing bubble, itself inflated by severely 
underregulated financial markets. Not only would action on some 
subset of these policy ideas help to provide desperately needed 
opportunities for working families, but I think they provide an 
excellent answer to the question of, What is Washington doing 
to help? Thank you.
    Chairman Kline. Thank you.
    [The statement of Mr. Bernstein follows:]

         Prepared Statement of Jared Bernstein, Senior Fellow,
                 Center on Budget and Policy Priorities

    Chairman Kline and ranking member Miller, I thank you for inviting 
me to testify today on issues directly in the wheelhouse of this 
committee: education, skills, and jobs.
    My testimony begins by looking at the current jobs situation with 
an emphasis on educational investments. I then discuss ways in which 
recent budget cuts are threatening the educational support critical to 
a productive workforce. Finally, I specify a range of policy ideas that 
I urge the committee to consider in the interest of boosting future job 
growth.
Education Investments and the Current Job Market
    From the perspective of working families, the current economy is 
highly imbalanced. The stock market just hit new highs last week, 
boosted in part by historically high corporate profitability. Yet, 
middle- and low-wage workers continue to fall behind. As shown in my 
first chart, in 2012, the real weekly earnings of full-time workers 
were down about 2% for those at the bottom of the pay scale, flat for 
those in the middle, and up 2% for those at the top.



    The ``staircase'' pattern of growth shown in the figure is 
characteristic of the income inequality that has been increasing 
prevalent in our economy for decades now. Inequality has served as a 
kind of a wedge in the U.S. economy, such that the benefits of growth 
no longer accrue to working families the way they used to. This 
divergence of compensation and productivity is well-documented and is a 
central reason why even in macroeconomic good times--in the absence of 
the output gaps that remain large today--middle-class families have 
faced challenging economic times since well before the bursting of the 
housing bubble and the Great Recession that then ensued.
    Education has often been put forth as a policy solution to this 
problem of stagnant earnings and inequality, and for good reason. In 
the most recent jobs report, for example, the unemployment rate last 
month was shown to be 3.7% for college graduates, 8.1% for high-school 
grads, and 12% for high-school dropouts. And there is, of course, a 
significant wage premium for workers with higher levels of education, 
one that has grown considerably over time.
    In this regard, a significant message from my testimony is that 
members of this committee need to be aware of the forthcoming budgetary 
constraints on programs that help support education, both at the 
federal and sub-federal levels, and particularly as regards educational 
access and affordability for the least advantaged among us.
    But especially at times like the present, it would be a mistake to 
think that higher educational attainment alone would help ameliorate 
the economic squeeze so many families face. The supply of labor, even 
of so-called ``skilled'' labor, is not what's holding back job growth 
right now. Inadequate labor demand--not enough jobs to meet the supply 
of workers--has been by far the more pressing factor in recent years.
    Our slack-demand job market has hurt even college-educated workers. 
I suspect the trend shown in my second figure, using the same data 
source as the first figure (BLS weekly earnings) will surprise some 
members on the committee. It shows that even the wages of workers with 
a bachelor's degree have been losing ground in real terms, and not just 
over the recession, but over the prior expansion as well.



    Trends like these should serve to remind policymakers and 
economists that we need to worry about both sides of the supply/demand 
equation. Yes, we need to ensure that policies are in place to help 
future workers achieve their academic potential. This role for policy 
is especially important when persistently high levels of income 
inequality block educational opportunity for children from economically 
disadvantaged backgrounds. But, in periods like the present 
characterized by persistent labor-market slack, we also need to be 
concerned that there will be jobs for them after their course of 
schooling is successfully completed.
Budget Cuts at the National and State Levels
    Clearly, the education of its citizens is time-honored role of 
government--a ``public good'' that is essential to building a strong, 
competitive economy. It is widely accepted by economists of all 
political stripes that absent a public role, the nation's citizenry 
would be under-educated, damaging both individual and national 
potential.
    However, an objective observer of today's politics would, I fear, 
be hard-pressed to see these concerns reflected in our political agenda 
or our policies. It is extremely hard to see how careening from crisis-
to-crisis--from fiscal cliff to debt ceiling to sequester--supports the 
private sector need for both a well-educated labor force on the supply 
side and a stable climate of demand for the goods and services they 
produce.
    In particular, an exclusive focus on deficit reduction appears to 
have wholly crowded out policies devoted to educational opportunity or 
job creation. Worse, spending cuts are threatening to reduce the 
government's commitment to supporting education and training while 
austerity economics is hurting the fragile recovery.
    As this committee well knows, spending cuts agreed to so far have 
been almost exclusively from the discretionary side of the budget. 
Within the non-defense discretionary (NDD) budget, some key education 
programs are at already at risk. For example, my Center on Budget and 
Policy Priorities colleague Richard Kogan points out that if the Pell 
Grant appropriation grows only with inflation from its 2012 funding 
level, ``the program will face a funding shortfall of about $50 billion 
over the next decade. In other words, an additional $50 billion will be 
needed to maintain Pell Grant award levels without cutting students 
from the program.''
    Kogan's analysis is based on the lower NDD spending caps already 
legislated, largely through the Budget Control Act. Thus, any further 
cuts to this part of the budget will exacerbate this shortfall.
    About one-third of NDD spending provides grants to states and 
localities to support services including education, to which is 
allocated about 25% of those grants, or around $40 billion this year. 
According to Leachman et al:
    These funds mostly end up with elementary and high schools, 
primarily to help them educate children from low-income families and 
children with learning disorders and other types of disabilities. The 
funds also go to agencies that provide preschool education to low-
income children through the Head Start program, and to school districts 
to help them train better teachers and reduce class sizes.
    These same authors report the results of a 2012 survey of education 
administrators of K-12 public schools, wherein majorities say that 
``sequestration cuts would mean `reducing professional development 
(69.4 percent), reducing academic programs (58.1 percent), eliminating 
personnel (56.6 percent) and increasing class size (54.9 percent).' ''
    Invariably, today's budget discussions take place at a level high 
above the programmatic implications of the cuts being considered. But 
many of the programs that will be targeted by NDD cuts already enacted 
are well known to this committee, such as high poverty schools that get 
assistance through Title 1, special education through the Individuals 
with Disabilities Education Act, Head Start, and teacher quality 
improvement grants.
    Finally, while NDD spending has taken a hit with significant 
implications for K-12, the recession and slow recovery has had at least 
two other negative consequences for the provision of educational 
quality and opportunity: a) job losses for teachers and other 
educational workers, and b) higher costs of attendance at public 
universities.
    State budget constraints have led to significant service cuts at 
the state and local level, and public education has of course been a 
central target. Recovery Act funds helped to temporarily offset some of 
these localized budget pressure, but Figure 3 shows the extent to which 
the budget cuts forced layoffs in local education since its peak in 
early 2008. Since then, jobs in that sector are down about 360,000. 
Meanwhile, both enrollments and costs are rising, so spending per pupil 
is down in most states.



    Another consequence of state budget cuts has been diminished 
support of their public university systems. Figure 4 plots state 
appropriations for higher education, both in total and per full-time 
equivalent student, against enrollments. The number of students going 
to public colleges rose significantly in the downturn, in part because 
returning to school can be a smart option during a period when the 
labor market is particularly unwelcoming. But as can be seen, the gap 
between enrollment and appropriations was wider in recent years than in 
any time covered by these data (from the College Board).



    As state contributions to higher education decline, tuitions 
typically must pick up the difference, and of course, over the 
recessionary period, this means rising prices (and greater demand) for 
higher ed while most households' incomes were falling. In fact, between 
the 2007-08 school year and now, tuitions and fees for private four-
year colleges rose about 13% compared to a 27% rise for public higher 
education. Of course, there are still large differences in the tuition 
levels between private and public institutions of higher education, 
with private tuition and fees about $30,000 per year in 2012-13 and 
public at about $9,000. But the large differential in the growth of 
tuition and fees between the two sectors means this gap is shrinking.
Fighting the Jobs Deficit
    As stressed above, when it comes to economic policy, despite the 
fact that so many families continue to struggle, Congress's sole focus 
appears to be deficit reduction. While it is essential to stabilize the 
growth of the debt in the medium term, a few factors should be 
considered. First, based on about $2.3 trillion in spending cuts and 
tax increases enacted since 2011, we are $1.2 trillion in further 
policy changes (that would save another $200 billion in interest 
payments) away from stabilizing the debt as a share of GDP by 2022.\1\ 
So Congress and the administration have already made important progress 
in this regard.
---------------------------------------------------------------------------
    \1\ This figure may be modified up or down as a result of the 
forthcoming CBO forecast, to be released at 1:00 p.m. today. See http:/
/www.cbo.gov/content/43858.
---------------------------------------------------------------------------
    Second, the most pressing near-term economic problem is not the 
budget deficit, it's the jobs deficit. This is clear in relevant 
indicators of both: we have high unemployment and low interest rates.
    Were the budget deficit a near-term problem, in the sense of 
crowding out private borrowing, we'd see this in debt markets through 
higher rates of interest, but instead we see the opposite, with 
Treasury yields at historic lows. Yet the unemployment rate has been 
stuck around 8% for the past year.
    In fact, as I travel around the nation discussing these matters 
with audiences from all walks of life, I constantly hear one refrain: 
``Why isn't Washington doing anything about jobs and paychecks?''
    So in closing out my testimony, I'd like to provide the committee 
with a brief and very lightly annotated list of ideas that I'd urge you 
to consider.
     Infrastructure investment: Our national stock of public 
goods is in significant disrepair, with significant costs to 
productivity and growth. With high unemployment and low borrowing 
costs, this is an excellent time to make such investments. One specific 
idea to consider here is the FAST! (Fix America's Schools Today) bill 
introduced in the last Congress to repair the nation's public schools, 
with an emphasis on energy-efficient retrofits.
     Manufacturing policies: Both offense (forward looking 
investments in areas like clean energy where private investment will be 
undersupplied) and defense (fighting back against non-tariff barriers 
like currency manipulation that disadvantage our exports).
     Helping Unions: Creating a more level playing field for 
unions to organize.
     Minimum wage: Ranking member Miller has proposed a useful 
increase in the wage floor that would help lift the earnings of our 
lowest wage workers by 85 cents a year for three years, bring the 
federal minimum from $7.25 to $9.80 and then indexing it to inflation. 
Such an increase in the minimum wage would lift year-round earnings 
from around $15,000 to around $20,000, and potentially lift the 
earnings of 30 million low-wage workers, with little or no negative 
impact on the employment of affected workers.
     More rigorous application of labor standards, including 
overtime rules, correct worker classification, and prosecuting wage 
theft.
     Strong work supports both in terms of wage subsidies for 
low-income workers like the Earned Income or Child Tax credits, and 
assistance with the costs of employment, including child care and 
transportation.
     Guaranteed health insurance coverage: While lower-income 
jobs obviously tighten family budget constraints, if that family has 
affordable and reliable health insurance coverage, they are far more 
likely to be able to make ends meet and achieve a level of security 
that all working families deserve.
     Better oversight of financial markets: While this may seem 
tangential to jobs for the middle class, it is in fact highly relevant. 
Today's high unemployment rate, even years into a GDP recovery, is 
widely viewed as one consequence of the housing bubble, itself inflated 
by severely under-regulated financial markets. And while the Dodd-Frank 
financial reform bill has much to recommend it, Congress must 
accelerate its lagging implementation.
    Not only would action on some subset of these policy ideas help to 
provide desperately needed opportunities to working families, but they 
would provide an excellent answer to the question of ``what's 
Washington doing to help?''
    Finally, an amply funded government sector is essential to 
accomplish the above agenda, both in terms of educational access and 
jobs for the middle class. This will require future budget deals 
involving revenue increases and spending cuts, not solely in the 
interest of debt stabilization, but to support economic security and 
opportunity, financial market oversight, and work.
    Thank you.
                                 ______
                                 
    Chairman Kline. Mr. Timmons, you are recognized.

          STATEMENT OF JAY TIMMONS, PRESIDENT AND CEO,
             NATIONAL ASSOCIATION OF MANUFACTURERS

    Mr. Timmons. Chairman Kline, Ranking Member Miller, and 
members of the committee, thank you so much for inviting me to 
offer a perspective on the critical workplace issues facing 
manufacturers as a new session of Congress gets underway. In 
the coming months, manufacturers urge the committee to focus on 
our Nation's ability to compete with other Nations and address 
the many challenges that our sector face here at home. Today it 
is actually 20 percent more expensive to manufacture in the 
United States compared to our major trading partners, and that 
figure excludes the cost of labor. Although the committee 
cannot address every factor that goes into that number, it can 
provide assistance in other areas.
    My written testimony highlights some of the barriers to 
competitiveness for manufacturers. For example, the National 
Labor Relations Board's overreach is making workplace relations 
needlessly adversarial. The Board's aggressive agenda is 
undoing the time-tested balance in our labor system, one on 
which employers and employees have come to rely. But I would 
like to use my time today to highlight two issues in two areas 
where I believe Congress has an opportunity to make significant 
advances, and both of these issues focus on the manufacturing 
workforce and I believe have the opportunity for bipartisan 
solutions.
    Over 600,000 manufacturing jobs are unfilled today because 
workers don't possess the right skills. Manufacturers are 
working to close this skills gap through initiatives like the 
NAM's military badge program and our skills certification 
program, both of which facilitate entry and advancement into 
the manufacturing workforce. There are many Federal programs, 
as you know, that aim to provide worker training, but quite 
candidly they are just not getting the job done.
    Federal resources aren't being used effectively. For 
example, programs authorized by the Workforce Investment Act 
are overly bureaucratic, which prevents workforce training 
dollars from getting to the workers who actually need them. We 
believe Congress should streamline the program and direct the 
focus, direct its focus to training workers with skills that 
are in demand and for jobs that actually exist. The AMERICA 
Works Act, which Congressmen Barletta and Schneider introduced 
this morning, achieves exactly that goal. Manufacturers 
appreciate Congressman Barletta's work on this legislation, and 
we urge members of the committee to cosponsor this bill.
    We can begin closing the skills gap through better 
education and better training programs, but that is going to 
take time. Manufacturers also need access to the people who 
will invent, who will innovate, who will create, and who will 
build, regardless of where they are born. And so manufacturers 
are encouraging Congress to move forward with comprehensive 
immigration reform that will allow us to meet our current and 
future workforce needs. Manufacturers need to be able to hire 
the right person, with the right skills, at the right time. 
Without major reforms, we will be ceding talent to our 
competitors and turning away a future generation of 
entrepreneurs.
    Consider this inspirational finding of a study by the 
Partnership for a New American Economy. It found that over 40 
percent--over 40 percent--of Fortune 500 companies were either 
started by an immigrant or by the child of an immigrant. 
American manufacturing enterprises founded by immigrants span 
all sectors, from technology, to steel, to chemicals, to 
medical devices, and many others. All told, major companies 
founded by immigrants or children of immigrants have an 
economic impact larger than the entire economies of all but two 
of our competitors--Japan and China--according to the report.
    We also have to recognize reality. In addition to border 
security, structural reforms, and verification issues, 
immigration reform must address the millions of undocumented 
individuals who currently live in the United States. We need to 
provide a solution for these men, women, and children who seek 
freedom and opportunity and who can help us build a stronger 
country.
    So thank you again for giving me this opportunity to 
provide a perspective from manufacturers. We look forward to 
working with you, with all of you to achieve our shared goal of 
a more vibrant economy that leads to investment and jobs in 
America.
    [The statement of Mr. Timmons follows:]

          Prepared Statement of Jay Timmons, President & CEO,
                 National Association of Manufacturers

