State-funded entrepreneurs program for unemployed on chopping block
After becoming a "product of a downsizing" in January, Joyce Shaffer of Robinson started her own business, thanks to a little-known program that trains budding entrepreneurs while they collect unemployment benefits.
"Their goal is to turn out successful small businesses. It's definitely a results-driven program," said Shaffer, who formed Rescue Your Project in mid-March. "I wish they would expand the program."
Instead, the Self-Employment Assistance program could vanish this year, a victim of budget cuts amid the recession.
"That's the irony," said Diane Sandstrom, consulting manager at Duquesne University's Small Business Development Center, a key partner in the program. "At a time when people need the program's services the most, the tax revenue isn't there to support it."
The program was created by Congress as an amendment to the North American Free Trade Agreement in 1993. It began in Pennsylvania in the late 1990s as a pilot program, then expanded statewide in 2001. Pennsylvania is — or was — one of only eight states participating.
"But now, it's not in anybody's version of the fiscal 2010 budget" yet to be passed, said David Smith, spokesman for Pennsylvania CareerLink, Harrisburg. The state agency's 67 offices, including six in this region, administer the job-training program.
"The program was getting less and less money over the years," said Smith. Funding statewide was $359,000 in the year that ended in June, down from $500,000 in the fiscal year before and from $3 million two years ago.
The City of Pittsburgh's share last year — $23,000 — was "significantly down from previous years" and was "just enough to put six people through the program," said Frank Cannone, a counselor for the city who works at the CareerLink office Downtown.
Shaffer, 51, had a deep background in finance, but had never launched a business. The program provided entrepreneurial training and business consulting at Duquesne's SBDC that enabled Shaffer to start her business, which provides program management for companies.
"I began earning a profit at the end of June," she said. "That felt good, especially in this economy."
A unique aspect of the program involves the jobless benefits. Unemployment compensation normally runs 26 weeks, but is discontinued once a person starts a new job. The Self-Employment Assistance Program lets participants collect their cash benefit while training to start a business, and they still collect the benefits if that business makes money before the 26 weeks are up.
Participants go through a series of classes over six weeks that train them in the ways of an entrepreneur. Classes cover such topics as finance, marketing and legal aspects of founding and operating a business.
"It's designed so that the majority of the time, they continue to receive unemployment," said Larry Garvin, vice president of Career Track, an affiliate of the CareerLink office in Butler.
Garvin's office coordinates with Slippery Rock University and Indiana University of Pennsylvania to provide small business training for program participants in Butler, Armstrong and Indiana counties.
Duquesne University's SBDC provides training for the program's clients in Allegheny County. It also provides business consulting services for budding entrepreneurs.
That's where Chris Lewis and Joe Serkoch turned after they lost this jobs at a commercial production company in December. Following training at Duquesne, the pair from Carnegie formed OrionVega, a video production/Web design/print media business in January.
"We learned how to do a business plan, they helped us figure out how to do financial projections ... all the things to make sure you don't fail in your first year," said Lewis, 33.
He and Serkoch, 31, even made money in their first 26 weeks of unemployment and could still collect their jobless benefits during that time.
"I found out this morning there's nothing in the budget for the SEA program," said Serkoch. "That, to me, is shocking."
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