BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 23 X3
                                                                  Page  1


          (  Without Reference to File  )

          ASSEMBLY THIRD READING
          AB 23 X3 (Coto and Arambula)
          As Amended  March 16, 2009
          2/3 vote.  Urgency 

           INSURANCE           8-2         APPROPRIATIONS      11-4        
           
           ----------------------------------------------------------------- 
          |Ayes:|Coto, Blakeslee,          |Ayes:|De Leon, Ammiano,         |
          |     |Arambula, Carter, Feuer,  |     |Charles Calderon,         |
          |     |Hayashi, Nava, Torres     |     |Fuentes, Hall, Jones,     |
          |     |                          |     |John Perez, Price,        |
          |     |                          |     |Skinner, Solorio,         |
          |     |                          |     |Torlakson                 |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Garrick, Niello           |Nays:|Nielsen, Duvall, Harkey,  |
          |     |                          |     |Miller                    |
           ----------------------------------------------------------------- 
           SUMMARY  :  Establishes eligibility for an additional 20 weeks of  
          federally-funded extended unemployment insurance (UI) benefits.

          Specifically,  this bill  :

          1)Sets an "on" indicator for federal-state extended UI benefits  
            when the average rate of total unemployment in the state in  
            the most recent three months equals or exceeds 6.5%, and the  
            average rate of total unemployment in the most recent three  
            months equals or exceeds 110% of that average for either or  
            both of the corresponding three month periods ending in the  
            two preceding calendar years.  

          2)Specifies that this "on" indicator shall apply to weeks of  
            unemployment beginning on February 1, 2009, and shall become  
            inoperative on December 6, 2009, or on the date the federal  
            sharable extended compensation authorized by Public Law 111-5  
            (the 2009 federal economic stimulus legislation) expires,  
            whichever is later.

          3)Establishes the total extended compensation amount that an  
            eligible individual may receive when the total unemployment  
            rate during the most recent three months exceeds 8%.  In that  








                                                                  AB 23 X3
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            instance, the amount shall be not less than whichever of the  
            following is the least:

             a)   80% of the total amount of regular compensation payable  
               to him or her during that benefit year;

             b)   20 times his or her average weekly benefit amount;

             c)   46 times his or her average weekly benefit amount,  
               reduced by the regular compensation paid to him or her  
               during that benefit year.

          4)Provides that individuals who continue to meet all other  
            requirements may not be required to re-apply for federal  
            extended UI benefits.

          5)Specifies that these extended benefits (described in #3,  
            above) apply to weeks on or after February 1, 2009.  This  
            state law and the authority for the benefits expires on  
            December 6, 2009, or on the date the federal sharable  
            compensation authorized by Public Law 111-5 expires, whichever  
            is later.

          6)Establishes this act as an urgency statute necessary to  
            address the weakened state economy.

           EXISTING LAW  :

          1)Establishes an "on" indicator for purposes of implementing  
            federal-state UI extended benefits if during the preceding 13  
            weeks the  insured unemployment rate (IUR)  equals or exceeds  
            6%, or 120% of the average of the rates for the corresponding  
            13-week period ending in each of the preceding two calendar  
            years and exceeds 5%.

          2)Requires that in order to qualify for federal extended  
            benefits, an unemployed individual must have previously been  
            found eligible for regular UI, have exhausted their regular UI  
            benefits, must continue to seek work, and have had earnings  
            exceeding 40 times the weekly UI benefit during a one-year  
            base period, or earnings exceeding 1.5 times the highest  
            calendar quarter of earnings.  

           FISCAL EFFECT  :   The Assembly Appropriations Committee analysis  








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          states the following:
          Increased federal funding in the range of $2.5 billion to $3  
          billion for 20 weeks of additional emergency UI benefits during  
          2009.  Potential, likely minor, General Fund costs to state and  
          educational agencies (schools and colleges) related to emergency  
          benefit increases.  Unknown impacts to local public agencies to  
          the extent increased federally funded benefits require an  
          increased employer contribution.

           COMMENTS  :   

          1)The UI Program is administered by the California Employment  
            Development Department (EDD) as part of a federal-state system  
            to provide unemployment compensation to workers who lose their  
            job through no fault of their own.  The benefits range from  
            $40 to $450 per week in California depending upon earnings  
            during a 12-month base period.  The regular UI Program is  
            financed by employers who pay unemployment taxes on the first  
            $7,000 of earnings by each worker.  

            In the most recent period in which data are available, January  
            2009, there were 1,863,000 people unemployed in California and  
            the unemployment rate was 10.1%.  In January 2009, 717,525  
            people received regular UI benefits during the survey week.   
            Another 259,903 people were certified for federal emergency UI  
            benefits in California in January 2009.  Thus, only 52% of  
            unemployed workers in California receive UI benefits.

          2)A new federal law, titled the American Recovery and  
            Reinvestment Act (ARRA, commonly referred to as the "federal  
            stimulus legislation"), provides authority for states with  
            high rates of unemployment to enact state legislation which  
            permits long-term unemployed people to access up to an  
            additional 20 weeks of extended benefits under the UI Program  
            that are 100% payable by the federal government.  This bill  
            proposes to accomplish this for California.  

          3)Under existing law, the maximum duration of regular UI  
            benefits is 26 weeks and the maximum duration of federal  
            emergency unemployment benefits is 33 weeks.  Thus, the  
            present maximum duration of UI benefits in California is 59  
            weeks.  The enactment of the federal ARRA and this bill will  
            make it possible for long-term unemployed Californians, who  
            meet specific criteria, to obtain up to a total of 79 weeks of  








                                                                  AB 23 X3
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            unemployment benefits (26+33+20 weeks).  These 20 weeks of  
            extended benefits would not affect employers' reserve  
            accounts.

          4)The federal extended UI benefits made available by this bill  
            (AB 23 X3) to unemployed residents of California will result  
            in 100% federal funding during calendar year 2009.  This  
            amount is estimated to be between $2.5 billion and $3 billion  
            in benefits in 2009.  This bill will  not  cause an increase in  
            state costs during calendar year 2010 as a result of the  
            extended benefits provision (i.e., there will not be a 50/50  
            split of federal and state costs for extended UI benefits  
            during calendar year 2010 as a result of this bill).  The bill  
            specifies that the extended benefits provision sunsets on  
            December 6, 2009, or on the date the federal sharable extended  
            compensation authorized by the federal ARRA legislation  
            expires, whichever is later.  The relevant federal provision  
            expires on December 31, 2009 (Section 2005 (a) of the ARRA, as  
            cited in the text of AB 23 X3).

           
          Analysis Prepared by  :     Manny Hernandez /INS. / (916) 319-2086  
           
           


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