FY 2015-16 Cost per Employed Exit Targets


Background

The Performance Funding Model relates historical performance to economic and demographic variables. The goal is to create a target for each local workforce development board that accounts for differences among local boards beyond their control. For example, one local board may consistently have a higher unemployment rate or a larger agriculture industry relative to another local board. When developing the targets for each local board in any given year, CareerSource Florida forecasts economic and demographic conditions for each board.

FY 2015-16 Adjustment

In fiscal year 2015-16, four metrics were used to evaluate each local board: Unemployed Placement Rate, Time to Earnings, Cost per Employed Exit and Business Engagement. The Unemployed Placement Rate and Time to Earnings metrics are measured as rates. The Cost per Employed Exit metric, however, is different. It measures a local board’s total formula funds expenditure divided by the number of employed exits. As a result, changes in economic conditions have a larger impact on the denominator than the numerator of the Cost per Employed Exit metric. Changes in economic conditions impact the numerator and the denominator of the other metrics at approximately the same magnitude.

The chart below displays the state’s unemployment rate (blue) and the total formula funds expenditure for the entire CareerSource Florida network (orange). Note that the expenditure increased 56 percent from fiscal year 2008-09 to fiscal year 2012-13 to better assist the unemployed after the most recent recession. As the economy stabilized and started to expand, the network’s total formula funds expenditure declined. The expenditure for fiscal year 2015-16 fell 4.1 percent from the previous year.


Total Formula Funds Expenditure versus Unemployment Rate

Total Formula Funds Expenditure vs. Unemployment Rate chart


The Federal Reserve forecasted 1.9 percent growth in GDP and a 5.3 percent unemployment rate for 2015. However, the economy actually grew 2.1 percent and unemployment fell to 5.0 percent. When the economy grows more than expected and the unemployment rate is lower than expected, fewer job seekers need services from the network. As a result, performance on the Cost per Employed Exit metric is negatively impacted. To more equitably offset the unforeseen impact of improved economic conditions, CareerSource Florida increased each local board’s Cost per Employed Exit target by 20 percent for fiscal year 2015-16. Therefore, if a local board originally had a target of $300.00 per employed exit, for example, that target was increased to $360.00. This adjustment resulted in higher Cost per Employed Exit performance scores for all local boards, with increases ranging from nine to 25 points.