    Chairman Kline, Ranking Member Miller and Members of the Committee, 
thank you for the opportunity to appear today to testify on behalf of 
our nation's manufacturers at this hearing on the ``Challenges Facing 
America's Workplaces and Classrooms.''
    My name is Jay Timmons, and I am the President and CEO of the 
National Association of Manufacturers, the nation's largest industrial 
trade association, representing small and large manufacturers in every 
industrial sector, in all 50 states. And we are the voice of 12 million 
manufacturing workers in America. I am pleased to testify on behalf of 
our nation's manufacturers and all those who wish to preserve our 
nation's competitiveness and prosperity, on the critical issues of 
education and workforce development.
    Before I begin, I would like to let you know that the Manufacturing 
Institute, the non-profit affiliate of the National Association of 
Manufacturers, is honoring 120 women tonight from across the country 
for their leadership in Manufacturing. We applaud all of these women 
for their hard work, dedication and commitment to the success of 
American manufacturing.
    Manufacturing remains an important economic force across the 
country. To retain that strength we need to address the fact that it is 
now 20 percent more expensive to manufacture in the United States 
compared to our competitors, and that figure excludes the cost of 
labor. As manufacturers, we have identified four goals to keep 
manufacturing as leading economic driver.
    1. The United States will be the best place in the world to 
manufacture and attract direct foreign investment.
    2. Manufacturers in the United States will be the world's leading 
innovators.
    3. The United States will expand access to global markets to enable 
manufacturers to reach the 95 percent of consumers who live outside our 
borders.
    4. Manufacturers in the United States will have access to the 
workforce that the 21st-century economy demands.
    These goals are our vision for manufacturing. There are however, 
also very specific challenges we are facing in labor policy, workforce 
development and immigration that make it difficult to achieve these 
objectives.
Labor Policy
    The National Labor Relations Board's (NLRB) aggressive agenda 
threatens jobs and undermines employer--employee relations. The NAM is 
committed to defending the rights of manufacturers and their employees 
and stopping this bureaucratic overreach. We need to maintain the time-
tested balance between labor unions and employers. This balance is 
critical to economic growth and job creation.
    The current National Labor Relations Board and the Department of 
Labor continue to churn out troubling regulations and case decisions, 
often overturning decades of established and accepted labor practice. 
At times it appears these agencies are proposing old-economy ideas to 
solve problems that simply do not exist in a modern workplace. Based on 
press accounts, we are likely to see an expansion in the amount of 
personal information employers will be required to share with union 
representatives, including personal emails. It is also likely the Board 
will seek to allow for electronic voting during a unionization campaign 
election. Both of these initiatives, along with the ambush election 
rule, and the Employee Free Choice Act, purport to make it easier for 
unions to hold representation elections, but it is rather interesting 
when you look at the NLRB's own data about union representation 
elections and how the Board is dead set on fixing a problem that the 
numbers continue to show doesn't exist.
    This is a pattern with the Board. For example, the Acting General 
Counsel's Summary of Operations Memorandum for 2012 shows 93.9 percent 
of union elections were conducted in 56 days or less from the time the 
representation petition was filed. This rate is above the Board's goal 
of 90 percent and the 12th straight year the NLRB has exceeded its 
stated goal. Keep in mind, the ambush election rule that would speed up 
representation elections never went into effect last year due to 
litigation the NAM supported. The regulation was invalidated by the 
District Court last year and is before the DC Circuit Court of Appeals 
right now. We've been asking the same questions and have yet to receive 
credible answers from this Board.
    What is even more telling however, is despite the U.S. Court of 
Appeals for the D. C. Circuit recent decision that two of the three 
current members of the Board were improperly appointed by the 
President--effectively reducing the Board to one member, the Chairman 
of the NLRB, Mark Pearce, has stated the Board ``will continue to 
perform our statutory duties and issue decisions.''
    The result is rather than being focused on hiring new employees and 
creating new opportunities for employees, employers are shifting focus 
to educating themselves on multiple union representation elections, 
questioning whether or not they should consult with their attorney over 
representation elections and facing challenges to comply with the 
shifting landscape of regulations. We anticipate this current focus to 
continue over the next several years, not just with the NLRB, but as 
also evidenced by the most recent Regulatory Agenda released by the 
Department of Labor this past December. Employers will be trying to 
decipher hundreds of pages of proposed regulations from the 
Occupational Safety and Health Administration (OSHA), the Office of 
Federal Contract Compliance Programs, NLRB, and other agencies rather 
than focusing on the reason they exist in the first place.
Alignment of Education and Workforce Needs
    While these challenges are of serious concern by themselves, there 
is also a long-growing and looming problem for manufactures. Our most 
recent Skills Gap survey identified approximately 600,000 positions 
going unfilled due to the lack of qualified applicants. In fact, 82 
percent of manufacturers reported a moderate-to-serious shortage in 
skilled production labor.
    The U.S. is betting its entire economic future on our ability to 
produce leading-edge products. Whether it's in IT, biotech, aerospace 
or construction * * * it doesn't matter. Manufacturers will be the ones 
to consistently create new and better things. This future promises to 
be bright, but only if we have the workforce capable of pushing that 
leading-edge. And right now, that doesn't look like a very good bet.
    We have created an education system that is almost completely 
divorced from the economy at large. The only way to address this 
monumental challenge and support the economic recovery is to align 
education, economic development, workforce and business agendas to work 
in concert and develop the talent necessary for success in the global 
economy.
    It is our belief that we do not need another government program to 
solve these problems. We should, however, make sure the ones we 
currently have are actually addressing the problems we face. If they 
are failing to meet the needs of employees and employers, we shouldn't 
be afraid to change them. As representatives of the manufacturing 
industry, we think we've found a solution that fits the needs of our 
businesses and our labor force while working within the existing 
secondary and postsecondary education structure.
    The solution, called the NAM-Endorsed Manufacturing Skills 
Certification System, is grounded in the basic set of skills identified 
by manufacturers--the employers themselves--as required to work in any 
sector across the manufacturing industry.
    The system is a series of nationally portable, industry-recognized 
credentials based specifically on those employer-identified skills. 
These credentials, and the training required to obtain them, certify 
that an individual possesses the basic skills necessary for a career in 
manufacturing and ensures that they are useful nationwide and across 
multiple manufacturing sectors. A realignment of this kind would be 
tangible for our nation and its workforce.
    While on its face, the idea of a skills certification system may 
not seem transformational, it is in fact reforming education and the 
way we think about it. For too long, any programs that were ``career or 
technical'' were pushed off into the non-credit side of academic 
institutions. This attitude sends a loud and clear message to students 
and parents about the value colleges and universities place on these 
types of programs. Yet, it is these very skills and certifications that 
will lead to a job or career that actually exists.
    We are working to integrate credentials into the for-credit side of 
colleges, so even if a student takes only three or four courses to 
achieve a certification and heads into the workforce, they have 
``banked'' those credits. Under this system, the individual knows that 
when they return to achieve the next level certification, they will 
also be working toward a degree as well.
    This approach creates more on and off ramps in education, which 
facilitates individuals' ability to obtain schooling when their 
professional career requires it, and positions them to earn while they 
learn, applying what they learn in class at night on the job the next 
day. In fact, I know the Manufacturing Institute has worked closely and 
successfully with Congresswoman Brooks' former employer, Ivy Tech, 
which is a national leader in quality manufacturing training. These are 
the partnerships we embrace and hope to replicate.
    For many years, postsecondary success has been defined as a four-
year degree. This is unfortunate when a valid, industry-based 
credential can provide the knowledge and skills for a well-paying job 
and a solid foundation on which to build a future.
    Acquiring skills that are in demand by employers is probably the 
soundest investment individuals can make in themselves and as I said 
earlier, the federal government does not need to spend more money to 
facilitate these investments--but there are things Congress and the 
President must do in order for this approach to have the greatest 
impact over the long-term.
    In addition to private-sector alignments, we need to look at 
federal workforce training programs that often do not address the 
skills that are in demand by employers. For example, programs such as 
the Workforce Investment Act that have not been reauthorized for decade 
need to be seriously addressed. WIA can be beneficial to employers, but 
the program is overly bureaucratic and inefficient which prevents 
workforce training dollars from getting to the workers who need them. 
The program should not only be streamlined but also focused on the goal 
of training workers to credentials that are in demand in the private 
sector and to jobs that actually exist.
    That is why manufacturers support the America Works Act, 
legislation introduced this morning by Congressmen Barletta and 
Schneider. The legislation creates this prioritization in WIA but also 
in TAA and Perkins. For employers, an emphasis on a nationally-
portable, industry-recognized credentialing system provides a level of 
quality in potential hires that does not exist today. For employees, it 
ensures they are obtaining the skills in demand in the workplace and 
can work in multiple sectors. For government, it ensures that federal 
funds allocated to worker training are used more efficiently and 
effectively. I want to thank Congressman Barletta for working with us 
on this piece of legislation that is of utmost importance to 
manufacturers.
    For too many years, anything that looked or sounded like skills 
development was classified into a lesser accepted form of education. It 
was defined simply as job training, non-creditable courses or career 
and technical education. In other words, it wasn't considered real 
education. Skill certifications can and should be part of a traditional 
education system, but a wall has been built between education and job 
training by institutions on both sides of that divide. The NAM and the 
Manufacturing Institute are working to break down that wall. The result 
will be more individuals gaining the skills they need to build a career 
and more employers finding and hiring qualified workers.
Immigration
    Employers are investing in workforce development that is essential 
for the future of manufacturers. We have committed to and are invested 
in reducing the skills gap and will work to find future solutions to 
support substantive changes and investments in the education system, 
especially in the areas of Science, Technology, Engineering and Math, 
but right now there is a skills gap across the country in many sectors.
    Employers cannot find the workers they need to get the job done. We 
need access to the people who will invent, innovate, create and build 
and many of these people are born outside of the United States. The 
broken immigration system is making it more difficult to hire the right 
person with the right skills at the right time.
    We fully understand the need and support efforts to address the 
millions of undocumented and falsely-documented people currently 
residing in the United States. Whether it is politically popular or 
not, many of these individuals were born here and many others have 
lived here for years. This is a serious concern and should be addressed 
in a thoughtful manner in conjunction with border security and 
enforcement measures. The NAM supports resolving these issues and looks 
forward to working with Congress, the President and anyone else willing 
to work together on a solution.
    Just as important, however, is reform of the employment-based 
immigration system, which in its existing state is hindering economic 
growth. Manufacturers need a functional legal immigration system that 
efficiently deals with the lack of necessary green cards and visas. 
American companies cannot hire the employees they need and will either 
not hire at all or move jobs abroad if the workers are not available 
domestically. Put simply, we need to raise the caps on the number of 
green cards and visas and create a functional system for hiring 
employees in order for reform to be a workable solution for 
manufacturers.
    A few years ago, a study by the Partnership for a New American 
Economy, a group of business and civic leaders, found that over 40 
percent of Fortune 500 companies were either started by an immigrant or 
the child of an immigrant. Manufacturers are well represented in this 
group.
    American manufacturing enterprises founded by immigrants span all 
sectors, from technology, to steel, to chemicals, to medical devices, 
to many others. All told, the study concluded, major companies founded 
by immigrants or children of immigrants have an economic impact larger 
than all but two of our competitors, Japan and China.
    Every year, even during the economic downturn, the H-1B visa cap is 
reached, leaving companies without any access to necessary employees. 
In addition, the wait time for a green card can be up to ten years, 
leaving employers and employees frustrated and searching for alternate 
solutions.
    During the next ten years, STEM jobs are expected to grow by 17 
percent, compared to a 9.8 percent-growth in non-STEM jobs. In 2008, 
just four percent of all bachelor's degrees were awarded in 
engineering. In China, 31 percent of all bachelor's degrees were in 
engineering and throughout all of Asia the percentage was 19 percent. 
We need these individuals now, but we also need to firm up our 
pipeline.
    But it is not just the education pipeline that needs to be 
addressed. Comprehensive reform should look to create a program to 
address the future needs of the workforce. Without creation of a 
functional, legal system we will be looking back at ourselves in 20 
years trying to determine how to manage the next generation of 12 
million undocumented people residing in the United States. Hand in hand 
with the need to address the next generation workforce is the need to 
have a verification system that is fair and reliable.
    Make no mistake; immigration reform and the access to foreign-born 
talent is not an excuse for American manufacturers to neglect the STEM 
pipeline. These two issues are inextricably linked. We will continue to 
work on building skills for the shop floor and for the laboratory. Visa 
and green card funding should be dedicated to building this pipeline 
and we look forward to working with you to create a more robust 
program.
Conclusion
    Mr. Chairman, we need access to workers with the skills that will 
allow American manufacturers to grow and succeed. We have invested in 
developing those skills here in the United States, but we also need 
access to foreign-born workers whose skills, talents and vision 
complement those of the American workforce.
    Thank you for the opportunity to testify today. I look forward to 
working with you to build the next generation of manufacturers.
                                 ______
                                 
