What is a Sheltered Workshop?

This article reprinted from my personal blog.

Have you ever looked at your tax bill and wondered "what's that 'sheltered workshop' tax all about?"

Recently I've learned a little more about sheltered workshops in Missouri, and their important role in employing individuals that probably would not be able to get jobs anywhere else. They also provide a valuable service to government and industry in the form of contracts for manufactured goods and certain services like janitorial work.

In short, a sheltered workshop is a small factory where people with mental retardation and developmental disabilities (and in some cases, physical disabilities) work. They do get paid, but have special waivers from the US Department of Labor Wage & Hour Division to pay less than minimum wage; typically, they pay 50% of the prevailing wage for the job.

The Extended Employment Sheltered Workshops program of the Missouri Department of Elementary and Secondary Education, Division of Special Education, funds about 20% of workshop budgets in Missouri. The legislation was passed back in the late 1960s, thanks to the efforts of numerous concerned parents of children with mental retardation who were becoming adults.

According to the Missouri Association of Sheltered Workshop Managers, the Missouri sheltered workshops operate primarily on an industrial model, where they generate most of their revenues from contracts for manufacturing work and some service contracts. In many other states, the per diem reimbursement rates from state government are much higher, because the program is more of a residential treatment and recreation center, with the work being secondary.

But back to that tax bill: Another 10-15% of most sheltered workshops' budgets comes from local taxes authorized by the voters and administered by county SB 40 boards, called that because of the Missouri state legislature bill number that authorized them in 1968. Over the years, these boards have begun to provide funding for other organizations that provide services to individuals with developmental disabilities; but they started out primarily as a funding vehicle for sheltered workshops. About half of these boards are members of the Missouri Association of County Developmental Disabilities Boards. Each board is an independent body with its own tax rate, and allocates its funds independently.

The local SB 40 boards are as follows:

City of St. Louis -- St. Louis Office for Mental Retardation and/or Developmental Disability Resources (MR/&DD Office)
St. Louis County -- Productive Living Board for St. Louis County Citizens with Developmental Disabilities (PLB)
St. Charles County -- Developmental Disabilities Resource Board (DDRB)
Jefferson County -- Developmental Disabilities Resource Board (JCDDRB)
Franklin County -- Developmental Services of Franklin County

These days, most of the agencies funded by these boards are not sheltered workshops, but community-support organizations. There has been some concern this diminishes the focus on sheltered workshops as a tax-supported employment initiative for the most severely disabled persons who need the programs.

Nevertheless, we still have a large number of workshops in and around the St. Louis area; and several are good examples of regional cooperation in funding.

In the City of St. Louis, there's:
Industrial Aid at 4417 Oleatha Ave. in Tower Grove South;
MERS Goodwill, one of the biggest ones, at 4140 Forest Park Pky. in the Central West End. Of course, MERS Goodwill is jointly funded by the St. Louis City, St. Louis County, and St. Charles County boards.
Project Inc. at 6301 Manchester Ave. in Dogtown (Clayton-Tamm); and
Worth Industries at 4124 N. Broadway on the North Riverfront.

In St. Louis County, there's:
Canterbury Enterprises at 7228 Weil Ave. in Shrewsbury. Canterbury is also jointly funded by the City and County boards.
Lafayette Industries with two locations, the original at 179 Gaywood Dr. in Manchester; and
Lafayette Industries North (formerly ITE Inc.) at 4621 World Parkway Circle in Berkeley.
Valley Industries at 143 B McDonnell Blvd. in Hazelwood; and
W.A.C. Industries at 8520 Mackenzie Rd. in Affton, another very large operation, also jointly funded by City and County.

In St. Charles County, there's Boone Center, Inc. at 200 Trade Center Drive in St. Peters. In addition to Boone and MERS Goodwill, the St. Charles board also funds TEMCO, Inc., a division of Emmaus Homes located on their Marthasville campus at 2245 Highway D in Warren County.
The Franklin County and Warren County boards don't have websites, but they appear to support the TEMCO facility to some extent as well. Warren County also has another workshop, called Warren County Sheltered Workshop (no website?), located in Warrenton at 1760 HGP Ave.

In Jefferson County, there's Jeffco Subcontracting at 2065 Pomme Rd. in Arnold. JSI is the only workshop in the county, and the only workshop funded by the Jefferson County board.

In Franklin County, there's:
Sheltered Workshop, Inc. at 1600 West Main in Washington; and
Sheltered Industries of Meramec Valley located in Sullivan.

The Franklin County board also seems to help fund River Bluff Industries located in Hermann (Gasconade County), and already mentioned TEMCO in Marthasville (Warren County).

Also in St. Louis County you'll find a workshop for individuals who are blind, called Lighthouse for the Blind, Inc. which has two locations:
10440 Trenton Ave. in Overland; and
8833 Fleischer in Berkeley.

LHB is not a DESE Sheltered Workshop, so it does not get State or Local funding. What it DOES get, as do some of the sheltered workshops, is Federal contracts.

Under legislation dating to the late 1930s, workshops for the blind (and since the 1970s, those sheltered workshops for the severely handicapped) are eligible for special preference in Federal government contracting. (They also qualify for five points extra consideration in State of Missouri contracting, which is why you'll see that Warren County Sheltered Workshop has the maintenance contract for the I-70 rest areas near Wright City, and indeed most rest areas are maintained by workshops in Missouri.)

The Federal program for workshop contracts has long been called JWOD in honor of the sponsors of the legislation, all from New York: Senator Jacob Javits in 1971, and House members Wagner and O'Day in 1938. The name is changing to AbilityOne. The program is administered by a group ominously called "The Committee," a group of top Federal bureaucrats appointed by the President. (Its full title is a mouthful: The Committee for Purchase from People Who Are Blind or Severely Disabled.)

Like Federal Prison Industries (aka Unicor), JWOD/AbilityOne is what is known as a "required source of supply" for Federal agencies. This means that if Unicor or a JWOD workshop offers the item for sale, Federal agencies must buy it from them. Unicor often issues waivers to this rule.... but The Committee does not do so as often.

To get on the JWOD Procurement List, workshops must become affiliates of either National Industries for the Blind (NIB) (which happens to have its national technical center in Earth City) or National Industries for the Severely Handicapped (NISH). While there is no fee for affiliation, once a workshop gets a contract, they must pay back 4% of that contract to NIB or NISH.

LHB, of course, is a NIB affiliate -- and they got over $8 million in Federal contracts just in Fiscal Year 2006. Most of the local Sheltered Workshops are NISH affiliates, but only one has the capacity to offer JWOD products/services: MERS Goodwill, DBA MGI Services. In FY '06, MGI Services got about $400k in JWOD contracts, mostly cleaning Federal buildings. JWOD products are marketed to Federal buyers under the brand name Skilcraft.

The world of sheltered workshops is a little-known aspect of the government; arguably, it's not really part of the government at all, but given that these dozens of independent non-profits receive state and local tax dollars, as well as state and federal contracts in some cases, it is surprising how little attention they get. Most seem to be doing a great job in employing individuals who probably would have a great deal of difficulty getting and keeping jobs in traditional settings.