BILL ANALYSIS
Senate Committee on Labor and Industrial Relations
Mark DeSaulnier, Chair
Date of Hearing: March 25, 2009 2009-2010 Regular
Session
Consultant: Rodger Dillon Fiscal:Yes
Urgency: Yes
Bill No: AB 23XXX
Author: Coto and Arambula
Version: As Amended March 23, 2009
Third Extraordinary Session
SUBJECT
Unemployment Insurance
KEY ISSUE
Should the State provide specified additional weeks of
unemployment insurance to qualified unemployed workers by
conforming to federal law and taking receipt of federal funds
that would pay for this extension?
PURPOSE
(A) To allow the state to qualify for up to $3.2 billion in
federal funds for additional weeks of unemployment benefits for
unemployed workers by conforming to the federal stimulus
legislation; (B) To provide financial support to
otherwise-qualified unemployed workers and their families, and;
(C) To take advantage of federal stimulus funds that will help
to buttress the California economy.
ANALYSIS
Existing law:
Establishes a federal-state program that provides weekly
unemployment insurance (UI) payments to eligible workers who
lose their jobs through no fault of their own. To be eligible
for benefits a claimant must be able to work, be seeking work,
be willing to accept a suitable job, and meet certain income
and other criteria;
Provides for extended weeks of benefit payments in times of
higher unemployment, as specified, through federal fund
transfers to the state.
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%.
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.
This Bill establishes eligibility for an additional 20 weeks of
federally-funded extended UI benefits for otherwise eligible
recipients. California will receive up to $3.2 billion for
conforming and implementing the 20-week extended UI benefits
program.
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 continuing
Hearing Date: March 25, 2009 AB 23 XXX
Consultant: Rodger Dillon Page 2
Senate Committee on Labor and Industrial Relations
until the week ending three weeks prior to the last week for
which 100% federal sharing of UI costs is authorized by Public
Law 111-5 [the American Recovery and Reinvestment Act, aka the
recent federal stimulus bill]. This provision of federal law
expires at the end of 2009.
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
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.Establishes this act as an urgency statute necessary to
address the weakened state economy.
COMMENTS
General Background . 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. Federal extended
benefits are fully paid by the federal government.
In the most recent period in which data are available, February
2009, there were 1,950,000 people unemployed in California and
the unemployment rate was 10.5%. In February 2009, 768,762
Hearing Date: March 25, 2009 AB 23 XXX
Consultant: Rodger Dillon Page 3
Senate Committee on Labor and Industrial Relations
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.
Federal Legislation Regarding Extended Benefits. The federal
ARRA legislation also 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. The Employment Development
Department reports that approximately 74,000 workers will see
their unemployment insurance benefits expire as of April 11,
2009, and others will stop receiving extended benefits as the
year proceeds.
The maximum duration of regular UI benefits is 26 weeks and the
maximum duration of federal emergency unemployment benefits is
33 weeks. Thus, the 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 79 weeks of unemployment benefits (26+33+20 weeks). These
20 weeks of extended benefits would not affect employers'
reserve accounts.
100 Percent Federal Funding
The federal extended UI benefits made available by this bill 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 $3.2 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. This version of the bill incorporates language
worked out with EDD and the Administration.
SUPPORT
California Labor Federation
California-Nevada Conference of Operating Engineers
American Federation of State, County and Municipal Employees
Hearing Date: March 25, 2009 AB 23 XXX
Consultant: Rodger Dillon Page 4
Senate Committee on Labor and Industrial Relations
California Rural Legal Assistance Foundations
California Federation of Teachers
Service Employees International Union, State Council
National Association of Professional Employer Organizations
California Professional Firefighters
California Nurses Association
California Bean Shippers Association
California Business Properties Association
California Chamber of Commerce
California Citrus Mutual
California Construction and Industrial Materials Association
California Farm Bureau Federation
California Grain and Feed Association
California Grocers Association
California Hospital Association
California Independent Grocers Association
California Manufacturers and Technology Association
California Pear Growers Association
California Retailers Association
California Seed Association
California State Floral Association
California Warehouses Association
Lumber Association of California and Nevada
National Federation of Independent Business
Nisei Farmers League
Pacific Coast Rendering Association
Pacific Egg and Poultry Association
Western Growers Association
OPPOSITION
Unknown
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Hearing Date: March 25, 2009 AB 23 XXX
Consultant: Rodger Dillon Page 5
Senate Committee on Labor and Industrial Relations