BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2058
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           Date of Hearing:   March 24, 2010

                           ASSEMBLY COMMITTEE ON INSURANCE
                                 Jose Solorio, Chair
                 AB 2058 (Block) - As Introduced:  February 18, 2010
           
          SUBJECT  :   Unemployment Insurance: Retraining Benefits

           SUMMARY :   Eliminates a series of requirements for participating  
          in the state's retraining benefits program in order to allow  
          unemployed people to receive unemployment insurance (UI)  
          benefits while enrolled in a training program on a full-time  
          basis.  Specifically,  this bill  :  

          1)Declares the policy of this state to assist individuals with  
            unemployment insurance (UI) benefits if these individuals need  
            training to upgrade their skills to become competitive in the  
            labor market.  

          2)Makes UI recipients eligible to participate in training or  
            retraining programs if the Director of the Employment  
            Development Department (EDD) determines the state unemployment  
            rate equals or exceeds 8.5 percent during a recent three-month  
            period.  

           3)Provides that UI benefits shall not be denied to an otherwise  
            qualified unemployed worker  because he or she is in training.  
             

          4)Eliminates the requirement of state law that the EDD Director  
            approve the training program.  

          5)Deems automatically eligible for "retraining benefits" an  
            unemployed person who files a UI claim during a period of  
            training or retraining.  Retraining benefits allows eligible  
            UI recipients to participate in training programs on a  
            full-time basis while receiving their UI benefits.  Retraining  
            benefits are also known as the California Training Benefits  
            Program.  

           6)Eliminates the provision of law that requires a determination  
            of potential eligibility for retraining benefits to be issued  
            if the EDD Director finds the training is authorized by the  
            federal Workforce Investment Act, by the state Employment  
            Training Panel, by the federal Trade Act of 2002, or the  








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            individual is a participant in CalWORKS.   

           7)Deletes the provision of law that requires EDD to issue a  
            determination of potential eligibility for retraining benefits  
            to an unemployed person if the EDD Director finds that all   
             eight conditions apply.  (See item #5 in Existing Law  
            section.)  

          8)Makes an unemployed person eligible for retraining benefits if  
            he or she is able to work and certifies on the UI claim form  
            that he or she is enrolled in a training program designed to  
            increase or improve their job skills and employability.   

           9)Eliminates the authority of unemployed people to receive a  
            training extension if the person applies no later than the  
            16th week of receiving UI benefits.  Under existing law, a  
            training extension provides the claimant with a possible extra  
            26 weeks of UI benefits.  

          10)Requires EDD to inform all UI claimants of the availability  
            of retraining benefits, by on-line means.  This information  
            shall be made available on EDD's website in close proximity to  
            information on UI claim forms.  Existing law already requires  
            this information to be conveyed verbally and in written form.   
             

           11)Deletes the provision of law that limits access to retraining  
            benefits unless the EDD Director finds  both  of the following:

             a)   the person is potentially eligible for retraining  
               benefits or a training extension of UI benefits, and

             b)   the person submits with each claim a written  
               certification executed by a responsible person connected  
               with the training program certifying that the individual is  
               enrolled in and satisfactorily pursuing the training course  
               of instruction.  

          12)Provides that if a person fails to submit biweekly  
            information documenting eligibility for any week of training  
            or retraining, he or she shall be ineligible to receive any  
            retraining benefits for that week.  

          13)Deletes the provision of law that prohibits the payment of  
            retraining benefits during the period of training for any week  








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            with respect to which the person receives training benefits or  
            allowances pursuant to any state or federal law providing for  
            the payment of such benefits, but excluding costs of training  
            paid pursuant to the federal Trade Act of 1974, as amended.

           EXISTING LAW  :

          1)Declares the policy of this state to assist individuals with  
            UI benefits if these individuals need training in demand  
            occupations to become competitive in the labor market. 

          2)Provides that UI benefits shall not be denied to an otherwise  
            qualified unemployed worker because he or she is in training  
             approved by  the EDD Director. 

          3)Allows an unemployed person who files a UI claim to apply to  
            EDD for a determination of potential eligibility for  
            "retraining benefits" during a period of training.  Retraining  
            benefits allow people who qualify for UI benefits to  
            participate in training programs on a full-time basis  and   
            receive UI benefits while being relieved of the obligations to  
            be available for work and to actively search for work each  
            week. 

          4)Requires EDD to issue a determination of potential eligibility  
            for retraining benefits to an unemployed individual  if the EDD  
            Director finds  that the training is authorized by the federal  
            Workforce Investment Act, the state Employment Training Panel,  
            the federal Trade Act of 1974, as amended, or the individual  
            is a participant in the CalWORKS Program and has entered into  
            a contract with the county welfare department to participate  
            in an education or training program.  

