PI Original Ellyn Fortino Thursday June 13th, 2013, 12:27pm

The Pros And Cons Of Chicago’s TIFWorks Program

Chicago's TIFWorks program provides tax increment financing (TIF) funds to help cover workforce-training costs for employers. Job trainers say the program offers much-needed resources for workforce development. But others say TIFWorks needs to be more transparent and accountable. Progress Illinois takes a closer look at the program.

State funds for incumbent worker training programs are hard to come by these days, said Guy Loudon, executive director of the Chicago-based Jane Addams Resource Corporation.

Illinois’ competitive job training grants for already-employed workers have been “completely disinvested” over the years, said Loudon, whose non-profit provides workforce development and job training in the IT and manufacturing sectors.

“You look at the fiscal health of the state of Illinois, [and] you understand why,” Loudon said.

For the most part, job training programs have been focused on getting the unemployed back to work in response to the economic crisis, and “rightfully so,” Loudon stressed.

But even still, “We are a little under resourced in the area of incumbent worker training,” he explained.

Some businesses in Chicago looking for extra help to strengthen their current workforce, train new employees and grow their company have been able to find some relief, however, via the TIFWorks program.

The Jane Addams Resource Corporation, which is one of 13 Centers for Working Families in Chicago, has tapped TIFWorks for eight single-company training projects since 2006, Loudon said. Separately, the non-profit also provides job-skills training and other supports for low-income families and unemployed workers.

TIFWorks, which has been active since 2002, provides tax increment financing (TIF) funds to help cover workforce-training costs for employers. The goal of the program is to help companies operate more effectively and become more competitive in the marketplace.

Under the program, TIF dollars are doled out to qualified providers of approved training projects. TIF funds come from a portion of property tax dollars generated inside TIF districts. There are 172 TIF districts across the city.

Businesses seeking TIFWorks training for their employees have to be located inside a TIF district to be eligible.

Funds can be used for various training modules involving technology, safety, negotiation and sales and language skills, among others. Employees can also be trained on how to use new products, machinery and technology.

TIFWorks has provided $4.3 million in TIF funds to 84 businesses since 2008, according to information on the city’s website. Since that time, 3,295 employees were trained and 174 new employees were hired.

But overall, the $4.3 million paid out since 2008 is not a lot of money for a workforce-training program, said Tommy Cafcas, research analyst at Good Jobs First, a Washington, D.C-based subsidy watchdog group.

In comparison, he said $120 million goes out every year for training programs in Washington, D.C.

The $4.3 million paid out breaks down to about $1,300 for each of the reported 3,295 trained employees, which is fairly low and not an unreasonable amount of money, Cafcas said.

During the application process, the city asks whether new jobs will be created, but a project will not be approved or rejected solely on that basis, Loudon said.

“It’s consideration,” he noted.

Teresa Córdova, director of the Great Cities Institute at the University of Illinois at Chicago, questioned whether the conditions to receive a TIF grant should be strengthened.

“Part of the issue is, does this economic development strategy result in the creation of employment," she asked.

In general, TIFWorks is a tool that has potential value, Córdova said, but it really comes down to the particulars of specific contracts.

"Does that tool get used in a way that benefits all the taxpayers, (so) you're not just subsidizing things that maybe you wouldn’t want to subsidize," she asked.

A lot of work goes into creating a customized training program for an employer as part of the program, Loudon explained.

“You really have to make the case that this training is business-driven, [that] we’re responding to business issues, and here’s how we measure the problem, and here’s how we’re going to measure the return,” Loudon said. “Because after all, it’s return on investment, not return on performance.”

Winning a TIFWorks grant is also dependent on whether TIF money is available at the time. If the grant is awarded, however, it can cover up to 100 percent of the training costs, Loudon said.

Peter Strazzabosco, spokesman for Chicago’s Housing and Economic Development Department, which oversees the program, said workforce training is one of the top priorities for small businesses to utilize in order to become more profitable.

TIFWorks is one of the more useful, targeted and successful aspects of the city’s overall TIF program, which in itself is “highly beneficial and successful,” he said.

But Richard Dye, a TIF expert at the University of Illinois' Institute of Government and Public Affairs, said the program involves “hidden taxes and hidden governance.”

Chicago’s TIF program aims to spur economic development by providing subsidies to companies typically planning development projects, such as a housing complex or a shopping center, inside TIF districts.

The TIF program essentially diverts a portion of property taxes away from other local government bodies, such as the Chicago Public Schools (CPS), that would normally receive the money.

“TIF is a device that makes public scrutiny hard,” Dye explained. “Nobody’s on the record for a contract. Nobody’s making decisions in a public and open meeting. It’s concealed by design, which is one of the things that makes it politically attractive.” 

More recently, the controversial program has come under fire regarding Mayor Rahm Emanuel's proposal to shell out $55 million in TIF funds to help create a new DePaul University basketball arena near McCormick Place.

With a backdrop of 50 neighborhood schools slated to close at the end of June, activists and TIF experts have said the project is not a good use of public money. CPS officials say the school district is facing a $1 billion budget deficit and a reported underutilization crisis. 

Transparency Concerns

Workforce training programs are likely a more effective economic development strategy compared to “throwing big subsidy deals at companies,“ Good Jobs First's Cafcas said.

But the TIFWorks program does appear to have some transparency issues, he explained.

The TIFWorks website should disclose the name of the companies that have received training funds, how much was spent and possibly an explanation of the project and its outcomes, Cafcas noted. The overall TIF program's website does include more specifics about economic development projects funded by TIF, although transparency concerns remain.

“It is an outrage that there is no transparency on this [TIFWorks] program,” Cafcas said. “I’m not very skeptical of the program itself, but it doesn’t mean that I’m not skeptical of the fact that there’s little transparency.”

He went on to say that it appears as though there is “no accountability happening.”

“We simply don’t know which companies are receiving these dollars or what they’re doing with it,” he stressed. “It’s just not apparent to me from the website.”

Every state and city got a crash course on what transparency and accountability looks like as part of the American Recovery and Reinvestment Act of 2009, Cafcas noted. And all recipients of recovery funds are required to report online how the money was used via Recovery.gov.

“To argue that this [TIFWorks] data is all available through FOIA (a Freedom of Information Act request) is really to sort of look backwards and to go back to the dark ages before we really knew what was happening in our government,” Cafcas stressed. “That’s a stalling, delaying tactic.”

Loudon agreed the city’s workforce system should be transparent and accountable.

“The training providers and the employer companies that use the resource ought to be able to explain what it is that they’re doing,” he stressed. “In the long run, you’re going to have more good will towards the program.”

Also, TIFWorks does not require some or all of the training programs to be certified by the U.S. Labor Department, according to the Housing and Economic Development Department.

Job training programs that are certified by the Labor Department, however, help to ensure organizations that do training properly are getting the money, Cafcas explained.

But overall, Loudon said it is important for the city of Chicago to have some kind of commitment to worker training.

That being said, he would prefer a city workforce-training program that reaches past TIF district boundaries.

“I think a lot of companies left out of training are saying, ‘Where’s the equality? We pay taxes too. We’re part of the city, and were sticking it out here in the city, and providing jobs and creating jobs. Where’s the infrastructure for us,’” Loudon said.

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