    Chairman Kline. Thank you. I thank all the witnesses. We 
are going to start questions, and I will start. I am going to 
limit myself and all members to 5 minutes--remind me to gavel 
myself down if we get going here--so that all members will have 
a chance to ask questions.
    Let me start with you, Governor. You talked about red tape 
and bureaucracy getting in the way of workforce training. We 
are going to again, Mr. Miller mentioned it in his remarks, we 
are going to again take up the Workforce Investment Act. We had 
legislation in the last Congress, we will probably move it 
around a little bit and bring it back up because we believe, I 
believe that the current workforce investment, the workforce 
training system is not helping. So you brought it up. What is 
it that you are doing in Utah that you think we could pick up 
in Federal legislation that would be helpful?
    Governor Herbert. Well, thank you, Mr. Chairman. I think 
all of us recognize in the marketplace that regulation 
sometimes gets in the way of production, and as I get around 
the State of Utah and other places, the most common lament that 
I hear from the business community is the regulation sometimes 
that don't make sense to them, and particularly Federal 
regulation.
    In Utah we have taken an approach of going back and 
actually counting and reviewing the numbers of regulations that 
we have in our State, and last year we challenged our 
departments, our cabinet members to go back and count the 
regulations that we have on our books, and we found out we had 
1,969. Who knew? And we found out that we had 368 of those that 
had no public purpose, meaning they didn't level the playing 
field, they didn't protect the public. They were just a drag on 
the economy. And so we did what would be sensible, I think, and 
that was we eliminated or modified them to allow the 
marketplace to not have that drag.
    That has been a shot in the arm for our business community. 
And so, again, we are now taking it one step further. Now, this 
year, we will be working with our local governments and their 
regulations to make sure that they are appropriate and they 
actually have a purpose out there in either leveling playing 
fields or protecting the public. But I think regulation reform 
is something that ought to be viewed by every State and 
certainly ought to be viewed here in Washington, and count them 
up, see how many you have got and see what you can eliminate or 
modify.
    Chairman Kline. I can't even guess what that number would 
be.
    Governor Herbert. That is part of the problem.
    Chairman Kline. Very, very large. Exactly. Many thousands 
of pages, no doubt. I think we are up to something like 13,000 
pages of regulations on the Affordable Care Act already.
    Mr. Timmons, let me pick up again on the workforce training 
and the Workforce Investment Act. You have been following what 
we have been doing here. What do you think would be most 
helpful in making sure that businesses are able to convey what 
jobs are available and what training needs to be done?
    Mr. Timmons. Well, I think there are several factors, Mr. 
Chairman. From a Federal perspective, obviously, ease of being 
able to access training funds and having those funds 
consolidated into programs that are focused on developing those 
with the skills that are necessary for the manufacturing 
workforce. As I mentioned, 600,000 jobs in manufacturing go 
unfilled. It is one of the reasons that the organization, the 
Manufacturing Institute, which is an arm of the NAM, has been 
focused on skill certification programs, that is partnerships 
with community colleges, to help us certify manufacturing 
workers with a portable set of skills that they can use across 
State lines or in other communities.
    We have also been working on our military badge program 
that allows us to access the skills that our returning military 
personnel have that they may not know can translate into real 
life experiences in the manufacturing sector. The military 
badge program acts as a translator for skills that our military 
personnel have acquired while they are on mission in the 
military and translate those skills into real life 
manufacturing jobs here at home.
    Chairman Kline. So you are saying in the manufacturing 
field alone there are 600,000 job openings and you don't have 
the people.
    Mr. Timmons. That is right, sir, about 5 percent of the 
manufacturing workforce is vacant today. Even with 8 percent 
unemployment, manufacturers are always trying to find workers 
that have the skills necessary. Some of those are the high-end 
positions, the STEM fields, and some of them are more basic 
skills that require some basic sets of training activities.
    Chairman Kline. So the 47 programs across nine agencies or 
whatever is not getting it done. Okay.
    Mr. Timmons. I think they are well intentioned.
    Chairman Kline. My time has expired.
    Mr. Miller.
    Mr. Miller. Thank you.
    On this same subject, Jared, one of my concerns in my 
opening statement was this, as I say, leaping from fiscal cliff 
to fiscal cliff. And one of the things I think we see or is 
talked about in the unemployment market, after people are 
unemployed 6 months or more, they start to lose proficiency, 
they are not in the environment to pick up new requirements, 
skills that are necessary or information. And my concern is, 
you know, as I pointed out, what we saw happen in 2011 was this 
dramatic drop. I think FedEx testified it was the largest drop 
in business in the history of the company, larger than after 9/
11. That is what happened when we fooled with the debt limit 
then.
    We saw this report recently suggesting that people just 
stopped hiring in the fourth quarter because they didn't know 
if we were going to go over the cliff, due to the debt limit, 
what have you. And it seems to me that has to be resolved so 
that employers have a clear picture of where they are going so 
that then we can backfill with the kinds of programs undertaken 
by the Governor, the kinds of programs suggested here by the 
manufacturers, but people have to have a vision that is longer 
than 90 days. I mean, we are running this government on a 90-
day leash. That is long term, when we go 90 days. We have done 
30 days. And I just don't see how you get this economy really 
taking advantage of everything we need to get stronger and 
stronger if you have this continued bashing around here inside 
the Beltway.
    Mr. Bernstein. Well, yeah, I couldn't agree more. And I 
suspect when the Governor talks about, you know, regulatory 
uncertainty, he is probably also talking about general economic 
uncertainty. That is certainly something that I hear a lot from 
business people. But the problem that most folks talk about 
nowadays is not so much uncertainty from a regulatory agenda, 
but uncertainty from precisely the kind of jumping from cliff 
to ceiling to sequester that you are describing, Congressman, 
and what is I think unfortunately ironic there is that this is 
an uncertainty that is being generated by the very Congress who 
could do something about it.
    Let me make one comment about these unemployed, these slots 
allegedly open in manufacturing. I am not questioning Mr. 
Timmons, who is an expert in that field. I will say, among 
economists it has been widely argued whether unemployment now 
is structural, mostly structural, or mostly cyclical, meaning 
that it is mostly cyclical coming from a demand phenomena, the 
kind of job creation problems you have when the unemployment 
rate is so high and you are still working through the residuals 
of the great recession. So a lack of available jobs, or is it 
structural, a lack of enough skilled workers? And the consensus 
among economists, conservative and liberal, this is across the 
board, is that this is a cyclical unemployment problem, not a 
structural one, so that if we had more employment growth, a lot 
of the unemployment problems you are hearing described would go 
away.
    Now, that doesn't mean that we have adequately trained 
workers for every job slot in the economy. We don't. And I very 
much endorse some of the ideas I have heard from my colleagues. 
But the problem writ large is a cyclical problem associated 
with labor demand, not enough job growth, not a skills-based 
problem right now in the near term.
    Mr. Miller. Thank you.
    Now, we are all hoping, Mr. Timmons, we are hoping to 
reauthorize the workforce investment program here, and there 
has been a lot of suggestions and there has been a lot of 
effort on both sides of the aisle put into this effort. You 
know, we try to come together, but one of the things that was 
suggested in the markup last year by the bill presented by my 
colleagues on the other side of the aisle was that the labor 
unions would not be allowed to participate in the workforce 
investment boards in an area such as large manufacturing, 
DuPont, Dow, Chevron, Exxon, they are all there, United States 
Steel. And as we transition, we find jobs, new jobs, in my area 
the labor unions have been very helpful in providing the 
workforce for the expansions at Chevron, the labor unions have 
been very helpful in providing skilled workers for the internal 
workings of the refineries. When both Dow and DuPont came up 
with new manufacturing procedures, the community colleges and 
the labor unions, the Chemical Workers put together the 
programs to train those people so they would be ready when the 
construction was done. And so I just want to have your opinion, 
is this critical that labor unions not be allowed to 
participate in these boards that are made up of employers, 
employees, educators, small businesses, large businesses in our 
communities?
    Mr. Timmons. Well, you know, I come from a little different 
perspective. My grandfather was a 40-year labor union member 
with Mead Paper Company.
    Mr. Miller. I have got more people here come out of labor 
families, okay? So I am long on people who aren't happy with 
labor unions that came out of labor families.
    Mr. Timmons. Right. So, you know, I think I will let you 
all work that out.
    Mr. Miller. Is this a critical question because this goes 
to how this bill----
    Mr. Timmons. This is not a critical question for the NAM.
    Mr. Miller. Is this a make-or-break issue for you?
    Mr. Timmons. Not for the NAM, but I can tell you that I 
think----
    Mr. Miller. Appreciate that.
    Mr. Timmons [continuing]. It is important for us to really 
focus on getting it done one way or the other.
    Mr. Miller. We may not be working very well together in 
Washington, but all over this country they seem to be working 
together in various communities to try to create the atmosphere 
for these new jobs, new processes that are responding to the 
changes in the economy. Thank you.
    Chairman Kline. Thank the gentleman.
    Mr. Wilson.
    Mr. Wilson of South Carolina. Thank you, Mr. Chairman, and 
thank you, in fact, for promoting an effort to promote an 
atmosphere, as Mr. Miller indicated, to create jobs. I am very 
concerned about the contraction of the economy. I think it 
directly relates to higher taxes. We already know right here in 
this room that the NFIB projected that the government takeover 
of health care would result higher taxes providing for the 
destruction of jobs. In fact, 1.6 million jobs. And so we need 
to certainly make every effort. Mr. Chairman, I appreciate your 
efforts.
    And, Secretary Fornash, I am honored to be here with you. 
My mother's family is from Richmond. I graduated from 
Washington and Lee at Lexington, and I have a son who is a 
doctor in Portsmouth, so we cover the Commonwealth.
    With that, you indicated a need to reauthorize No Child 
Left Behind. This brings up a huge issue, and that is what is 
the proper role of the Federal government and what should be 
the primary function of State government, which is to provide 
for public education, and I believe it should be led by local 
elected school boards. So what should be the Federal role?
    Ms. Fornash. Well, thank you, Mr. Wilson. It is nice to 
know your strong ties to Virginia. Appreciate that.
    I think the role of the Federal government is really to 
focus on that supplemental funding to States, that helping 
disadvantaged children progress academically. We know these at-
risk students need greater access to resources, and the Federal 
government is doing that. I think the challenge is obviously 
the accountability for those Federal dollars and really 
ensuring that States have the flexibility at the local level to 
focus on raising rigor with standards to focus on closing the 
achievement gap. And in many times those strategies take 
innovation and creativity that Federal dollars don't always 
allow for. So it is important going forward that we make sure 
those resources do have greater flexibility in order to be able 
to respond to some of the innovative programs that are being 
successful throughout the Nation. And in Virginia we are very 
much focused on raising our standards and ensuring that all 
young people are college or career ready when they leave high 
school.
    Mr. Wilson of South Carolina. Well, your input can be very 
helpful because I certainly, I have faith in professional 
educators. My wife is a retired teacher. So that is who we need 
to be counting on to provide for the young people of our 
country.
    Mr. Timmons, I appreciate your reference about the National 
Labor Relations Board. South Carolina was the poster child, the 
NLRB overreach, as you indicated. Boeing built a plant, 1.1 
million square feet, hired a thousand employees, and then out 
of the blue NLRB intervened and said that it couldn't open. 
Thank goodness Governor Nikki Haley, Attorney General Alan 
Wilson responded quickly, we were able to settle this, and now 
thousands of people are employed and 787 Dreamliners are being 
built. What other examples of overreach have you detected that 
destroy jobs by NLRB?
    Mr. Timmons. I think a few examples of creating an 
unnecessarily adversarial relationship involve quick snap 
elections, the specialty health care bill, which creates--
regulation, pardon me--that creates micro unions, small 
bargaining units, smaller bargaining units. I think the poster 
rule that was required by the NLRB, which is now on hold, are a 
few examples of those.
    Unfortunately, I think that well-intentioned, oftentimes by 
regulators, well-intentioned actions have adverse results, and 
actions do have consequences, and creating an environment where 
employers and employees who have had 70 years of settled labor 
law, creating a situation that is not as harmonious as it once 
was is very unfortunate, particularly in an economy like we 
face right now.
    Mr. Wilson of South Carolina. Well, we certainly look 
forward to your input.
    And, Governor Herbert, congratulations. Forbes has named 
Utah as the best State for business for 3 years in a row. And 
the reduction in unemployment from 8.3 to 5.2, that is huge, 
and I want to congratulate you. We look forward to seeing what 
you did. I know one thing, the benefits of being a right-to-
work State. Could you tell us how you have seen this and how 
this is reflected in creating jobs?
    Governor Herbert. Well, thank you. We are pleased with the 
growth we have seen, and it has been a difficult time for all 
of us, all the States going through the great recession. But my 
father was an old Idaho farm boy, and I didn't grow up on a 
farm, but we always had an acre, and acre and a half of garden, 
and what my dad taught me was it didn't matter how good the 
seeds were you planted if you didn't have a good soil to plant 
them in. And so as a metaphor for what we have tried to do in 
Utah, we have tried to create an environment of a fertile 
field, a fertile soil where entrepreneurs can come down and 
throw their seeds and grow them. If they work hard, weed, 
water, and fertilize, there will come a harvest.
    And in Utah we have an environment that is conducive to 
risk-reward of a free market system, and we don't have the 
shackles sometimes of a labor union that has a hard 
negotiation. We are a right-to-work State, and I think that 
gives us competitive advantage. I believe in free markets and 
the ability for the entrepreneur to go where they want and set 
up what they want and risk and try to have a profitable outcome 
in that environment. Our success in Utah is one of 
predictability and certainty and an environment that attracts 
the entrepreneur to come and invest in our soil, which as 
Forbes has mentioned is the best climate in America right now.
    Mr. Wilson of South Carolina. Congratulations. Thank you.
    Chairman Kline. The gentleman's time has expired.
    Mr. Andrews.
    Mr. Andrews. Thank you, Mr. Chairman.
    Mr. Timmons, I welcome your support for immigration reform. 
I thank you for it. Hope you are part of a broad and successful 
coalition to get that done.
    Mr. Timmons. We do, too.
    Mr. Andrews. The NAM is a member of something called the 
Coalition for a Democratic Workplace. Is that correct?
    Mr. Timmons. That is right.
    Mr. Andrews. And my understanding is the Coalition for a 
Democratic Workplace filed a petition to intervene in the Noel 
Canning decision that invalidated the NLRB appointments. Is 
that correct?
    Mr. Timmons. I am sorry, invalidate which?
    Mr. Andrews. In the Noel case, which is the one that 
invalidated the recess appointments on the NLRB.
    Mr. Timmons. I think the coalition did, but I am not sure.
    Mr. Andrews. Here it is.
    Mr. Timmons. Okay.
    Mr. Andrews. So I assume that you agree with the assessment 
that the intra-session recess appointments President Obama made 
are unconstitutional?
    Mr. Timmons. Well, the coalition filed that, and obviously 
we are a part of the coalition. The NAM did not. We weren't 
part of that particular decision.
    Mr. Andrews. Do you support what the coalition did, though?
    Mr. Timmons. But at this point the courts have at least 
ruled. Right now we are waiting for an appeal----
    Mr. Andrews. But you support what the coalition did in 
intervening in the case?
    Mr. Timmons. And I think we need to----
    Mr. Andrews. Okay.
    Mr. Timmons. Basically I think we need to listen to the 
courts.
    Mr. Andrews. On August 31st of 2001, President George W. 
Bush appointed Peter Hurtgen to the NLRB in an intra-session 
recess appointment, exactly the same facts as these. Did you 
intervene and oppose that appointment?
    Mr. Timmons. Not that I am aware of.
    Mr. Andrews. On August 31st of 2005 President Bush 
appointed Peter Schaumber to the NLRB in an intra-session 
recess appointment. Did you oppose that appointment?
    Mr. Timmons. Not that I am aware of.
    Mr. Andrews. On January 4th of 2006 President Bush 
appointed Peter Kirsanow to the NLRB on an intra-session NLRB 
appointment. Did you oppose that?
    Mr. Timmons. You know, this is an interesting line of 
questions, but quite frankly I think the courts are the ones 
that have to decide this. This is not an issue for us.
    Mr. Andrews. Well, but you didn't seem to think the courts 
had to decide it when President Bush appointed four members of 
the NLRB using exactly the legal basis President Obama did. Why 
didn't you challenge those appointments?
    Mr. Timmons. Well, thank you for your confidence in my 
constitutional abilities. I have been president of the NAM for 
2 years, so I think you probably have to talk to some of my 
predecessors. I do think the bottom line, though, Congressman, 
is the courts have made a decision on this, and I think we are 
going to have to listen to the courts.
    Mr. Andrews. Well, but evidently your coalition did not 
think that President Bush's appointments of Mr. Hurtgen and Mr. 
Schaumber, Mr. Kirsanow, Mr. Dennis Walsh on January 7th of 
2006 were problematic. Why is all of a sudden these 
appointments in intra-session recesses, what is so different 
about them that make them challengeable in court when you 
didn't challenge the other four by President Bush?
    Mr. Timmons. Again, I think you are going to have to ask 
the courts why they think that that is the case.
    Mr. Andrews. I will tell you why I think it is the case. I 
think that there is no question that there has to be some 
limitation on the appointment power of the President of the 
United States, there is no question about that. Although I 
would point out that on 303 occasions since President Reagan 
took office Presidents have used the intra-session recess 
appointment to appoint people. Jeane Kirkpatrick was appointed 
by President Reagan, Alan Greenspan was appointed by President 
Reagan during this time. Presidents sometimes felt they needed 
to do this.
    This problem has been heightened in recent years because 
the Senate, in my opinion, has used its constitutional 
prerogative to advise and consent as a constitutional bludgeon 
to paralyze the operation of the executive branch. President 
Obama made these appointments because the Senate refused to act 
on his nominees so that the Board could not act.
    The power to advise and consent is not the power to 
paralyze. Presidents who are confronted with this, 72 times by 
President Reagan, 37 times by President George H.W. Bush, 53 
times by President Clinton, and the champion, 141 times by 
President George W. Bush, made intra-session recess 
appointments, but your coalition, your organization never 
challenged any of them, including four appointments, four 
appointments to the National Labor Relations Board in the 
George W. Bush years.
    So I understand we have to leave this to the courts. I am 
hopeful the court will reach a decision which avoids paralysis 
of the executive branch for ideological reasons. But I find it, 
frankly, disconcerting that on four occasions when President 
George W. Bush appointed people to the NLRB using exactly the 
same constitutional arguments President Obama did, your 
organization was quiet about it.
    I yield back the balance of my time.
    Chairman Kline. I thank the gentleman.
    Dr. DesJarlais.
    Mr. DesJarlais. Good morning, and thank you all for being 
here today. I want to focus a little bit on the higher 
education aspect and the challenges we face. Governor and 
Secretary, I wanted to get your perspectives on a couple of 
things. Just like anything coming out of Washington right now, 
the deficit and spending issues are driving a lot of our 
challenges.
    But also, it seems like we are having more and more 
difficulty getting kids to graduate college in a punctual 
fashion. The days of 4-year colleges seem to be stretched to 6 
years, and costs continue to increase. And over the past 
decade, for public 4-year colleges I think we have seen about a 
66 percent increase in cost, 47 percent per 2-year public 
institutions, and about a 26 to 27 percent increase for 4-year 
private institutions. Yet over the same decade, Federal 
subsidies for higher education has gone up about 140 percent. 
We know that in fiscal year 2012 Pell Grant spending was about 
$41.5 billion compared to $13.7 billion in 2006. And looking 
back to the 2003-2004 school year for 4-year institutions, 
about 50 percent of students are obtaining a bachelor degree 
after 6 years.
    So when we look at these numbers, they are kind of 
alarming. And to think, unless the numbers have changed, 
student loan debt in this country surpasses all credit card 
debt and all auto loan debt combined. So we have a lot of money 
being poured in by the Federal government, but we are not 
getting a good return on our investment.
    So, Governor Herbert, I would ask you first, what do we do 
to make colleges not only more affordable, but what do we do to 
incentivize students to graduate in a timely fashion? And then 
how do we make it more conducive for full-time employment for 
these kids after they graduate?
    Governor Herbert. Well, after I get through answering that 
question, I can work on world peace.
    Mr. DesJarlais. Exactly.
    Governor Herbert. You know, Steve Forbes made an 
interesting observation, where he said that when the Federal 
government got involved in the 1970s in putting more money into 
higher education, it actually had the phenomenon of rising 
costs for students. Our loans have gone up. The costs of 
education have gone up. And so you wonder if there is a cause-
and-effect relationship there.
    We have an emphasis in Utah to see if we can make sure that 
we get through the process quicker, saving time. Most college 
students take 6 years to get a 4-year degree. We in Utah are 
trying to embrace more use of technology, concurrent enrollment 
in K-12 so that people are better prepared when they get to 
college education experience to in fact get a leg up on the 
challenge they have there. We find there is too much remedial 
work, where people have to be retrained when they leave high 
school and get into college. That costs time and money.
    We have got colleges now within their own budgets that are 
trying to restructure and reprioritize their own budgets to 
make sure that we in fact get away from what some have referred 
to as degrees to nowhere. Again, all education has value, but 
right now in the marketplace, for example, the STEM educations 
have more value and better reward.
    So we are trying to find ways to streamline, to use more 
technology, remote learning, concurrent enrollment, online 
courses, which will help us in fact reduce costs. We also have 
a significant effort to have private support and help with 
donors to help reduce costs so there is not just a burden on 
the taxpayer. And I think if you will find and compare, you 
will find that Utah's higher education is at the lower one-
third when it comes to tuition costs and the overall costs to 
get a degree in Utah.
    Mr. DesJarlais. Thank you, Governor.
    Secretary.
    Ms. Fornash. Great. Thank you for the opportunity. Governor 
McDonnell has been very focused on access and affordability to 
higher education and really focused on tuition increases 
because of the growing debt, college debt, that students are 
experiencing. And so we have had a real push on trying to 
incentivize our institutions to do certain things, and part of 
that is the 4-year graduation rate. And we have got this 
points-based performance funding model where we are trying to 
push new resources to those institutions who are graduating 
more students in a timely manner. We are also looking at 
greater use of technology to help students complete in a timely 
manner. We also do want to promote dual enrollment. We have 
legislation that was passed that requires all local school 
divisions to provide associate and 2-year opportunities at the 
high school levels to ensure greater access and affordability.
    And we are also promoting year-round use of facilities. As 
you know, many of our higher education facilities are only used 
9 and 10 months throughout the year. So how do we use those 
other months and those break times to provide credit to 
students so they can complete in a timely manner.
    Mr. DesJarlais. Well, I think that sounds spot-on. And I 
will be anxious to hear the numbers, how that turns out, how 
that is working for you because I think that is the model that 
we need. And I look forward to hearing how that turns out. 
Thank you for your time.
    I yield back.
    Chairman Kline. The gentleman's time has expired.
    Mr. Scott.
    Mr. Scott. Thank you, Mr. Chairman. I want to thank all the 
panelists, particularly those from Virginia. I have known 
Secretary Fornash and Mr. Timmons, who worked with Governor, 
Senator, and Congressman Allen. So it is good to see you all.
    Secretary Fornash, there was a great controversy a little 
while ago when targets under the annual measurable objectives 
were set for minority students at a very low level, and there 
was criticism of that target. Can you tell me whether or not 
the future targets anticipate eliminating the achievement gap? 
And if so, how long will it take, and are we on track?
    Ms. Fornash. Yes, sir. Thank you for the question, 
Congressman Scott.
    What happened occurred last summer when our waiver was 
approved and the methodology was approved from the U.S. 
Department of Education. At that time we did not have the 
results back from our mathematics tests. When the results came 
back it did produce uneven results for the annual measurable 
objectives. We quickly responded to that situation and 
developed a new methodology that would ensure all students 
would obtain the same goal within the 6-year period. And so 
that has been our focus currently.
    Mr. Scott. Do you anticipate eliminating the achievement 
gap?
    Ms. Fornash. We are working very hard to do so. Yes, sir.
    Mr. Scott. Are we on track? Are we on track to eliminating 
the achievement gap?
    Ms. Fornash. We have a 6-year plan to do that. You also 
heard me mention the Opportunity Education Institution, which 
would specifically target those failing schools in the 
Commonwealth and step in with a very aggressive plan to manage 
those schools and make sure that they are receiving 
accreditation.
    Mr. Scott. So notwithstanding the low start, you expect 
within 6 years to be able to eliminate the achievement gap for 
minority students?
    Ms. Fornash. That is definitely the goal that we are 
working towards. Yes, sir.
    Mr. Scott. Thank you.
    Dr. Bernstein, is it true that the sequester is expected to 
be--if enacted, if allowed to go into effect--would be a drag 
on the economy? And if so, if we replaced it with an 
alternative $1.2 trillion in cuts, why would that not be an 
equal drag on the economy?
    Mr. Bernstein. Well, it would be, yes. The sequester 
amounts to about $85 billion of spending cuts in 2013. And 
according to independent analysis--I believe it is the firm 
Macro Advisers--this would reduce growth by 0.7 of a percent, 
GDP growth by 0.7 of a percent. Now, GDP growth in the most 
recent report was actually slightly negative. I think that that 
was anomalous. I think if you take a longer-term view, just to 
say look at year over year instead of quarter over quarter, you 
will find that the economy is expanding somewhere in the range 
of 1.5 to 2 percent a year.
    That is already too slow, as can be demonstrably seen by an 
unemployment rate that has been stuck at 8 percent. So you have 
to grow faster than that in order to bring the unemployment 
rate down. But if the sequester should kick in--or, for that 
matter, a sequester replaced by any other set of cuts should 
kick in--you would grow even slower, the unemployment rate 
would probably rise. That is certainly the prediction among 
macroeconomists.
    Mr. Scott. Your first chart shows how those at the bottom 
aren't doing particularly well. What can we do to fix that?
    Mr. Bernstein. Well, I think, of the suggestions I made 
toward the end of my testimony, there are some that I think are 
most relevant to folks at the lower end of the pay scale. I 
mean I think do no harm is probably one of the best things you 
can do for lower-income people because if the unemployment rate 
ticks up a little bit, it goes up a lot for them. So avoiding 
the sequester in the context of my last remarks are critical in 
this regard.
    But I know that an increase in the minimum wage, in fact 
just this morning there is an editorial in The New York Times 
endorsing that idea for the same reason, the fact that low-
income workers haven't seen a minimum wage increase in a while 
and have been falling behind. I think this idea of making sure 
work supports remain strong for low-wage people. Even if you 
are someone at the lower end of the pay scale, if your wage is 
boosted by a robust earned income or child tax credit, that 
helps a lot at the end of the day. Finally I also noted 
assistance with the costs of going to work, transportation 
costs, child care costs, a huge burden for many low-income 
families trying to do the right thing, trying to go to work.
    Mr. Scott. Dr. Fornash, can you say a word about what 
budget cuts are doing for your ability to provide quality 
education in Virginia in terms of class size and ability to 
attract and retain quality teachers? What effect budget cuts 
are having?
    Ms. Fornash. Well, the Governor has tried to restore 
funding to both higher education as well as K-12 in order to 
ensure that we do have adequate educational resources for our 
students and programs in place for teacher training.
    Chairman Kline. The gentleman's time has expired.
    Mr. Bernstein. Mr. Chairman, could I inject one point on 
that point? Is that okay?
    Chairman Kline. Not right now. We will get back to you.
    Mr. Rokita.
    Mr. Rokita. Thank the chairman. I would like to say good 
morning to all the witnesses and thank you for your testimony. 
It has been very helpful.
    Governor Herbert, can I ask you a question real quick? Is 
that your family behind you or no?
    Governor Herbert. Family behind me?
    Mr. Rokita. That is your family. Okay. Well, I could tell. 
They seem to be very proud of both of you. Would you mind 
introducing them for the record, because I know you must be 
very proud of them.
    Ms. Fornash. Oh, I would be delighted. Thank you so much. 
This is my son Carter Fornash. He is in the fourth grade. He 
will be back to see you on a class field trip in April. My 
niece Natalie Daniel and my sister-in-law Martha Daniel.
    Mr. Rokita. Thank you very much. I appreciate that.
    I will start with you, Secretary, then, if you don't mind. 
I am very interested in your public charter schools and really 
your whole charter school program. Indiana has an ever-
increasing robust program in that regard. I know you said you 
only had four. But there are all different kinds. There is the 
public charter school and then you said there was a science lab 
college prep charter school program, something like that. Could 
you confirm that?
    Ms. Fornash. We currently have four public charter schools 
in the Commonwealth of Virginia and those were all created by 
local school divisions. We have a real challenge at bringing in 
charter management organizations to the Commonwealth basically 
because of the restriction that we have on approving charter 
schools. Those can only be approved by the local school board.
    We do have an innovative concept that I believe you read 
about in my testimony and that are STEM academies. And these 
are public-private partnerships that are created throughout the 
Commonwealth. We have 16 of them. And they really take on a 
different flavor depending upon the business community. And 
this is a strategy that I would recommend as a way to really 
expose young people to careers in the STEM fields, as well as 
provide them with the skills to be able to be college- and 
career-ready.
    Mr. Rokita. How do you plan on measuring success? I mean, 
in Indiana we have charter schools where 25 percent of the 
kids, their sole source of food--I don't think this is 
different from other parts of the country--their sole source of 
food is the school. Charter schools where they are buying shoes 
for the kids. And then we have advanced learning charter 
schools as well. And seemingly, from someone who is still a 
little bit on the outside of it, that is all graded on the same 
scale. Is that going to be your plan, too? Or how are you going 
to measure success in these very different environments?
    Ms. Fornash. Sure. Well, the initial measure of success for 
us is third-grade reading. I mean, that has really been our 
focus in the Commonwealth over the past 2 years, is putting a 
focus, whether it is resources or reading specialists, on 
third-grade reading and ensuring that young people are able to 
read because we know that is the best predictor of success in 
high school and in graduation.
    So our focus has been third-grade reading, but also an 
interest in ensuring that young people are college- and career-
ready. And so that is evident through the graduation rate. We 
have also changed our diploma requirements to provide young 
people to earn an industry certification as part of their high 
school diploma requirements, so ensuring that when you graduate 
from high school you are either college- or career-ready.
    Mr. Rokita. Okay. Thank you.
    And, Governor, thank you again for being here. Our paths 
crossed back when you were lieutenant governor and you caucused 
with the Nation's secretaries of state.
    Governor Herbert. The good old days.
    Mr. Rokita. The good old days. You were excellent. And that 
is why I don't doubt any of your testimony and see the great 
things that Utah is doing. I know from our work together during 
that time that that would be the case.
    I would like to enter into the record this document that 
says, ``Why Utah.''
    Chairman Kline. Without objection.
    [The information follows:]