          5)Requires EDD to issue a determination of potential eligibility  
            for retraining benefits  if the EDD Director finds  that  all  of  
            the following facts apply:

             a)   The person has been unemployed for 4 or more continuous  
               weeks, or the person is unemployed and unlikely to return  
               to his or her most recent workplace because of a plant  
               closure or a substantial reduction in employment, or  
               because of a mental or physical disability which prohibits  
               the individual form utilizing existing occupational skills;

             b)   There is a lack of demand in the labor market area for  








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               his or her occupational skills and the lack of employment  
               opportunities is expected to continue for an extended  
               period of time;

             c)   The training course of instruction relates to an  
               occupation or skill for which there are, or are expected to  
               be in the immediate future, reasonable employment  
               opportunities in the labor market area in this state in  
               which the individual intends to seek work;

             d)   If the person is a journey level union member, the  
               training course of instruction is specific job-related  
               training necessary due to changes in the technology, or  
               necessary to retain employment or to become more  
               competitive in obtaining employment;

             e)   The training or retraining course of instruction is one  
               approved by the EDD Director and can be completed within  
               one year;

             f)   The training or retraining course is a full-time course  
               prescribed for the primary purpose of training the  
               applicant in skills that will allow him or her to obtain  
               immediate employment in a demand occupation and is not  
               primarily intended to meet the requirements of any degree  
               from a college, community college, or university;

             g)   The individual can be reasonably expected to complete  
               the training or retraining successfully; and

             h)   The beginning date of training is more than 3 years  
               after the beginning date of training last approved for the  
               individual. 

          6)Provides that an unemployed individual receiving UI benefits,  
            who applies for retraining benefits no later than the 16th  
            week of receiving UI benefits, and is determined eligible for  
            the retraining benefits shall be entitled to a  training  
            extension  on his her UI claim to complete the approved  
            training.  

          7)Requires EDD to inform all UI claimants of the retraining  
            benefits.  This information shall be conveyed verbally or in  
            written form.  









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          8)Requires the training extension of UI benefits to be charged  
            to the employer reserve accounts.

          9)Limits access to retraining benefits unless the EDD Director  
            finds  both  of the following:

             a)   the person is potentially eligible for retraining  
               benefits or a training extension of UI benefits, and

             b)   the person submits with each claim a written  
               certification executed by a responsible person connected  
               with the training program certifying that the individual is  
               enrolled in and satisfactorily pursuing the training course  
               of instruction. 

          10)Prohibits the payment of retraining benefits during the  
            period of training or retraining to any individual for any  
            week with respect to which that individual receives training  
            benefits or allowances pursuant to any state or federal law  
            providing for the payment of such benefits, but excluding  
            costs of training paid pursuant to the federal Trade Act o  
            1974, as amended. 

           FISCAL EFFECT  :   Undetermined.

           COMMENTS  :   

           1)Purpose .  The purpose of this bill is to allow unemployed  
            workers receiving UI benefits to continue their coverage while  
            enrolled in job training or education courses to develop the  
            skills necessary for the state's changing work environment.   
            This bill would directly remedy the loss of UI benefits by  
            automatically approving training when the unemployment rate  
            equals or exceeds 8.5 percent and removes other barriers.

           2)Background  .  This bill affects "Retraining Benefits" (as  
            phrased in Sections 1266 to 1274.10 of the Unemployment  
            Insurance Code), or the "California Training Benefits  
            Program," as called by EDD on its printed materials and its  
            website.  It is the same program.  The retraining benefits  
            program allows people receiving UI benefits to participate in  
            approved training programs without actively seeking work.  EDD  
            is responsible for determining whether UI recipients are  
            eligible for retraining benefits and may continue to receive  
            UI compensation.








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          In May 2009, the U.S. Department of Labor issued a guidance  
            letter to state agencies such as EDD that administer the UI  
            Program.  Specifically, Training and Employment Guidance  
            Letter No. 21-08 encourages states to widen the types of  
            training and the conditions under which education and training  
            are considered "approved training" for purposes of the state's  
            UI law.  States are also asked to reconsider their laws and  
            regulations, and applicable administrative requirements, to  
            determine if their approved training requirements are  
            appropriate to the current economy.  That guidance letter  
            strongly encourages states to
            broaden their definition of approved training for UI  
            beneficiaries during economic downturns.

            Currently, until a determination of eligibility for retraining  
            benefits is complete, EDD will suspend the UI benefits.  With  
            the current severe recession, many unemployed Californians are  
            trying to regain competitive job skills by participating in  
            the California Training Benefits Program.  Unfortunately, the  
            UI benefits of many Californians who indicate on an EDD form  
            that they're enrolled in training have their UI benefits  
            suspended for a period of 4 to 8 weeks.  As a result, many  
            Californians decide to drop out of the job training to  
            preserve their eligibility for UI benefits.  This is contrary  
            to the direction of the federal Department of Labor which has  
            been strongly encouraging states to streamline their  
            administrative procedures and laws, if necessary, to assist  
            unemployed people to regain competitive job skills for the  
            current economy.  In fact, many people who experience a  
            suspension of UI benefits are found to have been eligible for  
            both UI and retraining benefits.  This bill proposes a series  
            of statutory changes to improve training opportunities.

