The financing will back a new job development initiative that offers members of the Bluegrass State's workforce and its students education and training that better matches the needs of businesses.
The Work Ready Skills Initiative launched on July 13, signaling the start of the first application process that will eventually lead the state to issue $100 million of bonds to finance land, buildings and equipment supporting new job-training programs.
The public-private partnership will team private sector employers with high schools, technical schools and colleges to develop the programs where they are needed at the local level.
Education and Workforce Development Secretary Hal Heiner, whose agency will administer the program, said Monday that it is Kentucky's "greatest economic development initiative in a long, long time."
Participants seeking state financing for the projects they propose must contribute 10% of the cost to ensure that they have "skin in the game," he said.
The General Assembly authorized the bonds in the biennial budget earlier this year.
The Work Ready Skills Initiative was inspired by a proposal from several large Kentucky employers and a postsecondary institution to construct a new training facility focused on advanced manufacturing and related skills, according to Woody Maglinger, executive director of communications for the Education and Workforce Development Cabinet.
Rather than awarding a single project, Maglinger said the governor proposed a competitive $100 million grant program, modeled after that proposal, to fund construction and equipment purchases for training programs aimed at specific skills needed by Kentucky employers.
Kentucky has historically used bond funds for important infrastructure that yields long-term dividends, and workforce development across the state is a high priority, he said. Using bond financing will give Kentucky the opportunity to take action now, rather than waiting for the next biennium to invest in individual projects that meet the policy goal.
"As I travel the state, I hear repeatedly from employers about the shortage of workers with the skills needed to get the job done," Gov. Matt Bevin said. "Making this problem worse is the fact that Kentucky's workforce as a percent of its population is currently one of the smallest in the nation."
Only 59.4% of the state's 4.4 million residents 16 and older were in the civilian labor force from 2010 to 2014, according to the U.S. Census Bureau.
The bond program will help finance the expansion of career and technical education facilities and upgrade equipment with private industry sponsors in areas that need skilled workers, Bevin said.
"We will better align our education systems and our workforce needs," he said. "We must work diligently to be more economically competitive and create more jobs."
Ryan Barrow, executive director of the Office of Financial Management, said it is not yet clear if the bonds will be issued in several tranches or all at one time.
The issuance schedule will be determined after projects are selected later this year.
"The plan of finance will be driven, like most projects in the Commonwealth, by cash flow needs," Barrow said. "An evaluation of the individual cash needs of each project will be made and we will maximize the plan of finance for the total program."
Barrow said that the bonds likely will be issued by the State Property and Building Commission because the Work Ready Skills Initiative is a program backed by the state's general fund.
"I would anticipate the vast majority [of the bonds] being tax exempt," he said.
The need for the program is based in part on a July 2015 Kentucky Chamber of Commerce
Many of those employers also experienced frustrations with the outcomes produced by the current workforce education and training system.
Only 8% of Kentucky's overall workforce had good employment skills based on a survey of 483 respondents conducted on behalf of the chamber by Economic Leadership LLC.
Of the employers participating in the survey, 27% said they had trouble finding people with good "soft" basic skills, such as having the ability to communicate, taking personal responsibility for tasks like showing up at work on time, and participating in teamwork.
Some 23% of employers said they had trouble finding workers with the right technical skills, while 10% said employees had good skills but needed retraining.
The state created a Work Ready Skills Initiative
Applicants can include a business that partners with an educational agency as well as any other interested local and regional partners that will tailor the training programs based on the local industry needs.
Applicants can apply for bond financing for land acquisition, construction and equipping of new workforce training and education facilities, renovation or upgrade of an existing facility, the purchase of new or upgraded equipment, software and furnishings, and marketing expenses for the first year.
The educational institution partnering in the project will own of the building and fixed assets and will be responsible for future maintenance and support.
Heiner said the state has identified priority industry sectors for training programs: advanced manufacturing, health sciences, transportation and logistics, business and information technology, and construction and trades.
A two-step process will be used to determine the projects that will receive bond financing.
The "pre-application" period began July 13. Those submissions are due Aug. 19.
The nine-member Kentucky Work Ready Skills Advisory Committee will review the first round of submissions.
The committee will then invite some sponsors to submit a full application that will include detailed spending and operational aspects of the projects being proposed.
Complete applications will be due by Oct. 19.
The first round of projects chosen for state financing will be announced between Oct. 31 and Nov. 11.
Heiner, who said the state plans to open a "rolling" application process every six months, expects the initial round of funds to be available in early November.
"As we develop an employer-led skill and career development system, we move away from the old days of 'train and pray' that the training might lead to a job," Heiner said, "to a strategic plan equipping Kentuckians and industries with the skills to compete globally and build a stronger Kentucky economy."