    
    
                                ------                                

    Mr. Rokita. I am not sure if this was made for us today or 
you use this for other purposes or not.
    Governor Herbert. Somebody made it for you.
    Mr. Rokita. It says, quote, ``And we have reduced the size 
of government while all other employment sectors have grown.'' 
And if you said this in your testimony I apologize. But can you 
put some numbers to that or some specificity to reducing the 
size of government, what that meant?
    Governor Herbert. Well, thank you. You know, we have talked 
a lot about certainty and predictability and people want to 
build on a solid foundation. And I believe that comes with 
fiscal prudence. We are one of only seven States right now that 
has a AAA bond rating from all rating agencies on Wall Street, 
and that says something about Utah, says something about the 
rest of the country and the challenges that they are facing. We 
have had a growth that has been pretty good. We are about 3 
percent growth rate now, back to our historical norms. And so 
that expansion of job creation has been healthy.
    Mr. Rokita. But reduce size of government.
    Governor Herbert. Yeah. Our personal income has grown at 
about 5 percent. Every sector of our economy is growing again 
except for government. And we have gone through to find ways to 
streamline and find efficiencies. Again, some of it is 
technology. Sometimes it is better process. But it is 
interesting to know that we have about 22,560 employees in the 
State today. You have to go back to the year 2001 to find a 
smaller number. As we all know, government is labor intensive, 
and we have actually reduced our labor and found more 
efficiencies.
    At the same time, Utah, which is also one of the fastest 
growing States in America, has increased its population by over 
600,000 people. So our ratio has gone from one State employee 
in 112 or 113 to now it is one State employee for 139. Again, 
as we save taxpayers' dollars proportionally, it allows us to 
redirect moneys where it needs to go and in fact empower the 
private sector because we are not taking as much of their 
revenue and their capital. They can reinvest and grow the 
economy. And, frankly, that ought to be the focus of all of us. 
If we get the economy growing right, everything else kind of 
falls into place. And that is the formula we have done in Utah, 
and it is working very well for us.
    Mr. Rokita. Chairman, my time has expired. Thank you.
    Chairman Kline. Mr. Hinojosa.
    Mr. Hinojosa. Thank you, Mr. Chairman. I wish to also thank 
Governor Herbert and the other three distinguished panelists 
for your participation at our congressional hearing on 
Education and Workforce Committee.
    My first question is for Dr. Jared Bernstein. Between the 
years 1973 and 2008, the share of jobs in the U.S. economy 
which required postsecondary education increased from 28 to 59 
percent. According to the Georgetown University Center on 
Education and Workforce, the share of postsecondary jobs will 
increase from 59 to 63 percent over this next decade.
    In your view, what will the jobs of the future look like? 
What can Congress do to prepare the least educated and 
underrepresented minority groups for the jobs of the future as 
you see it? And how can we continue to lower unemployment rates 
for these populations?
    Mr. Bernstein. Well, I should look more carefully, the 
numbers I have in my head don't quite match the numbers you are 
citing, although there is no question that over time the 
demands for more highly skilled workers increases. But it 
increases at a fairly secular, steady pace. There hasn't been 
any evidence of an acceleration in the increase of employers' 
needs for particularly highly skilled workers. And in fact if 
you look at the Bureau of Labor Statistics' projections for new 
jobs, the share with, say, college educated goes up a couple of 
percentage points over the next 10 years, not that big a deal.
    And if you then look at the occupations creating the most 
jobs, you will find that many of those jobs are for home health 
aides, for child care workers, for workers in the retail 
sector, for security guards, for health technicians. Did I say 
home health aides? That is one of the top ones. So while I 
think it is very important to be sure that we have the skilled 
workforce, continue to have the skilled workforce we need--and 
for that, I will speak specifically to some policy ideas--I 
think it is also very important that we be mindful that that is 
not the only sector that is going to be adding jobs. We are 
going to be adding a lot of jobs the middle and the low end of 
the pay scale as well. And being mindful of the job quality 
issues there, as I was mentioning to Mr. Scott and Mr. Miller 
earlier, low unemployment, robust work supports, a high enough 
minimum wage, guaranteed health care insurance, the ability to 
collectively bargain, if that is what you want to do, those are 
all really important.
    This is the point I actually wanted to make earlier. It 
does speak to the issue of your question, how can we help 
support the need for more highly and, for that matter, more 
successfully educated people across the educational scale? And 
that has to do with these funding cuts I mentioned earlier. In 
my spoken testimony, I talked about how the cuts are impacting 
education. Well, the nondefense discretionary part of the 
budget--and of course the discretionary part of the budget is 
where all the cuts thus far have taken place--on the 
nondiscretionary part, one-third of that spending goes to 
States and localities for the kinds of things Secretary Fornash 
was talking about a few minutes ago and endorsing as very 
important to her State and I am sure every other State as well.
    Well, of the one-third of this nondefense discretionary 
spending that goes to States and localities to support 
services, including education, about 25 percent of that, or $40 
billion this year goes to education. And that is precisely the 
kinds of programs that Secretary Fornash was talking about. 
These are things that target low-income kids, kids with 
learning disorders, kids with disabilities. They go to Head 
Start. They go to districts to train better teachers and reduce 
class sizes. Any further cuts to the discretionary side of the 
budget, any shift from defense cuts to the nondefense 
discretionary side of the budget will cut directly into the 
kinds of the programs that I am talking about, that third of 
NDD spending that goes to States to help them with their 
educational services; with their services writ large, of which 
education is a part.
    Mr. Hinojosa. Thank you for that response. And that leads 
me to the question for Secretary Fornash.
    In your testimony, you mentioned the success of Virginia's 
point-based performance funding model in incentivizing 
institutions to increase the production of the college 
associate's degrees and bachelor's degrees. Can you explain how 
that performance funding model works as well as its impact on 
the graduation rates for the underrepresented populations that 
I am concerned about?
    Ms. Fornash. Yes, sir. It is a relatively new performance-
based funding formula. We just actually provided funding----
    Mr. Hinojosa. Is your microphone on?
    Ms. Fornash. I am sorry. This is a relatively new 
performance funding model that was just implemented in 2011. It 
was developed with the business community policymakers and 
higher education policy analysts. And what the performance 
funding model does is give institutions certain points for 
graduating students in 4 years, STEM-H majors, as well as 
graduating more underrepresented populations.
    So we have only been able to provide funding to that 
performance-based incentive funding for the past 2 years. So at 
this point we don't have any data to report as it would relate 
to graduation and retention of underrepresented populations. 
But I do think it is important to note that we are 
incentivizing institutions to look to those populations. We 
know that if we want to increase the number of degrees in the 
Commonwealth and elsewhere, we are going to have to look to 
underrepresented populations and we need to have our 
institutions focused on ensuring those students graduate.
    Mr. Hinojosa. My time has run out. I yield back.
    Chairman Kline. I thank the gentleman.
    Mr. Thompson.
    Mr. Thompson. Thank you, Chairman.
    Thanks to the panel for bringing your expertise to all the 
issues we are dealing with here.
    Mr. Timmons, I want to start with you. With so many 
Americans suffering under unemployment and underemployment and 
manufacturing struggling to fill vacancies--and that is what I 
have seen traveling around my congressional district--unable to 
find qualified and trained workers for these positions sitting 
open, and quite frankly, on top of that, the risk of America's 
future competitiveness, given both of those things, what 
recommendations would you have for secondary education, 
including career and technical education, if it is applicable, 
in filling what I would call the skills gap?
    Mr. Timmons. Well, Congressman, I think there are certainly 
many things that we can look at with regard to the education 
system. You know, one thing I would say that hasn't been 
mentioned here today is that all manufacturing jobs do not 
require a 4-year degree. And, you know, that is the bright 
spot. We have been encouraged with the work of the 
administration on their support of our skills certification 
program. That is postsecondary, but in work with community 
colleges it has certainly been a benefit to helping train 
future manufacturing workers.
    In the secondary area, our Manufacturing Institute has also 
created a program, and it is I guess about 6 years old, called 
Dream It, Do It. I describe it as a cross between kind of the 
old shop class that many of us remember and junior achievement. 
And it gives young people an opportunity to really imagine 
their future in the world of manufacturing. We have gotten away 
over the course of the last several decades from encouraging 
our children and future generations to be involved in the 
manufacturing workforce because of a perception of what 
manufacturing used to be. Manufacturing today is sleek. It is 
innovative. It is clean. It is technology driven. You know, 
when I am speaking to students, I say it is a sexy field to go 
into. And the Dream It, Do It campaign or the Dream It, Do It 
effort helps young people kind of imagine their future in this 
field.
    So that is what we are doing from the private sector 
vantage point. We have partners in many States. Some States, 
the Governors have taken it on as kind of their main focus for 
advancing some interest in manufacturing, and we have 
appreciated that partnership as well.
    Mr. Thompson. Thank you. I think we have done a tremendous 
disservice to a lot of our youth, our kids. You know, many of 
them go right into the workforce. And I am a supporter of 
higher education. No doubt about that. I want to work to make 
that affordable and accessible. But I believe there are many 
different pathways to success in life, and if we don't honor 
all those and reduce the burdens on all those pathways, we 
really haven't served our children well.
    Governor, as you know, last week it was reported that the 
gross domestic product dropped during the last 3 months of 2012 
resulting in a 0.1 percent of negative growth for the fourth 
quarter. Now, this is the first contraction since the spring of 
2009. As you have looked at that and have heard that reported, 
what factors do you believe led to that loss? And what policies 
do you believe should we take to put the U.S. economy back on 
track?
    Governor Herbert. Well, that is a great question. I think 
there are a number of factors that, at least in my opinion, 
that caused it. I think some of it is cyclical, the ups and 
downs of the business cycle, and some of it may be seasonal. 
But clearly the fact that there is concern and uncertainty in 
the marketplace caused by either regulation, the fiscal cliff 
so-called, sequestration, tax hikes all cause the entrepreneur 
to sit on the sidelines and say, Gee, I don't know what the 
rules are. It is estimated by many economists that there is $2 
trillion of capital sitting on the sidelines not willing to 
invest, waiting for some kind of certainty to occur so they can 
feel like, We know what the rules are, if we know what the 
rules are we can play by them, and we will have an opportunity 
to have a return on our investment. I think that uncertainty is 
the biggest cause for the constriction.
    Again, without belaboring the point, in Utah we have tried 
to in fact provide certainty and predictability. We have not 
had a tax increase for 15 years. We actually lowered our taxes 
and flattened the rate. We have had regulation reform. We in 
fact do everything we can to empower the private sector to do 
what they do best, which is innovate and create and find new 
ways to solve the problems and find solutions to the challenges 
that the marketplace and the public wants. And in doing so, we 
have created an opportunity where venture capital is coming to 
Utah. Businesses are locating. We actually have research and 
development's occurring and concentrating in Utah. Actually 
reshoring, bringing people from outside of our country. They 
are coming back to a favorable environment. Lower cost energy. 
Those kinds of things are attracting manufacturing to Utah. 
Procter & Gamble opened up their first manufacturing plant in 
North America in 40 years in Utah here just a couple of years 
ago because of those kinds of things. So absent certainty and 
predictability, the marketplace is hesitating.
    Mr. Thompson. Thank you, Mr. Chairman.
    Chairman Kline. The gentleman's time has expired.
    Mr. Tierney.
    Mr. Tierney. Thank you.
    Dr. Bernstein, I won't ask the Governor this because it 
would put him on the spot, but I will ask you. The uncertainty 
of which the Governor speaks, can you give us a couple of 
comments on how that arose or what is causing that uncertainty 
over the last quarter?
    Mr. Bernstein. I think there is actually considerable 
evidence that right now uncertainty is very much a function of 
fiscal policy and jumping from fiscal cliff to fiscal ceiling 
to potential sequester. It is very hard for businesses, many of 
whom depend on government contracts--the government lets $0.5 
trillion in contracts per year all throughout the economy--to 
plan ahead with that kind of uncertainty. So this lurching from 
crisis to crisis--and I think I am corroborating things the 
Governor himself said a minute ago--very much doesn't help.
    Mr. Tierney. It is rather asymmetric. I would just point 
out, the uncertainty is caused of course by our friends who 
won't come to a reasonable balanced approach to taking care of 
our fiscal problems. But be that as it may.
    Let me ask you again, Dr. Bernstein, talk to me, if you 
will, about the lack of demand in the economy and its effect on 
our situation.
    Mr. Bernstein. Sure. It is very important in the context of 
a hearing that has been largely about--and appropriately so, of 
course, given the committee's mandate--on education and making 
sure that we have an adequate supply of skilled workers. But 
absent enough jobs for the workforce, a skilled worker is 
essentially all dressed up with nowhere to go. That is, simply 
training somebody does not create a job for them.
    We have a widely agreed upon--again, by economists of all 
stripes--large output gaps in our economy. The economy has 
never grown quickly enough to restore the growth lost in the 
depth of the great recession. The unemployment rate has been 
elevated for years now. The current unemployment rate is just 
below 8 percent. Most economists consider full employment 
somewhere slightly north of 5 percent.
    So those factors are not just hurting the unemployed--and 
this is important--they also hurt the employed. I showed in my 
first chart the loss of earnings for middle-income workers and 
low-income workers, real losses once you factor in inflation. 
These are for full-time workers. These are for full-time 
workers.
    Mr. Tierney. So the stagnation of wages is the second 
element of that.
    Mr. Bernstein. The stagnation of wages is closely related 
to the persistent lack of demand or weakness in the labor 
market.
    Mr. Tierney. Governor, on that point alone I notice that in 
your fiscal year 2014 budget, you allow for a 1.6 percent 
increase, I guess, in education, right?
    Governor Herbert. Yes. But again, we have about a 2 percent 
growth rate in our student population.
    Mr. Tierney. But it is a 1.6 percent increase in your 
budget for that year. And I think that allocates resources to 
give a cost of living raise to your higher education 
professionals, right?
    Governor Herbert. We have provided salary increases for 
higher education and also for public education.
    Mr. Tierney. Well, you didn't for K-12, right? I mean, they 
have not had a raise for 4 years. And let me guess, you had a 
Utah State Board of Education and your own Education Excellence 
Commission both recommended you give a 2 percent increase in 
education. You gave a 1.6 percent, and the difference is that 
you didn't give a cost of living raise to your K-12 teachers, 
right?
    Governor Herbert. Well, again, our formula we have there is 
taking care of the health care costs in the benefit package.
    Mr. Tierney. Right. But I guess my real question focuses on 
whether or not you gave a cost of living increase to your K-12 
teachers.
    Governor Herbert. We did. We did. It depends on how they 
decide to spend it at the local district level. They have 
flexibility. We covered the benefit package. They can either 
take a reduction in their benefit or they can have a cost of 
living on their salary and take home.
    Mr. Tierney. So they got a choice in poison, but they 
didn't really get an increase.
    Governor Herbert. The choice is, the local districts, how 
they want to spend the moneys.
    Mr. Tierney. So they want to cut the teachers back in one 
area or another. But it is not a question of----
    Governor Herbert. I would answer it this way, Congressman. 
I remember as a young man I was able to go out and buy an 
automobile. When I asked my father if it was okay for me to do 
that he said, You can buy it if you can afford it. There are 
limited amounts of money that we have available to spend. We 
are putting $300 million this year----
    Mr. Tierney. So, Governor, if I could interrupt you. You 
chose to make your reduction in the K-12 people by not giving 
them the same cost of living increase that you gave to other 
areas, including higher education.
    Governor Herbert. We made the proposal, then worked with 
the legislature to make sure that--our original proposal was 
for last year. If you are talking about last year's budget----
    Mr. Tierney. I am talking about 2014 projections on that. 
And I guess, Dr. Bernstein, is that failure to give raises for 
4 years and then failure to give a cost of living increase this 
year obviously has an impact on the overall economy of that 
area, right?
    Mr. Bernstein. And there is no question that Utah has done 
absolutely better on many of the indicators that the Governor 
was talking about today and I don't doubt that at all. But it 
is the case that from the late 1990s to the mid-2000s, the real 
income of Utah households in the bottom fifth of the pay scale 
fell 11 percent, fell 11 percent in real terms. Over that same 
period middle-income households--that is from the late 1990s to 
the mid-2000s--only went up less than 2 percent. So there is 
the same type of pay squeeze, of income squeeze, of 
difficulties facing middle-wage and low-wage workers exists 
there as well.
    Chairman Kline. The gentleman's time has expired.
    Mr. Messer.
    Mr. Messer. Thank you, Mr. Chairman. I have a formal 
statement. But in the interest of time I would like to, with 
your permission, submit that statement and then try to get to 
the essence of my question. Thank you, Mr. Chairman.
    I am sure there has been some dialogue earlier about the 
Affordable Care Act and its sometimes intended and unintended 
consequences on our economy. I think the chairman mentioned 
there are already 13,000 pages of regulations associated with 
that bill. This week the superintendent of a school system in 
my district came to me--his name is Dave Adams at the 
Shelbyville Central School System--and raised the issue with me 
that the challenges the school system is having and the 
calculation of what a full-time employee is and how that might 
impact their budgets and specifically how that might impact 
teachers aides, people who work between 30 or 40 hours a week 
but do that 9 months a year. His estimate is that under the 
proposed definitions in the act it would cost this school 
system, a town of about 15,000 people, $794,000 in a time where 
they are very strapped with budgets.
    This, of course, is not something that just impacts 
schools. And I would like to raise my first question to Mr. 
Timmons, if I could. How will the affordable health care law's 
mandates and penalties impact employers and their employees? 
And what steps are employers taking to mitigate the potential 
harm from these provisions?
    Mr. Timmons. Well, I am only on page 4,692 of the 
regulations. So I can't give you a direct answer to that. But 
just suffice it to say that manufacturers were fairly 
disappointed with the outcome of the Affordable Care Act. We 
supported the goals of reducing the cost of health care and we 