           3)Arguments in Support.   According to the sponsor of the bill,  
            the California Workforce Association, this bill:  
              a)   Continues UI benefits to unemployed Californians who are  
               in training,  
              b)   Eliminates lengthy determination periods,  
              c)   Makes it possible for program participants to enroll in  
               training that will result in a college degree,  
              d)   Suspends the 4-week waiting period to enroll in training  
               and receive California Training Benefits,  
             e)   Suspends the regular eligibility criteria when the  
               unemployment rate reaches 8.5%,  








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              f)   Allows participants to be in training longer than one  
               year, and  
              g)   Allows representatives of training programs to sign  
               forms certifying that individuals have enrolled in and are  
               participating in training.  

          4)Arguments in Opposition  .  The California Chamber of Commerce  
            and the California Manufacturers and Technology Association  
            state their opposition to this bill because it reaches further  
            than timely delivery of benefits and proposes to automatically  
            approve enrollment in training programs when the unemployment  
            rate equals or exceeds 8.5%.  These groups also state that the  
            bill would create a different public policy which could lead  
            to fraud and abuse since unemployed individuals could use  
            their UI benefits to make lifestyle changes beyond those  
            required for re-employment, regardless of real employment  
            opportunities.  
             
           5)Related Legislation  .  This Legislative Session, AB 2748  
            (Furutani) proposes as state policy that unemployed  
            individuals be provided retraining benefits made available  
            under the federal American Recovery and Reinvestment Act  
            (ARRA) of 2009.  Also, SB 968 (McLeod) proposes a series of  
            changes to the retraining benefits program that are similar to  
            those proposed by AB 2058.

           6)Clarifying Changes Recommended:  
           
             a)   Specify the Name of the Program  .  Under existing law,  
               the statutory article which provides authority for UI  
               recipients to simultaneously participate in training  
               programs, without losing UI, is titled "Retraining  
               Benefits."  Over the years, this program has become known  
               as the California Training Benefits Program.  In order to  
               avoid public confusion, it is suggested that this article  
               be re-titled the California Training Benefits Program to  
               reflect the name of the program already printed in  
               thousands of pamphlets, the name posted on EDD's website,  
               and the name used by EDD staff when speaking with the  
               public.  In addition, it is recommended that the bill be  
               amended to formally name this program the California  
               Training Benefits Program.  

             b)   Program Eligibility During Periods of High Unemployment  .  
                The bill proposes to make UI recipients eligible to  








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               participate in "training or retraining programs" if the EDD  
               Director determines the state unemployment rate equals or  
               exceeds 8.5 percent during a recent three-month period.   
               Since the state operates a variety of training programs, it  
               is recommended that the bill be amended (on page 4, line 4)  
               to specify that recipients of UI benefits shall be eligible  
               to participate in the California Training Benefits Program.  
                
           
              c)   Automatic Eligibility for Program.   The bill seems to  
               automatically deem eligible for UI benefits any unemployed  
               individual who files an UI claim during a period of  
               training or retraining.  Since this drafting could be  
               interpreted to remove the ability of EDD to make  
               determinations of UI eligibility, which is understood to be  
               contrary to federal requirements, this provision of the  
               bill (Section 4 of the bill, page 4, lines 25 -33) is  
               recommended to be re-written as follows:  An individual who  
               qualifies for UI and then applies for the retraining  
               benefits shall be deemed automatically eligible for the  
               California Training Benefits Program.

              d)   Eligibility for Program  .  The bill makes an unemployed  
               individual eligible for retraining benefits if he or she is  
               able to work and certifies on the UI claim form that he or  
               she is enrolled in a training program designed to increase  
               or improve their job skills and employability.  In order to  
               comply with federal requirements, it is recommended that  
               Section 6 of the bill (page 6, lines 17 -23) be amended as  
               follows:  Notwithstanding subdivision (c) of Section 1253,  
               an unemployed individual who initially qualifies for  
               unemployment insurance benefits is eligible to participate  
               in the California Training Benefits Program if he or she  
               certifies on the unemployment insurance claim form that he  
               or she is enrolled in a training program designed to  
               improve his or her job skills and a responsible person  
               connected with the training program certifies that the  
               individual is enrolled and satisfactorily pursuing the  
               training or retraining course of instruction.  

             e)   Training Extensions  .  Existing law specifies the  
               conditions in which an unemployed person is entitled up to  
               an additional 26 weeks of retraining benefits.  This bill  
               eliminates that portion of the law without replacing it  
               with other similar specific authority.  Thus, it is  








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               recommended that Section 8 of the bill (page 6, lines 34 -  
               40, and page 7, lines 1 -2) be amended to state:  Any  
               unemployed individual receiving unemployment compensation  
               benefits payable under this division, who applies for a  
               determination of eligibility for the California Training  
               Benefits Program and requires a training extension in order  
               to complete the training, is entitled to a training  
               extension on his or her unemployment compensation claim.  
             
           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Workforce Association (Sponsor)

           Opposition 
           
          California Chamber of Commerce
          California Manufacturers and Technology Association
           
          Analysis Prepared by  :    Manny Hernandez / INS. / (916)  
          319-2086.