promises $4.6 for every $3.6 now available under the Labor Department administered manpower programs, along with an automatic 10% boost in funds when unemployment is about 4.5%. All of this, except for the 15% retained by the Feds, will be turned over to the state and local elected officials. Instead of distributing the entire amount, the revenue share could be limited to the added dollars plus the automatic boost. More funds could be added during a recession by extending the trigger mechanism and raising the automatic Federal contribution when unemployment rises above 4.5%. Manpower funds could be boosted, for example, by 10% for each 0.2% increase in unemployment. This would mean that funds allocated to manpower efforts would double if unemployment rises to 6.3% for three consecutive months.

The most important point is that the present categorical manpower programs would be retained, while the mayors and governors would have glue money to fill gaps or to start entirely new efforts according to local needs. Gradually, the shared portion of manpower funds could be expanded. Revenue shares could be pegged as an increasing percentage of Federal categorical allocations; for instance, one-third in fiscal 1972, one-half in fiscal 1973, and three-fourths in fiscal 1974. Alternatively, authorization levels for the shared revenue could be stated in dollar terms, say $500 million in fiscal 1972, $1.0 billion in fiscal 1973, and $1.5 billion in fiscal 1974.

In this way, the portion of manpower funds administered by the state and local governments would be gradually increased. When the economy picks up, cutbacks in manpower outlays could come from the Federal programs. Local efforts would not need to be reduced, and their continued funding could be assured.

The legislation could also provide for an automatic pass-through of funds to each city or combination of local governments with more than 100,000 population with the remainder of funds administered by the states. The formula for distributing the incremental shared funds among the states and localities could be based on criteria such as the number of persons in the labor force, the number of unemployed, and the number of low-income individuals 16 years of age or older, as in the Administration's revenue sharing proposal. Neither of these arrangements should be controversial, since they are similar in the vetoed manpower reform and revenue sharing bills.

Much could be done at the national level to improve the performance of existing categorical programs. Availability of funds allocated directly to states and communities should ease Federal re-examination of

program effectiveness and the reallocation of funds among the categorical programs. For instance, changing economic conditions might favor the transfer of resources from private to public sector efforts; Operation Mainstream, the Neighborhood Youth Corps, and the Public Service Careers could be expanded using JOBS funds that are less effective in a slack economy.

One possibly useful change in the Federal programs would be the initiation of variable matching grant formulas, requiring contributions from participating state and local governments. With discretionary funds provided under revenue sharing, governors and mayors could "shop around" for the services and delivery systems best suited to their needs. At the same time, the Feds could adjust the matching formulas among programs to influence acceptance of their desired priorities. To maximize their leverage, states and localities would use their shared revenues to match Federal outlays, participating to the maximum feasible extent in these national programs. However, all or some portion of matching funds could be included as Federal outlays in the calculation of the aggregate amount of revenue sharing. This would insure that states and localities would have money to operate their own programs in addition to participating in Federal efforts.

With the revenue shares which are not used as matching funds under the categorical programs, a variety of manpower services could be provided. Under current conditions, the most appropriate and likely use of funds would be for public employment.

It is contrary to the intent of decentralization and eventual decategorization to create a new Federal program or to put restrictions on the use of shared revenues. Instead, the governors, mayors, and county commissioners should be allowed to create public employment positions if they deem this to be their most critical need, and the nature of these jobs should depend on local circumstances. However, Federal funds can be used as an incentive for the creation of "meaningful" opportunities and the provision of worthwhile training. Authorizations for the Public Service Careers (PSC) program could be expanded, with an attractive matching formula, so that there would be an inducement to combine local public employment programs with subsidized training.

Since PSC provides subsidies for only a year and a half, states and localities would have an incentive to see the trainees become fully productive on the jobs or would move on to positions elsewhere. There would be no requirement that locally initiated public employment efforts tie in with PSC, but it is doubtful that additional Federal dollars will be refused.

The Conference Board RECORD

Something for everyone

It is the essence of compromise that everyone gets a little less than desired, but enough to satisfy minimal anticipations. This briefly outlined proposal combines the most essential features of manpower reform, revenue sharing, and public employment.

The proposal features reform at the Federal level, including needed adjustments to changing economic conditions, with a gradual decentralization of control to the state and local level. Gradualism is important to minimize outright and active oppositions of vested interest groups. More significantly, gradual decentralization will grant states and localities the time and resources to build up expertise in the design and administration of manpower programs. The retention of Federally administered programs that are currently operating with a fair degree of success provides a foundation on which states and localities can build their own manpower structures.

Revenue sharing is an integral part of the proposal. An increasing portion of manpower funds are to go directly to the states and localities. Within broadly designated guidelines, the mayors and governors will have few restrictions on the use of these monies, particularly in reference to the public employment efforts they may undertake.

National policies will be pursued through the continuing Federal programs, and attractive matching grants can be formulated to induce states and localities into desired actions, using carrots rather than sticks to insure Federal priorities. Funds will be assured for the operation of state and local programs as well as for the matching of Federal outlays. By the gradual implementation of revenue sharing, the core of Federal programs can be retained as insurance in case the anticipated benefits do not materialize. It is better to wade than to plunge into unknown waters.

Finally, the proposal provides substantial resources for the mounting of state and local efforts to meet current needs. In many areas, most of the shared funds will undoubtedly go for public employment. The mayors and the governors will be free to implement any type of program which will meet their needs. If they have critical shortages of public employees, they can fill their requirements by upgrading the underemployed. If the problem of hard core unemployment is more critical, they can create suitable positions that can be filled by the unskilled and deficiently educated.

The availability of Federal training assistance under Public Service Careers and the allegedly widespread shortage of productive public employees would suggest that most funds will be used to create "worthwhile" slots. The compromise should help smooth disagreements over the quality and transitional character of public employment positions; by permitting a more rapid passage of the needed legislation, it will hurry resources into the hands of mayors and governors where they are critically needed.

It is vital that a workable compromise be reached. This requires on the part of all parties a flexibility which has been conspicuous by its absence since the onslaught of the recession. It is vital that manpower reform, revenue sharing, and public employment legislation be considered together so that the necessary tradeoffs can be made explicitly. The victims of unemployment have suffered from present inaction and it is essential that all efforts turn to compromise.

As we go to press, Congress approved legislation authorizing the funding of public job creation over the next two years. The legislation received bipartisan support because Congressional leaders promised immediate consideration of Administration manpower reform proposals. The compromise approach outlined in this article may therefore still offer a basis for legislation. Ed.

AUGUST 1971