supported the goal of increased access. And, unfortunately, 
there were a lot of other things added to that bill that made 
it quite expensive.
    Manufacturers, 97 percent of manufacturers provide very 
robust health care benefits for their employees. So for us, it 
was not that large of an issue or a change. And I can't answer 
your question because I think manufacturers are looking at the 
cost-benefit ratio of the law and what they are going to be 
required to do to keep the plans that they have in place right 
now versus moving away from employer-provided care and into the 
new system.
    I can say that manufacturers would prefer to be able to 
provide these benefits to their employees. I mean, it is 
something that we are very proud of. It is something that 
employees appreciate. And, you know, it is part of that good 
healthy working relationship that employer and employees have 
in the manufacturing community. So I have to, unfortunately, 
get back to you on what they are planning to do, but I can tell 
you that they are evaluating it.
    Mr. Messer. Okay. Well, I appreciate that.
    And very quickly, Secretary Fornash, appreciate your 
testimony. And you were very eloquent about the successes in 
Virginia. I just wanted to ask the question, is this an issue 
that you are aware of? Do you have any thoughts on the impact 
of the requirements and penalties of the Affordable Care Act on 
education institutions in Virginia or elsewhere?
    Ms. Fornash. Sure. We are still evaluating the implications 
of the Affordable Care Act as it relates to education and in 
the process are working on some guidance to our State agencies. 
In the Education Secretariat also have our higher education 
institutions, which employ a tremendous amount of part-time 
staff, as you can imagine, on the auxiliary side, student 
affairs, residence life, dining, those types of things. So that 
is obviously a concern for the employees of those operations, 
as well as our State-operated museums who hire a lot of wage, 
part-time, seasonal employment. So these are definitely issues 
that we are in the process of evaluating and working on some 
guidance to better understand and issue to our State agencies 
and institutions of higher education.
    Mr. Messer. Well, thank you.
    Mr. Chairman, clearly at a time when schools are strapped 
for cash and we just had a dialogue just a second ago about the 
challenges they face, I think this is one more challenge that 
is being piled on schools. Thank you.
    Chairman Kline. The gentleman yields back.
    Mr. Courtney.
    Mr. Courtney. Thank you, Mr. Chairman. And thank you to the 
witnesses for your outstanding testimony today. Again, I 
appreciated the input regarding the skills gap and the 600,000 
job openings, which again I think we are all hearing that in 
our districts. In Connecticut, Governor Malloy has initiated an 
advanced manufacturing program using community colleges with 1-
year or 2-year degrees. The hiring rate is almost 100 percent 
in those programs.
    So, you know, there is actually I think a lot of good work 
this committee can do with the Workforce Investment Act to try 
and make sure the structural unemployment doesn't add to the 
pain that is out there right now. But again, I have to say, the 
fiscal uncertainty that is out there right now is what I am 
hearing when I am back home. And I am going to use a very 
specific example, which is that if sequestration and the CR, by 
the way, go into effect, the impact in terms of the Navy's 
budget for repair and maintenance, which will affect shipyards 
in Virginia as well as Connecticut, California, Hawaii, means 
that 23 ship repair and availabilities are going to be 
canceled. And those are real jobs. Those are exactly the high-
value jobs in manufacturing that people are pulling their hair 
out right now, they just cannot believe that that is not 
something that we are focused on right now 22 days away roughly 
from sequestration from kicking in.
    And the solutions that the majority party has put forward 
to protect defense cuts would basically shift all the cuts to 
discretionary domestic spending, which is Title I, which is 
Head Start. Again, my largest school district is going to lose 
two Head Start programs if the domestic discretionary cuts go 
into effect. So that is not a solution. I mean that is just not 
an answer for dealing with what again is about an inch from our 
nose as we are standing here right now.
    The Bipartisan Policy Center, which is the group that was 
founded by Senator Dole and Senator Daschle, came out with a 
report on sequestration which again a million jobs will be lost 
if we don't deal with this right now. And I just wonder if you 
have reviewed those findings, Dr. Bernstein, and have any 
comment.
    Mr. Bernstein. Well, it is precisely related to the kinds 
of comments that I was referring to earlier. And in fact you 
gave the microeconomic foundations for exactly what we are 
talking about. Many of these outlays find their way into the 
economy quickly. Think of it as sort of the opposite of 
stimulus. Right? It is instead of an infrastructure program 
that creates a job, this is pulling out funding resources that 
are actively creating jobs now, and those jobs will be lost if 
those spending cuts occur as planned in the sequestration.
    I mean you will recall that many economists, and I think 
Members of this body, were very much worried about the impact 
of the fiscal cliff on the economy. Ben Bernanke warned about 
it. I don't recall the CBO ever projecting a recession before. 
They projected that if the fiscal cliff occurred, there would 
be a recession. This is a microcosm of that. And if you thought 
the fiscal cliff was bad for the economy, this is a microcosm 
of the fiscal cliff. Works the same way, by slowing GDP growth, 
slowing employment growth, slowing consumer demand, slowing 
investor demand, pulling funding out of the very kinds of 
productive processes you are describing.
    Mr. Courtney. And the positive outcome of the fiscal cliff, 
which was basically to get some certainty into tax rates, 
estate tax rates, again, not everybody was thrilled with where 
the cutoffs were in terms of the rates, but at least now we are 
not looking in those two areas. In AMT, no more AMT patches. We 
are not looking at any sunset dates. We are not looking at any 
automatic expiration dates or shelf life dates.
    And, frankly, you know, your organization and your members, 
by the way, it is not just the big OEMs that are worried about 
the sequestration, it is the supply chain of metal finishers, 
valve manufacturers. These are the guys that, frankly, are 
going to feel because they have no reserves that they can fall 
back on. And the absence of any reference to what is staring 
manufacturers, particularly defense manufacturers in the face 
right now, literally about 3 weeks away, is kind of astonishing 
to me, Mr. Timmons.
    Mr. Timmons. Well, it shouldn't be too astonishing because 
we are talking about it all the time. And you are exactly 
right, our study actually shows that there will be a 12.8 
percent contraction in GDP between now and the end of 2015 if 
sequestration is allowed to proceed. And it could ultimately 
result in another decade to get back to where we have just come 
from.
    So for us, it really is a very vital issue. You know, 67 
percent of manufacturers say that there is too much uncertainty 
right now to expand, to hire, to grow; 55 percent of 
manufacturers say they would not start their business today if 
they knew what they know now and in this current environment. 
So manufacturers are very concerned about sequestration. As Dr. 
Bernstein mentioned and our study confirms that, a million jobs 
at stake in the manufacturing sector if sequestration, 
particularly in defense manufacturing, is allowed to continue 
as it is currently scheduled to do. And we would love to work 
with all Members of Congress on both sides of the aisle to 
resolve this problem.
    Mr. Courtney. Thank you. I yield back.
    Chairman Kline. The gentleman's time has expired.
    Mrs. Brooks.
    Mrs. Brooks. Thank you, Mr. Chairman.
    Mr. Timmons, as you might know, I was previously a senior 
vice president with workforce training at Ivy Tech Community 
College and general counsel for the college. And you have 
talked about the skills gap and the 600,000 jobs that have gone 
unfilled. Can you talk a little bit more specifically about the 
Manufacturing Institute work that you all do, what you have 
done with Ivy Tech, and why you think community and technical 
colleges are really the right forum for this type of training?
    And then secondly, I was on shop floors last week at Roche 
Diagnostic and Rolls-Royce in Indiana, and you are right, they 
are sleek, innovative, high-tech factory shop floors. And I 
think a lot of people don't understand the appreciation or the 
importance of the skill certification that you have mentioned. 
Can you talk about how the Manufacturing Institute is working 
with the community colleges on the skill certifications?
    Mr. Timmons. Well, I would be happy to do that. And thank 
you for the question.
    The Manufacturing Institute has really taken the skills 
issue to a new level. I mentioned earlier the Dream It, Do It 
campaign that the Manufacturing Institute kicked off several 
years ago, and one of the things that we want young people to 
understand is the ability to have a much higher income than 
they might otherwise. Twenty-seven percent higher income than 
the rest of the economy is what the average is for 
manufacturing workers.
    The institute has implemented, as I mentioned in my 
testimony, a skill certification system by working with 
community colleges throughout this country to enact a portable 
set of skills that can be applied to manufacturing facilities 
anywhere. It is a basic skill set that tells a manufacturer 
that these individuals are skills-ready to enter the 
manufacturing workforce. It doesn't mean that there won't be 
additional training that is required at a particular company 
for a particular industry, but it is an effort to try to 
provide that pipeline for the workforce that manufacturers so 
desperately need.
    I also want to point out again--and I mentioned it earlier 
but I think it is very important to mention this particular 
program--and it is the military badge program that the 
institute has kicked off with several of our members throughout 
the country. And the military badge program really acts as a 
translation device, if you will, for skills that military 
personnel may have acquired in their service to our country. 
For instance, if you are talking to somebody who is just 
returning from Afghanistan and you say, Well, what skills do 
you think you could apply to the manufacturing workforce? And 
they shrug their shoulders and say, I don't know, I drove a 
tank. Well, the military badge program will help them identify 
the skills that would be very vital to a manufacturing career. 
It might be hydraulics. It might be electronics. It might be 
logistics. Those skills can be then applied to a manufacturing 
position.
    If they have a skill set that is ready to go, we help them 
enroll in an online database to match them with openings in the 
manufacturing community. If their skills might need a little 
tweaking, we work with a group called Right Skills Now to get 
them the additional training that they will need and then we 
get them into this electronic database.
    So the Manufacturing Institute, you know, I have to say 
that they have about six people on their staff and they are 
running quite an amazing program to help fill this 600,000 
deficit in our workforce.
    Mrs. Brooks. Thank you, Mr. Chairman. I yield back.
    Chairman Kline. Thank the gentlelady.
    Ms. Bonamici.
    Ms. Bonamici. Thank you very much, Mr. Chairman and Ranking 
Member Miller, for holding the hearing today. And thank you to 
the witnesses. I want to start by concurring with some of the 
comments that were made today.
    Governor Herbert, thank you for bringing up the importance 
and the benefits of language immersion and preparing students 
for a global marketplace.
    Secretary Fornash, thank you for emphasizing the importance 
of increasing innovation.
    Dr. Bernstein, I appreciate your discussion about the role 
of investment in education as an important way to address 
income inequality.
    And, Mr. Timmons, this has been a great discussion about 
the skills gap and workforce training, something that I have 
met with community colleges and businesses in my home State of 
Oregon about. I am actually working on developing some 
legislation that will help to pair the local employers with 
workforce training and help address that skills gap.
    I want to follow up, especially with Dr. Bernstein, about 
something that my constituents are emphasizing, and that is the 
importance of investment in early childhood education programs, 
like Head Start and the difference that they make for students, 
especially in the long term. And I know, Dr. Bernstein, you 
mentioned the importance of higher education to helping 
Americans find jobs and earn good wages. But you also talked 
about the dramatic effects that cuts in the nondefense 
discretionary budget would cause, including programs like Head 
Start and early childhood education.
    The University of Oregon, my alma mater, has a new 
president, and he has an interesting background for a college 
president. He was a criminologist. And he said one of the best 
investments we can make in crime prevention is an early 
childhood education. So can you elaborate in not only the 
importance of investing in early childhood education to ensure 
that we have the workforce needs for the future, but also, 
conversely, how budget cuts and cutting those programs could 
negatively impact everything from a prepared workforce to 
graduation rates and even criminal justice laws?
    Mr. Bernstein. By the way, I was out at the University of 
Oregon last week giving a couple of talks. Go Ducks, is I think 
what you say out there.
    Ms. Bonamici. Thank you.
    Mr. Bernstein. The idea that we would under-invest in 
preschool, including Head Start, particularly for disadvantaged 
kids whose parents far more often than not are unable to afford 
the investments that more affluent parents make all the time, 
is unquestionably cutting off our nose to spite our face, 
whether it is concerns about our fiscal future, whether it is 
concerns about the issues discussed here today, whether it is 
concerns about those children realizing their potential. This 
is something that is widely agreed upon, again, by economists 
of all stripes. It is not a liberal idea. It is not a 
conservative idea. In fact, a renowned Nobel laureate economist 
named Jim Heckman, who is I think typically associated with 
Republicans, has written many memos to Members of Congress and 
the administration just deeply urging that we pursue this kind 
of funding more deeply--again, particularly as regards kids in 
the bottom half of the income scale who typically are left 
behind in this regard.
    Things like small class sizes have been shown, we now have 
decades of longitudinal data on this, so there are very good 
controlled studies that show if a kid gets to go to a smaller 
class, which is often associated with the kinds of funding 
within the NDD budget, that kid will have a higher likelihood 
of completing college. Same thing if you look at the kinds of 
educational experiences, parental investments that kids in the 
bottom fifth of the income scale face versus kids in the top 
fifth, they are highly disadvantaged at the starting gate. So 
both in terms of public savings down the road and helping these 
kids achieve their potential, these are obviously very smart 
investments.
    Ms. Bonamici. Thank you. And I know that my colleagues and 
I all listen to our concerns of our constituents when we are in 
our districts and we will be doing what we can to make sure 
that we don't have these detrimental cuts that our local school 
districts will not be able to make up if these important 
investments, like Title I, Head Start, IDEA are cut. So thank 
you for your testimony.
    And thank you again for this hearing.
    Chairman Kline. I thank the gentlelady yielding back.
    Ms. Foxx.
    Ms. Foxx. Thank you, Mr. Chairman.
    Ms. Fornash, in your testimony you discuss Virginia's 
Longitudinal Data System. Could you tell us what steps you are 
taking to secure student and teacher performance data and 
protect students' privacy? And with respect to the linkage 
between teachers and their preparation programs, how do you 
hope to use that information?
    Ms. Fornash. Yes, ma'am. Thank you, Congresswoman Foxx. We 
are very proud of Virginia's longitudinal database system 
because it is providing a way where we can come together with 
the State agencies, within the Department of Education, the 
State Council of Higher Education/Virginia, as well as a number 
of other State agencies, one of which is the Virginia 
Information Technology Association. And so they have been a 
critical partner in ensuring the safety and security of those 
records since that is foremost important to us in the 
Commonwealth, is protecting those records.
    We also see it as a vital tool in order to be able to 
evaluate program effectiveness. And so right now we are in the 
process of, as I mentioned earlier, being able to look at wage 
outcome data for our graduates of our both public, as well as 
private higher education institutions. But we also have 
interest in using that data in better understanding the 
outcomes of our teachers and understanding how they impact 
young people and students.
    And so we have really developed a very robust system that 
is going to allow us to look at teachers, their preparation at 
our 4-year public and private institutions, and then ultimately 
the outcomes of students and what types of things do we need to 
be thinking about in the future. As it relates to preparation 
of teachers, what changes do we need to make in our teacher 
preparation programs to really ensure that they are prepared to 
handle the challenges of the student in the 21st century.
    Ms. Foxx. A little quick follow-up, and maybe you can get 
me some information outside of today's hearing.
    But one of the things we are all concerned about is the 
issue of transparency and making sure that people have the kind 
of information that you are gathering. So in 25 words or less, 
could you say how you are going to make sure that people 
understand what the results are of your data gathering?
    Ms. Fornash. Sure. And that really is a challenge. Right 
now we have used the resources to really build the 
infrastructure for the system and we are working closely with 
our higher education institutions' research faculty to make 
them more aware of the system and the capacity of the system. 
Much of what is currently available in the database you are 
able to query through the Department of Education's Web site at 
the State level or the State Council of Higher Education's Web 
site at the State level. These, again, are on protective 
servers. But we do make that information available to the 
public and try to do so in a very simple and easy to find 
manner.
    Ms. Foxx. Well, thank you very much.
    Mr. Timmons, I apologize that I have had to be in and out 
of the hearing today, but I know that you all have shared some 
really good information. And I can tell by the questions that 
my colleagues have asked that you are presenting very good 
information.
    You mentioned that you are, quote, working to integrate 
credentials in the for-credit side of the colleges so 
individuals will have the opportunity to get college credit and 
work toward a degree. Could you say a little bit more about--
and you talked about this just a little bit ago--but can you 
talk about how well the colleges are working with you, how they 
have been enthusiastic about better aligning their course work 
with business needs, and anything else that you might have 
wanted to have said along those lines that you didn't get a 
chance to say before?
    Mr. Timmons. Well, I have a minute and three seconds, so I 
am not sure I can get to all that. But to your specific 
question, Congresswoman, we have been very pleased with the 
response from communities and institutions of higher education, 
both at the community college level and the 4-year level, 
because, quite frankly, everybody is talking about 
manufacturing. It really doesn't matter what political party 
you belong to, it doesn't matter where you live, folks 
understand that manufacturing is really the heart of a thriving 
economy. And it has the highest multiplier effect of any other 
sector of the economy in terms of investment in jobs, so 
everybody wants to see manufacturing succeed, and obviously we 
are thrilled with that.
    Community colleges and higher education institutions have 
been very responsive to our call for creating a set of portable 
skills. We have worked very closely with the administration on 
this particular project, and I have to say that it has received 
a lot of bipartisan support, as well as community support. So 
we are thrilled with the reaction that we have gotten.
    Ms. Foxx. I yield back.
    Chairman Kline. Thank the gentlelady.
    Ms. Davis.
    Mrs. Davis. Thank you, Mr. Chairman.
    Thank you all for being here. I wanted to go back to the 
skills gap issue, and I know we have talked a lot about that 
today, and just bring in a question from the New York Times 
article.
    And I will submit that for the record, Mr. Chairman.
    Chairman Kline. Without objection.
    [The New York Times article follows:]

