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Skilled to Work: Alabama legislation aims to grow apprenticeship program

Senate Bill 295 would create the Alabama Office of Apprenticeship, among other changes.

Posted: Jun 6, 2019 2:40 PM
Updated: Jun 6, 2019 6:58 PM

As the president of a company that has been around for more than 100 years, Alan Schollian knows the value of having quality workers.

In fact, his business, Decatur-based M&D Mechanical Contractors Inc., spends between two and three percent of its overall labor cost on training.

SB295 increases the amount of money set aside for the Alabama Apprenticeship Tax Credit Program from $3 million to $7.5 million per year. SB295 increases the amount of money set aside for the Alabama Apprenticeship Tax Credit Program from $3 million to $7.5 million per year.

“We don’t view that there’s any alternative to it,” said Schollian. “If we’re not training people, there won’t be people to perform those services.

He said one of their best tools for the job is investing in apprentices. When he sat down with WAAY 31 on Wednesday, he said they currently have about 20 apprentices. Many of them stay beyond that four-year training to take on leadership roles.

“We worked during the day and once a week, we’d go to class. So it wasn’t like we had to go to school full time and then find a job in between there,” said Michael Terry, a former apprentice.

In order to help finance their apprentices, M&D became one of just 25 companies across 13 counties in Alabama that took advantage of the Apprenticeship Alabama Tax Credit Program that began in 2017, with 76 apprentices covered by the tax credit that year.

Last year, 46 companies in 19 counties took advantage of the tax credit and were approved for 131 apprentices, according Alabama Industrial Development Training (AIDT). Last week, lawmakers passed a bill that would expand on that.

“We now have established [the Alabama] Office of Apprenticeship (AOA), which will focus the state more on this particular area and not just rely on the federal programs,” said State Senator Arthur Orr.

According to the U.S. Department of Labor, right now, 26 states run their own offices of apprenticeship, as well as Washington D.C. and Guam. All others have programs that are run through the federal government.

The bill, SB295, sponsored by Sen. Orr, not only establishes AOA, but it also increases the per capita tax apprenticeship tax credit from $1,000 to $1,250, increases the aggregate apprenticeship tax credit from $3 million to $7.5 million, expands the number of registered apprentices that qualify from five to ten per company per year and extends the program through 2025.

It also includes provisions to incentivize companies to take on youth apprentices in high school.

“[W]e also bumped the tax credit up to $1,250 and an additional $500 for those in high school. So this gives a little bit more incentive to employers to take on a 16 or 17-year-old who wants to work with their hands and who has a good work ethic,” said Orr.

Part of the reason why the cap was bumped to $7.5 million is to help compensate for the 10,000 in-school youth apprentices Governor Kay Ivey aims to have placed by the end of 2025.

Her office has a goal of placing 2,000 such apprentices by the end of 2021 and would increase that number by about 2,000 each successive year. Because of the new base credit, just placing 4,000 youth apprentices by 2022 would cost $7 million against the total cap.

Since the governor’s office helped craft the legislation, she’s expected to sign it soon. It will go into effect three months later.

Schollian said he’s encouraged by the steps the state is taking toward workforce development.

“The fact that the legislators are offering these incentives will help that effort and help bring people together to work on this issue,” said Schollian.

According to the legislation, Deputy Secretary of the Workforce Development Ed Castile has until June 30, 2019 to submit an application to form the AOA to the U.S. Secretary of Labor and the Administrator of the national Office of Apprenticeship.

The bill also establishes the Alabama Apprenticeship Council that consists of:

  • The Governor (ex officio chair of the council)
  • The Lieutenant Governor
  • The President Pro Tempore of the Senate
  • The Speaker of the House of Representatives
  • The Chancellor of the Alabama Community College System
  • The State Superintendent of Education
  • The Chair of the Alabama Workforce Development Board
  • The Chair of the Alabama Workforce Council
  • Nine members appointed by the Governor and confirmed by the Senate
    • Three members shall be representative of employer organizations
    • Three members shall be public representatives who are members of employee or employer organizations
    • Three members shall be representative of employee organizations

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