                 From the New York Times, Nov. 20, 2012

                       Skills Don't Pay the Bills

                            By Adam Davidson

    Earlier this month, hoping to understand the future of the moribund 
manufacturing job market, I visited the engineering technology program 
at Queensborough Community College in New York City. I knew that 
advanced manufacturing had become reliant on computers, yet the 
classroom I visited had nothing but computers. As the instructor Joseph 
Goldenberg explained, today's skilled factory worker is really a hybrid 
of an old-school machinist and a computer programmer. Goldenberg's 
intro class starts with the basics of how to use cutting tools to shape 
a raw piece of metal. Then the real work begins: students learn to 
write the computer code that tells a machine how to do it much faster.
    Nearly six million factory jobs, almost a third of the entire 
manufacturing industry, have disappeared since 2000. And while many of 
these jobs were lost to competition with low-wage countries, even more 
vanished because of computer-driven machinery that can do the work of 
10, or in some cases, 100 workers. Those jobs are not coming back, but 
many believe that the industry's future (and, to some extent, the 
future of the American economy) lies in training a new generation for 
highly skilled manufacturing jobs--the ones that require people who 
know how to run the computer that runs the machine.
    This is partly because advanced manufacturing is really 
complicated. Running these machines requires a basic understanding of 
metallurgy, physics, chemistry, pneumatics, electrical wiring and 
computer code. It also requires a worker with the ability to figure out 
what's going on when the machine isn't working properly. And aspiring 
workers often need to spend a considerable amount of time and money 
taking classes like Goldenberg's to even be considered. Every one of 
Goldenberg's students, he says, will probably have a job for as long as 
he or she wants one.
    And yet, even as classes like Goldenberg's are filled to capacity 
all over America, hundreds of thousands of U.S. factories are starving 
for skilled workers. Throughout the campaign, President Obama lamented 
the so-called skills gap and referenced a study claiming that nearly 80 
percent of manufacturers have jobs they can't fill. Mitt Romney made 
similar claims. The National Association of Manufacturers estimates 
that there are roughly 600,000 jobs available for whoever has the right 
set of advanced skills.
    Eric Isbister, the C.E.O. of GenMet, a metal-fabricating 
manufacturer outside Milwaukee, told me that he would hire as many 
skilled workers as show up at his door. Last year, he received 1,051 
applications and found only 25 people who were qualified. He hired all 
of them, but soon had to fire 15. Part of Isbister's pickiness, he 
says, comes from an avoidance of workers with experience in a ``union-
type job.'' Isbister, after all, doesn't abide by strict work rules and 
$30-an-hour salaries. At GenMet, the starting pay is $10 an hour. Those 
with an associate degree can make $15, which can rise to $18 an hour 
after several years of good performance. From what I understand, a new 
shift manager at a nearby McDonald's can earn around $14 an hour.
    The secret behind this skills gap is that it's not a skills gap at 
all. I spoke to several other factory managers who also confessed that 
they had a hard time recruiting in-demand workers for $10-an-hour jobs. 
``It's hard not to break out laughing,'' says Mark Price, a labor 
economist at the Keystone Research Center, referring to manufacturers 
complaining about the shortage of skilled workers. ``If there's a skill 
shortage, there has to be rises in wages,'' he says. ``It's basic 
economics.'' After all, according to supply and demand, a shortage of 
workers with valuable skills should push wages up. Yet according to the 
Bureau of Labor Statistics, the number of skilled jobs has fallen and 
so have their wages.
    In a recent study, the Boston Consulting Group noted that, outside 
a few small cities that rely on the oil industry, there weren't many 
places where manufacturing wages were going up and employers still 
couldn't find enough workers. ``Trying to hire high-skilled workers at 
rock-bottom rates,'' the Boston Group study asserted, ``is not a skills 
gap.'' The study's conclusion, however, was scarier. Many skilled 
workers have simply chosen to apply their skills elsewhere rather than 
work for less, and few young people choose to invest in training for 
jobs that pay fast-food wages. As a result, the United States may soon 
have a hard time competing in the global economy. The average age of a 
highly skilled factory worker in the U.S. is now 56. ``That's 
average,'' says Hal Sirkin, the lead author of the study. ``That means 
there's a lot who are in their 60s. They're going to retire soon.'' And 
there are not enough trainees in the pipeline, he said, to replace 
them.
    One result, Sirkin suggests, is that the fake skills gap is 
threatening to create a real skills gap. Goldenberg, who has taught for 
more than 20 years, is already seeing it up close. Few of his top 
students want to work in factories for current wages.
    Isbister is seeing the other side of this decision making. He was 
deeply frustrated when his company participated in a recent high-school 
career fair. Any time a student expressed interest in manufacturing, he 
said, ``the parents came over and asked: `Are you going to outsource? 
Move the jobs to China?' '' While Isbister says he thinks that his 
industry suffers from a reputation problem, he also admitted that his 
answer to a nervous parent's question is not reassuring. The industry 
is inevitably going to move some of these jobs to China, or it's going 
to replace them with machines. If it doesn't, it can't compete on a 
global level.
    It's easy to understand every perspective in this drama. 
Manufacturers, who face increasing competition from low-wage countries, 
feel they can't afford to pay higher wages. Potential workers choose 
more promising career paths. ``It's individually rational,'' says 
Howard Wial, an economist at the Brookings Institution who specializes 
in manufacturing employment. ``But it's not socially optimal.'' In 
earlier decades, Wial says, manufacturing workers could expect decent-
paying jobs that would last a long time, and it was easy to match 
worker supply and demand. Since then, with the confluence of computers, 
increased trade and weakened unions, the social contract has collapsed, 
and worker-employer matches have become harder to make. Now workers and 
manufacturers ``need to recreate a system''--a new social contract--in 
which their incentives are aligned.
    In retrospect, the post-World War II industrial model did a 
remarkably good job of supporting a system in which an 18-year-old had 
access to on-the-job training that was nearly certain to pay off over a 
long career. That system had its flaws--especially a shared complacency 
that left manufacturers and laborers unprepared for global trade and 
technological change. Manufacturers, of course, have responded over the 
past 20 years by dismantling it. Yet Isbister's complaint suggests some 
hope--that there's a lack of skilled workers; that factory layoffs 
overshot, and now need a reversal. As we talked, it became clear that 
Isbister's problem is part of a larger one. Isbister told me that he's 
ready to offer training to high-school graduates, some of whom, he 
says, will eventually make good money. The problem, he finds, is that 
far too few graduate high school with the basic math and science skills 
that his company needs to compete. As he spoke, I realized that this 
isn't a narrow problem facing the manufacturing industry. The so-called 
skills gap is really a gap in education, and that affects all of us.

    Adam Davidson is co-founder of NPR's ``Planet Money,'' a podcast 
and blog.
                                 ______
                                 
    Mrs. Davis. Thank you.
    The question really is raised whether or not it is so much 
a skills gap in all cases but rather a wage gap, because many, 
many manufacturers are only offering about $10-an-hour jobs. So 
the incentive for young people to go into those jobs when there 
might be--I mean, they could flip hamburgers probably for more 
than that--is that part of the problem? I am certain that in 
all cases this is not necessarily true, but I wonder, Dr. 
Bernstein, if you want to comment on that, that in many cases, 
and the article cites, you know, it may be entry at $10 and 
maybe you go up to $16.
    Mr. Bernstein. Yeah, I think the wage gap right now is very 
pronounced, and as I have tried to explain in my testimony, in 
the very near term, more pressing than the skills gap, which is 
a longer-term problem and a very real one. But if you look at 
my figure 2, for example, I show that--and, again, I think 
members would be surprised--I mean, you have heard a lot of 
talk today about how the demand for workers with high levels of 
skill is being unmet. Well, if that is true, we should 
definitely see their wages going up. I mean, that is very 
simple economics. If the demand for something is unmet by 
employers, employers should be bidding those wages up, and we 
don't. In fact, what we saw, as I pointed out, was a decline in 
the real pay of college graduates.
    Now, college graduates have much lower unemployment rates, 
they have much higher levels of pay. It is a great idea for--I 
know your kids are here today--it is a great idea for anyone to 
get all the skills they can because it makes a big difference 
in their earnings potential and in their success in life, no 
question about that. But economy large, this lack of demand, 
persistently high unemployment rate has been hammering away at 
wages across the pay scale, not just at the very bottom.
    Mrs. Davis. So if we really see manufacturing as the heart 
of a thriving economy, obviously that is a very important place 
to be able to put those resources. It is understandable if 
there were so many people out there looking for jobs that 
employers wouldn't feel a need to raise that salary, but that 
doesn't seem to be working in terms of filling those jobs.
    Mr. Bernstein. I think in terms of manufacturing, the thing 
that economists have found is that historically there has 
been--and I believe Mr. Timmons referenced this earlier--
historically there has been a large and significant wage 
premium in the manufacturing sector, and that is obvious 
because it is a high value-added sector, so you would expect 
that kind of a wage premium. But what we have seen, however, is 
that that premium has consistently slid. It has come down a 
lot. Now, it has not gone to zero. Some people say it has. My 
work suggests it is still somewhere in the, say, 5 to 10 
percent range, but it used to be in the 20 percent range. By 
the way, it is a larger premium if you include compensation 
because manufacturers tend to provide better compensation 
packages relative to just the wage package.
    Mrs. Davis. Thank you.
    Certainly I wanted to just comment, Mr. Timmons, on the 
issue around the military and the military badge. And I know 
that we are working with that across the country and with the 
Labor Department to try and help translate those skills better. 
Part of the problem that the military has is they need to at 
least provide something in the neighborhood of about 90 days of 
preparation to make that transition smooth, and of course that 
is a real problem that we have.
    I wanted to just turn to you, Madam Secretary Fornash, for 
the issues that we all face and we look at colleges and the 
fact that we have a high enrollment rate in our universities 
probably globally, you know, we do quite well in that area, but 
when it comes to actual graduation we are at the bottom. That 
must frustrate you. It certainly frustrates everybody that 
looks at this issue. In addition, I guess it is an education 
gap, kids are not graduating from high school with what they 
need to be successful in college. What do you think needs to be 
done about that?
    Ms. Fornash. One of the primary issues, I think, that 
relates to graduation and retention rates is remediation, and 
so many of our 4-year institutions are providing remediation 
services when that really should be done at the high school 
level or at the community college level. And in Virginia I 
think we can say we are very proud of Virginia's community 
college system because they have taken a very innovative 
approach to remediation as it relates to math and reading, and 
they have actually broken it down into components and created 
an online opportunity for students to gain those skills that 
they really need specific to the academic program that they are 
interested in studying. And so to me that is one of the largest 
challenges we face in higher education, is really ensuring that 
a young person is prepared for postsecondary education and 
ensuring that that is done in a way that won't slow down the 
process and hamper them from getting those credentials they 
need to be successful.
    Chairman Kline. The gentlelady's time has expired.
    I think all members have had a chance to ask questions. And 
Mr. Miller, I think, had a follow-up question, and I will yield 
to him for that question and any closing remarks he might have.
    Mr. Miller. Thank you.
    By way of question, in Virginia, can you tell me where you 
are now in terms of State support for your public higher 
education institutions? I think in California we drifted down 
to almost 20 percent from a high of 70, years ago, down to 
around 20. I think we are around 22, somewhere in that. Do you 
know where you are?
    Governor Herbert. I do. Our State budget, 50 percent goes 
to public education, another 15 percent goes to higher 
education, so a total of our State budget that we dedicate to 
education.
    Mr. Miller. That supplies what level of support, that is 
what percentage of the budget of those public institutions?
    Governor Herbert. It is about $3.7 billion of about a $6 
billion State budget.
    Mr. Miller. Of the 100 percent that is being spent by those 
institutions, the State is supplying, in California I think we 
are supplying about 20 percent of their budget down from a high 
of 70, and I just wondered what it is in Virginia and in Utah.
    Governor Herbert. Well, for Utah, again, our State portion 
of the budget, this is not the stuff we partner with, with the 
Federal government, we put about 65 percent of our State 
revenues go to education.
    Ms. Fornash. In higher education we have about 10 percent 
of our general fund goes to our higher education institutions.
    Mr. Miller. But you don't know what percentage of the 
institutional budget that provides? I mean, I think in Michigan 
it was drifting down to 6 percent.
    Governor Herbert. For the individual institutions 
themselves?
    Mr. Miller. Yes.
    Governor Herbert. It varies depending on the institution. 
We have eight institutions of higher learning, we have seven 
applied technology colleges which we are putting significant 
revenue into. It probably is a portion of probably 20, 25 
percent of the overall budget comes from tax dollars. And it 
varies.
    Mr. Miller. Okay. I may not have phrased the question 
right, but I will find the answer somewhere. Thank you.
    Ms. Fornash, let me thank you for raising this issue of 
remediation. I think in my State 30 percent of the students are 
going to institutions of higher education to get remediation. I 
can't think of a more expensive way to provide remediation than 
to do it on the campus of a State college or university, and 
especially when students are borrowing money. It just simply 
has to stop. I mean, you want to talk about, you know, the 
right allocation of resources and debt and what have you, I 
think you make a very important point and I hope other States.
    On the question of college, I think we have done here a 
relatively good job of helping with the affordability of 
college with interest rates and things to try to get through 
the recession, and student loans and the direct loans, I think, 
are all helpful. But the cost of college just continues. 
Looking at it from this side of the dais, there is not a lot of 
answers at the Federal level. We can strain, but really the 
cost of college is better dealt with. And some of the things I 
just want to say that you have mentioned institutionally in 
Virginia and Utah really have got to examine how this money is 
being spent in the institutions and what is the allocation of 
urgent resources and sort of non-urgent resources. I know there 
is turmoil in California because some lifetime learning classes 
will be dropped from community colleges. We had 5 million 
people show up for the community colleges across this country 
that we never saw before, and they are trying to get a job. And 
I think that kind of urgency, that kind of triage, it offends 
the liberal arts major that we would consider this, but the 
fact is the person that did your study, Tony Carnevale at 
Georgetown, will tell you whether they go to Georgetown or 
whether they go to San Jose State or community college, 80 
percent of them are going there to get a job. And the 
allocation of these resources and the cost of college, we have 
really strained at the Federal level to try to make it 
affordable with income-determinant repayments, with forgiveness 
so people could enter these careers. But this cost issue is 
something that we don't have a lot of say. We are sort of 
paying the bills. We really have a sense of urgency about that 
overall cost of college for us.
    And my final comment just, Mr. Timmons, is I think the 
badges are really a way for a lot of people to see a way into 
manufacturing that they couldn't envision. When I grew up, it 
was passed on from your uncle or your brother, what have you. 
Now they are not quite sure what is going on in that facility, 
and the idea that they would bring some competencies, whether 
it is from military service or elsewhere, to start that process 
I think is really an encouraging approach to students making a 
decision about how can they benefit from, you know, higher 
education, how can they benefit from training programs, what do 
they bring back from military service. That is a conversation a 
long time coming, and I really appreciate the leadership of the 
manufacturers in that one.
    Let me just close with this. We go back and forth. I don't 
know where these people are that have these skills, maybe they 
are just not in the United States, but regionally it sounds 
like everybody has 600,000 people that are looking for these 
skills, especially in California. But we do see manufacturing. 
I mean, there has been a lot of front page cover story 
magazines talking about manufacturing coming back to the United 
States, whether it is turmoil in China with the processes and 
the wages and the changes, and we saw that Foxconn just got 
their first independent union. Who knows what the hell that 
means? But if I remember, if I looked at the press over the 
last 8 or 9 months, you see commitments of foreign investment 
in manufacturing in the United States, much of it suggests that 
it is energy related to natural gas and what have you, in the 
Southeast, the Midwest, I would say 7, 8, 9 billion dollars in 
new facilities, some in chemicals, some in fertilizers and some 
of it in other related manufacturing where energy is a major 
input.
    So, I mean, some of this is coming back to the shores for 
other reasons. And I don't say that that is the end-all, and we 
can just sit back and watch it come because that doesn't 
happen, but there are some positive developments in terms of 
people repatriating businesses. They sort of left through 
Mexico, and there is some suggestion that some of them are 
coming back through Mexico, you know, they are pausing for a 
moment in Mexico while they take a look here. So what is your 
sense of that?
    Mr. Timmons. There are definitely some positive signs. We 
would like to see more positive signs, to be frank about it.
    Mr. Miller. I am not suggesting we are home free.
    Mr. Timmons. That is right. You mentioned energy and the 
cost of energy. In my opening statement I mentioned the 20 
percent cost disadvantage that manufacturers in the United 
States face compared to our major trading partners, and there 
is a lot of factors that go into that, taxes, regulation. 
Energy is one of those input costs, but for the first time in 
our survey, and we have been doing this for about a decade, 
energy costs are actually a slight net positive for 
manufacturers. So I think that companies are starting to look 
at that trend and say, Hey, you know, this can be very helpful 
to their ability to compete and succeed.
    So we are encouraged by the development, for instance, of 
shale gas and other forms of energy. And as you probably know, 
we are an advocate for an all-of-the-above energy strategy, 
everything from traditional oil and coal and natural gas to 
alternatives, including wind and solar and other types of 
energy, and that is a very, very important part of the 
manufacturing process and a huge cost driver for most 
manufacturers.
    Mr. Miller. Jared, just quickly, you know, the last of the 
stimulus certainly with respect to schools is running out, the 
sands have gone through, just about done to the extent that it 
held up either jobs or the wages of the people in those jobs, 
certainly in schools. And now these cuts, I mean, when we 
looked at where these cuts are going to fall should 
sequestration take place, the target may be the Federal 
government, but the victim is going to be local government, it 
is going to be schools, higher education, K-12, and whatever 
extent cities had some of this for law enforcement, what have 
you. That is where it is going here. You know, Federal 
employment has dropped even more dramatically in many 
instances.
    Mr. Bernstein. My analysis very much supports that. I show 
in my testimony a loss of about 360,000 local education jobs 
already over the last few years.
    Mr. Miller. That is with the stimulus.
    Mr. Bernstein. That is from when the stimulus began until 
now. So that is likely to accelerate. Remember States have to 
balance their budgets, so they are much more likely to cut 
services than raise taxes at a time like this. And that is, as 
we have heard from these statistics, that is where their 
services tend to lie.
    It has had problematic effects, as I document, at the K-12 
level, but also at the public university level where 
appropriations from the State have lagged exactly when 
enrollments have gone up, because it is actually a smart thing, 
to go back to school--I am talking about post, you know, 
college--it is actually a smart thing to do to go back to 
school when the economy is in a weak place because it can have 
lasting, damaging effects on your career trajectory if you 
enter the job market during a recession. So just when we have 
had greater demands for enrollment in community college, higher 
education, as well as, of course, enrollment continues to go up 
in K-12, we are having these cutbacks. And as I mentioned, if 
you shift discretionary spending cuts from the defense side on 
to the nondefense side, these cuts will be all that much 
deeper.
    Mr. Miller. Thank you, Mr. Chairman.
    Chairman Kline. Thank the gentleman. Just take a couple 
minutes for a few closing remarks myself and then let the 
Governor head back to Utah and everybody get back to work.
    We had a pretty wide-ranging discussion here today. There 
was some discussion about recess appointments and court 
decisions and quite an exchange between Mr. Timmons and Mr. 
Andrews. Of course, Mr. Andrews is on to other things, but 
obviously there were some differences in these recess 
appointments, and the whole question was whether or not the 
Senate was in recess. I thought that was the question, and the 
court came up with yet another ruling based on their 
interpretation of exact language in the Constitution. But I 
think it is undeniable that that has added to uncertainty out 
there. The question of NLRB rulings now is wide open, it is 
always subject to appeal, but I would argue subject to 
litigation, and that hasn't helped the certainty issue which a 
number of you have talked about.
    Mr. Miller talked about in the Workforce Investment 
Improvement Act that we were working in the last Congress that 
unions were prohibited from being on the Board. That language 
is actually not there. The language in our bill encouraged 
greater participation from employers but doesn't prohibit 
unions, and what the language will look like when we take that 
rascal up again, I am sure Mr. Miller has some input for that.
    Clearly, we have work to do here. Again, I just can't thank 
you enough for your taking the time, the witnesses, to be here 
today and offer your testimony and field our questions. It 
really is very helpful to us, and I want to thank you all.
    There being no further business for the committee, 
committee is adjourned.
    [Questions submitted for the record and their responses 
follow:]

                                             U.S. Congress,
                                      Washington, DC, May 08, 2013.
Hon. Laura Fornash, Secretary of Education,
Commonwealth of Virginia, P.O. Box 1475, Richmond, VA 23218.
    Dear Secretary Fornash: Thank you for testifying at the Committee 
on Education and the Workforce's February 5, 2013 hearing entitled, 
``Challenges and Opportunities Facing America's Schools and 
Workplaces.'' I appreciate your participation.
    Enclosed are additional questions submitted by committee members 
following the hearing. Please provide written responses that answer the 
questions posed no later than May 22, 2013 for inclusion in the 
official hearing record. Responses should be sent to Benjamin Hoog of 
the committee staff, who can be contacted at (202) 225-4527.
    Thank you again for your contribution to the work of the committee.
            Sincerely,
                                                John Kline,
                                                          Chairman.

Enclosures
                questions for the record from mr. messer
    I believe one of the biggest challenges facing our schools and 
workplaces is the numerous insurance mandates and hundreds of billions 
of dollars in new taxes on employers in the Affordable Care Act. These 
requirements and penalties likely will raise the cost of coverage and 
increase financial pressures on employers who are struggling to grow 
their businesses and create jobs, the last thing we want to do given 
our sputtering economy.
    I recently met with Dave Adams, the Superintendent of Shelbyville 
Central Schools, who like most employers is concerned about the 
proposed standard measurement period for determining whether an 
individual qualifies as a full-time employee for penalty purposes under 
the health care law. He is especially concerned about how educational 
organizations will calculate hours worked during this standard 
measurement period since they may be prohibited from including actual 
hours of service worked by school employees during educational breaks. 
He tells me this could cost Shelbyville schools $794,000 next year 
alone and lead to fewer hours for some school system employees.
    I share his concern about the impact this tax will have on the 
quality of education provided to students in Shelby County and 
elsewhere, and the potential for job losses and program cut-backs as a 
result. It is unconscionable that the Federal government will be taxing 
schools and employers to the point where student instruction may 
suffer, jobs may be lost, and hours may be limited simply to pay for 
the President's health care law.
    I have several questions about this issue:
    A. Secretary Fornash, what challenges do these requirements and 
penalties pose for educational organizations?
    B. Secretary Fornash, do you have concerns about the potential 
impact of these provisions on school systems, student instruction and 
the education workforce?
                                 ______
                                 
                          Commonwealth of Virginia,
                                    Office of the Governor,
                                                      May 22, 2013.
Hon. John Kline, Chairman,
Committee on Education and the Workforce, U.S. House of 
        Representatives, 2181 Rayburn House Office Building Washington, 
        DC 20515.
    Chairman Kline, Congressman Messer, and Members of the Committee: 
The Affordable Care Act poses many challenges for education 
organizations. Part time wage employees are an important staffing tool 
for colleges and universities as well as for our elementary and 
secondary schools.
    The federal Affordable Care Act includes a provision stating that 
employees, who work 30 hours per week or more, shall be eligible for 
health care coverage. The average annual cost of providing health care 
is currently $13,249 per Virginia state employee. Providing health 
insurance to all Virginia's wage employees is not financially feasible. 
Initial estimates exceed $100 million to expand health insurance to 
these employees.
    Mindful of the financial implications of complying with the 
Affordable Care Act, the Virginia General Assembly and Governor Bob 
McDonnell agreed that the Commonwealth's wage employees can work no 
more than an average 29 hours per week. The Virginia Community College 
System and its stakeholders will be hit the hardest with an estimated 
4,300 wage staff members across Virginia's 23 community colleges and 
the system office. It will also impact more than 9,100 adjunct teaching 
faculty who are hired and compensated by academic hours taught, not 
clock hours worked. Wage employees are crucial to Virginia's Community 
Colleges and the people they serve; offering Virginia a lean and 
productive operation that plays a crucial role in their ability to 
offer families affordable access to a college education. Adjunct 
faculty provide Virginia's students with real world experience in a 
vast array of professions.
    This spring, the Chancellor of Virginia Community College System 
created a policy that adjunct instructors cannot teach more than seven 
credit hours in the summer semester; ten credit hours in the fall 
semester; and ten credit hours in the spring semester. This mandated 
credit load limitation creates tremendous challenges. Reduced teaching 
loads may reduce course offerings and will not be easy for some of 
instructors who are striving to build their career and pay their bills.
    K-12 schools are also hurting. Public schools rely on wage workers 
to help keep their facilities up-to-date and safe for our children. 
Long-term substitute teachers will also be affected. When teachers use 
their time off, for surgeries, maternity leave or other long-term 
commitments, we owe it to the children to provide qualified 
replacement. To have a new substitute every day is disruptive to the 
learning environment and doesn't provide consistency for our children.
    The extension of health-care coverage for wage employees--including 
bus drivers, cafeteria workers and substitute teachers--is a key issue 
in many Virginia school divisions this spring as local school boards 
and governing bodies struggle to approve budgets. In Loudoun County, 
for example, the school board this month voted to eliminate coverage 
for all new wage employees working fewer than 20 hours a week.
    School boards also are increasing deductibles and asking employees 
to pay a higher share of their premiums. And in divisions where 
teachers and other employees are not being asked to pay more this year, 
school boards have had to repurpose funds that otherwise could have 
been spent on textbooks, new technology or other instructional needs.
    My concerns about the Affordable Care Act stem from a desire to see 
Virginia's students achieve their full potential. Part time wage 
employees play a critical role in our school systems and on our college 
and university campuses. They are a flexible staffing tool allowing 
programs to expand and contract quickly as demand changes. I do not 
want to see the quality of a Virginia education reduced because 
institutions can't respond to the needs of students and the 
marketplace.
    Thank you for asking me to comment on the Affordable Care Act.
            Sincerely,
                                          Laura W. Fornash,
                                            Secretary of Education.
                                 ______
                                 
                                             U.S. Congress,
                                      Washington, DC, May 08, 2013.
Mr. Jay Timmons, President and CEO,
National Association of Manufacturers, 733 10th Street NW, Suite 700, 
        Washington, DC 20001.
    Dear Mr. Timmons: Thank you for testifying at the Committee on 
Education and the Workforce's February 5, 2013 hearing entitled, 
``Challenges and Opportunities Facing America's Schools and 
Workplaces.'' I appreciate your participation.
    Enclosed are additional questions submitted by committee members 
following the hearing. Please provide written responses that answer the 
questions posed no later than May 22, 2013 for inclusion in the 
official hearing record. Responses should be sent to Benjamin Hoog of 
the committee staff, who can be contacted at (202) 225-4527.
    Thank you again for your contribution to the work of the committee.
            Sincerely,
                                                John Kline,
                                                          Chairman.

Enclosures
                questions for the record from mr. messer
    I believe one of the biggest challenges facing our schools and 
workplaces is the numerous insurance mandates and hundreds of billions 
of dollars in new taxes on employers in the Affordable Care Act. These 
requirements and penalties likely will raise the cost of coverage and 
increase financial pressures on employers who are struggling to grow 
their businesses and create jobs, the last thing we want to do given 
our sputtering economy.
    I recently met with Dave Adams, the Superintendent of Shelbyville 
Central Schools, who like most employers is concerned about the 
proposed standard measurement period for determining whether an 
individual qualifies as a full-time employee for penalty purposes under 
the health care law. He is especially concerned about how educational 
organizations will calculate hours worked during this standard 
measurement period since they may be prohibited from including actual 
hours of service worked by school employees during educational breaks. 
He tells me this could cost Shelbyville schools $794,000 next year 
alone and lead to fewer hours for some school system employees.
    I share his concern about the impact this tax will have on the 
quality of education provided to students in Shelby County and 
elsewhere, and the potential for job losses and program cut-backs as a 
result. It is unconscionable that the Federal government will be taxing 
schools and employers to the point where student instruction may 
suffer, jobs may be lost, and hours may be limited simply to pay for 
the President's health care law.
    A. Mr. Timmons, how will the health care law's mandates and 
penalties impact employers and their employees? What steps are 
employers taking to mitigate the potential harm from these provisions?
                                 ______
                                 
                                       Jay Timmons,
                                         President and CEO,
                                                      May 22, 2013.
Hon. John Kline, Chairman; Hon. George Miller, Ranking Member,
House Education & Workforce Committee, 2181 Rayburn House Office 
        Building, Washington, DC 20512.
    Dear Chairman Kline and Ranking Member Miller: Thank you for giving 
me the opportunity to testify before the Education and Workforce 
Committee on February 5, 2013 at your hearing entitled, ``Challenges 
and Opportunities Facing America's Schools and Workplaces.'' As you may 
recall, I testified about a number of challenges facing manufacturers, 
including the Affordable Care Act.
    The purpose of this letter is to respond to a question for the 
record submitted by Congressman Luke Messer. Congressman Messer's 
question was, ``Mr. Timmons, how will the health care law's mandates 
and penalties impact employers and their employees? What steps are 
employers taking to mitigate the potential harm from these 
provisions?''
Response
    As the Committee is aware, the Affordable Care Act contains many 
mandates, penalties, taxes, fees and surcharges that businesses will 
have to absorb, pay, comply or otherwise adapt to whether or not they 
provide health insurance for their employees. Clearly, employers who 
provide health insurance are concerned about the cost of providing it, 
but they are also interested in making sure the coverage makes sense 
for their employees. Employers are looking for clarity, of which there 
has been little over the last three years. Manufacturers are looking 
for predictability, of which the lack of clarity makes impossible. In 
short, manufacturers know they will have to react and adapt, but they 
are unsure of the best course of action to take right now. How 
businesses choose to mitigate the impact of harmful provisions of the 
law depends a great deal on their particular industry, size and 
structure.
    Again, I would like to thank you for the opportunity to provide the 
view of our nation's manufacturers to the Committee.
            Sincerely,
                                               Jay Timmons.
                                 ______
                                 
    [Additional submission of Mr. Miller follows:]

  Prepared Statement of the National Disability Rights Network (NDRN)

    As the nonprofit membership organization for the federally mandated 
Protection and Advocacy Systems (P&As) and Client Assistance Programs 
(CAPs) for people with disabilities, the National Disability Rights 
Network (NDRN) would like to thank Chairman Kline, Ranking Member 
Miller and the House Committee on Education and the Workforce for 
holding the hearing. NDRN would specifically like to comment on the 
critical need for employment services for people with disabilities and 
the need for a bipartisan reauthorization of the Workforce Investment 
Act and Rehabilitation Act.
    The P&A/CAP Network was established by the United States Congress 
through eight separate programs to protect the rights of people with 
disabilities and their families through legal support, advocacy, 
referral, and education. P&As and CAPs are in all 50 states, the 
District of Columbia, Puerto Rico, and the U.S. Territories (American 
Samoa, Guam, Northern Mariana Islands, and the US Virgin Islands), and 
there is a P&A affiliated with the Native American Consortium which 
includes the Hopi, Navaho and Piute Nations in the Four Corners region 
of the Southwest. Collectively, the P&A/CAP Network is the largest 
provider of legally based advocacy services to people with disabilities 
in the United States.
    Unemployment among people with disabilities is a severe and endemic 
problem. The unemployment rate among people with disabilities is around 
13.7%, significantly higher than that of the general population. In 
addition, the workforce participation rate for people with disabilities 
is approximately 21%, less than one third of the participation rate for 
people without a disability. Although the economic recovery has added 
many jobs to the economy over the past three years, the effects of the 
recovery have been much slower for people with disabilities, and the 
participation rate for people with disabilities has decreased while the 
unemployment rate for people with disabilities has increased since 
2010. Full integrated employment for people with disabilities is an 
important component in the fight for full community integration. 
Employment is a critical part of independence, as it allows people to 
earn a living wage and meet their needs. The P&A/CAP Network has been 
advocating for service providers and local governments to prioritize 
employment as a basic need for people with disabilities, and to ensure 
that people with disabilities receive the range of services that they 
need to be able to work. NDRN supports legislative changes that support 
employment services for people with disabilities, and make it easier 
for people with disabilities to obtain, maintain or advance in 
employment.
    Specifically, there are a number of changes to the Rehabilitation 
Act that would facilitate the work of the P&A/CAP Network in advocating 
for people with disabilities:
    1. Clarify language to allow for a Native American CAP program. 
Currently, the Native American Consortium, which provides a range of 
services to Native Americans with disabilities in the Four Corners 
region, does not have a Client Assistance Program. The law should be 
clarified to indicate that the Native American Consortium can designate 
a CAP program to receive funds and provide services to people with 
disabilities as like other P&A agencies.
    2. Provide language for a dedicated source of training and 
technical assistance when CAP appropriations reach an appropriate 
trigger amount. Training and technical assistance has proven to be 
effective in ensuring that the CAP Network is up-to-date on current 
law, regulations and procedures. Training and technical assistance 
should be a required component of the CAP funding.
    3. Allow expenditure of program income received by P&A and CAP 
grantees to occur over an indefinite time frame instead of requiring 
program income to be expended by the end of the second fiscal year 
after it is received. Grantees have occasionally had to spend program 
income based on several years' worth of case work in a very limited 
time, limiting their ability to use those funds to most effectively and 
efficiently benefit people with disabilities.
    4. Clarify that the authority of the PAIR program is the same as 
the Protection and Advocacy for Individuals with Developmental 
Disabilities (PADD) program. Also, clarify that P&A agencies have the 
ability to use the courts to enforce their access authority to records, 
individuals, and facilities to advocate and protect the rights of 
individuals with a disability.
    NDRN also supports the following changes to the Vocational 
Rehabilitation programs, which would help ensure that people with 
disabilities have more opportunities to obtain employment:
    1. Create a requirement that Vocational Rehabilitation agencies 
develop Individualized Plans for Employment (IPE) within ninety days 
after the date of determination of eligibility. CAP agencies have had 
difficulty advocating for their clients when the IPE is not completed 
in a timely fashion. Additionally, allow the client to request 
mediation and an impartial due process hearing if the IPE is not 
completed within that timeframe.
    2. Clarify that a Vocational Rehabilitation agency must provide 
notification to its clients whenever the client has the right to appeal 
a decision or to request mediation. CAP agencies have encountered many 
situations where individuals attempting to access Vocational 
Rehabilitation services have been provided confusing and/or 
contradictory information.
    3. Provide that each due process hearing shall be conducted by an 
impartial Hearing Officer who is fully trained on the requirements of 
the Rehabilitation Act as well as the approved State plan. CAP agencies 
have encountered situations where an impartial Hearing Officer is 
unsure of his or her ability to take certain actions, and adequate 
training is critical.
    4. Provide that the opportunity for mediation is available whenever 
a client receives an unfavorable determination from a Vocational 
Rehabilitation agency. Currently, Vocational Rehabilitation agencies 
interpret the law to require that individuals who wish to dispute 
Vocational Rehabilitation decisions must request a hearing before the 
agency will consider a request for mediation. The statute should be 
clarified to allow for mediation even when the individual does not wish 
to have a fair hearing.
    5. Clarify the burden of proof for an individual to obtain 
Vocational Rehabilitation services. The language of the statute should 
include clear language that a Vocational Rehabilitation agency must 
find clear and convincing evidence to determine ineligibility.
    6. Include provisions to limit the ability of Vocational 
Rehabilitation agencies and other service providers to place people 
with disabilities in segregated workplaces or to receive subminimum 
wage for their work. Require that people with disabilities be able to 
pursue an employment goal for 24 months before entering subminimum wage 
employment, or for up to 48 months for people with significant 
disabilities. Require face-to-face regular employment counseling for 
people working at subminimum wage jobs.
    These issues call out for Congress to address in a bipartisan 
fashion. NDRN and the P&A/CAP Network hope that the House and Senate 
can work together to pass legislation that will improve employment 
services for people with disabilities and support greater transition to 
competitive, integrated employment. Taking these steps will help 
achieve our goal of reducing unemployment of people with disabilities 
and increasing the participation of people with disabilities in the 
workforce.
                                 ______
                                 
    [Additional submission of Mr. Fornash: report, ``The 
American Dream 2.0: How Financial Aid Can Help Improve College 
Access, Affordability, and Completion,'' may be accessed at the 
following Internet address:]

                 http://www.hcmstrategists.com/content/
                  FINAL_Steering_Committee_Report.pdf

                                 ______
                                 
    [Additional submission of Governor Herbert follows:]

            Addendum to Testimony From Gov. Gary R. Herbert

    Rep. John Tierney of Massachusetts asked about funding levels for 
teachers in the Gov. Herbert's budget. Below is Gov. Herbert's 
response.
    In my proposed budget this year, I recommended an increase of 1.16% 
or $26 million for public education compensation. This percentage was 
more than the one percent that was recommended to higher education 
institutions. This would be flexible and can be used in conjunction 
with other sources of revenue to apply to compensation and benefits on 
an as-needed basis.
    Last year, the Utah State Legislature also provided 1.16% during 
the 2012 General Session for compensation.
    National data shows that teacher average salary increased by 7.03 
percent in 2008 but when the recession hit in 2009 the average salary 
dropped by 7.82 percent. The data also indicates an increase in average 
teacher salary of 9.1 percent from 2005 to 2010.\1\ Utah State Office 
of Education data shows teacher salaries increasing 21.01 percent from 
2006 to 2012 for an average of 3.5 percent per year.\2\
---------------------------------------------------------------------------
    \1\ Source: National Education Association, Estimates of School 
Statistics, 1969-70 through 2009-10.
    \2\ Source: Utah State Office of Education, Finance and Statistics.
---------------------------------------------------------------------------
    We are aggressively focused on funding many different initiatives 
that will yield the best outcomes in our education system. Part of that 
includes increasing compensation so we can attract the best and 
brightest teachers.
    Rep. George Miller of California asked about the percentage of 
higher education funds that are provided by the state. Below is Gov. 
Herbert's response.
    On average, Utah's state institutions of higher education receive 
49% of their operational funding from the state, with the remainder 
coming from student tuition and fees.
    During the Great Recession, the state could not provide funding to 
match the growth in enrollment at Utah's higher education institutions. 
This left a great imbalance in state support as some institutions 
raised tuition higher than others to provide much needed funding for 
instruction. As a result, some institutions have a lower percentage of 
State funding to tuition than others.
                                 ______
                                 
    [Whereupon, at 12:18 p.m., the committee was adjourned.]