BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 2058| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 2058 Author: Block (D), et al Amended: 6/21/10 in Senate Vote: 21 SENATE LABOR & INDUSTRIAL RELATIONS COMM : 4-1, 6/23/10 AYES: DeSaulnier, Ducheny, Leno, Yee NOES: Hollingsworth NO VOTE RECORDED: Wyland SENATE APPROPRIATIONS COMMITTEE : 7-4, 8/12/10 AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee NOES: Ashburn, Emmerson, Walters, Wyland ASSEMBLY FLOOR : 58-19, 6/3/10 - See last page for vote SUBJECT : Unemployment insurance: retraining benefits SOURCE : California Labor Federation California Workforce Association DIGEST : The bill establishes the California Training Benefits (CTB) Program within the Employment Development Department (EDD) and revise eligibility requirements for unemployment compensation benefits to specify that a person who qualifies for such benefits, extended duration benefits, or federal-state extended benefits or any federally funded unemployment compensation benefits shall be deemed to automatically be eligible for the program during a period of training or retraining. This bill CONTINUED AB 2058 Page 2 requires that a determination of eligibility for training or retraining be issued to a person if any of specified conditions apply. This bill requires that, if training or retraining is not authorized under provisions governing automatic eligibility for those benefits, a determination of potential eligibility for benefits be issued to the person if EDD finds that specified criteria apply. This bill also requires that EDD, no later than September 1, 2016, prepare and submit to the Governor and the Legislature a report evaluating the effectiveness of the California Training Benefits Program, as specified. ANALYSIS : Existing law provides for the payment of unemployment compensation benefits through the Unemployment Insurance (UI) program, administered by EDD. The UI program is a federal-state program that provides weekly unemployment insurance payments to eligible workers who lose their jobs through no fault of their own. Existing law authorizes an unemployed individual who files a claim for unemployment compensation benefits or extended duration benefits, to apply to the EDD for a determination of potential eligibility for benefits during a period of training or retraining through the California Training Benefit (CTB) program. The CTB program allows eligible UI claimants to receive their UI benefits while attending a training or retraining program approved by EDD. Claimants attending an approved training course are not required to look for work, be available for work or accept work while in training. EDD is required to inform, either verbally or in written form, all UI claimants of the retraining benefits. Under the required application process, the EDD schedules a phone interview with the applicant to determine his/her eligibility for CTB after the training has begun. The EDD is prohibited from pre-determining CTB eligibility until the individual has started to attend school or training. Existing law 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 following government programs: AB 2058 Page 3 ? Workforce Investment Act; ? Employment Training Panel; ? Trade Adjustment Assistance; or ? California Work Opportunity and Responsibility to Kids Existing law also allows the approval of other training programs, not authorized by one of the above, that are determined by EDD to be eligible. Among other things, the training must be: ? Full-time and must be completed in one year from the beginning date of CTB approval, even if the UI benefits expire before the conclusion of the training. ? Related to an occupation or skill for which there are, or are expected to be, reasonable employment opportunities in the labor market area in this state. ? If the person is a journey level union member, the training course of instruction must be job-related and necessary due to changes in technology, or necessary to retain employment or to become more competitive in obtaining employment. Existing law provides that a UI benefits recipient, 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 or her UI claim to complete the approved training. Benefits paid under a training extension are charged to the employer reserve accounts. This bill modifies the requirement for participation in the state's retraining benefits program in order to allow unemployed individuals to receive UI benefits while enrolled in a training program on a full-time basis. Specifically, this bill: 1. Establishes the CTB Program in code and declares the policy of this state to assist individuals with UI benefits if these individuals need training or AB 2058 Page 4 retraining to upgrade their skills in demand occupations to become competitive in the labor market. 2. Provides that UI benefits shall not be denied to an otherwise qualified unemployed individual because he or she is participating in eligible training or retraining. 3. Revises current eligibility requirements to specify that an unemployed individual, who qualifies for UI benefits (and subsequent state or federal extensions) and applies for the CTB program, shall be deemed to be automatically eligible for the program during a period of training or retraining. 4. Requires that a determination of automatic eligibility for benefits be issued to an unemployed individual if the director of EDD finds that: ? The training is authorized by the federal Workforce Investment Act, the state Employment Training Panel, the federal Trade Adjustment Assistance as amended, or the California Work Opportunity and Responsibility to Kids. ? The individual is a participant in training with a provider that is certified and on the state's Eligible Training Provider List. ? The individual is a journey level union member in industry-related training necessary to employment. 1. Provides that if training is not automatically authorized under the above provisions, the director of EDD shall issue a determination of potential eligibility for benefits if the director finds that specified criteria apply that includes, among others: ? That the director approved training be completed within a reasonable period of time (current law requires that it be completed within one year). AB 2058 Page 5 ? If an unemployed individual is eligible for training benefits and when federal extended UI benefits are in effect, the individual can receive benefits if he/she is enrolled in a community college or other accredited postsecondary education program with the purpose of preparing the applicant in academic or job skills that will increase employment opportunities or that leads to an industry-recognized credential or certificate designed for a specific occupation. 1. Allows EDD to inform all UI claimants of the availability of training benefits online (in addition to current laws requirement that it be provided verbally or in written form) and requires that this information be made available on the EDD's Web site in close proximity to information on UI claim forms. 2. Deletes the requirement that the unemployed individual submit written certification of participation in approved training with each claim, and instead allows EDD to prescribe the required certification through regulations. 3. Requires that EDD, not later than September 1, 2016, prepare and submit to the Governor and the Legislature a report evaluating the effectiveness of the California Training Benefits Program, as specified. Related Legislation SB 968 (Negrete McLeod) of 2010, is similar to this bill, however, SB 968 does not deem an unemployed individual automatically eligible for training benefits. SB 968 would delete the provision of existing law that requires the determination of potential eligibility and instead, specifies that an unemployed person who is able to work is eligible to receive training and retraining benefits if he/she certifies on the UI claim form that he/she is enrolled in a training program and lists a responsible person connected with the program that certifies that the person is enrolled and satisfactorily pursuing the program. This bill passed the Senate Floor (22-11) on 6/1/10. AB 2058 Page 6 FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes Local: No According to the Senate Appropriations Committee: Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Increase of training Up to $4,000*Up to $8,000 Up to $8,000 Special** benefits eligibility EDD administration Unknown, likely significant administrative Special*** savings annually * Average cost for each additional 1,000 persons, who would otherwise not be eligible under current law, to continue receiving unemployment insurance benefits while engaging in a training or retraining program. At the average weekly benefit ($304), the maximum cost to the Unemployment Fund could be $7,904,000 (1,000 new applications x 26 weeks maximum x $304) annually. When a claimant completes training before the 26 week limit the benefits terminate. ** Unemployment Fund *** Unemployment Administration Fund SUPPORT : (Verified 8/16/10) California Labor Federation (co-source) California Workforce Association (co-source) American Federation of State, County and Municipal Employees, AFL-CIO California Nurses Association/National Nurses Organizing Committee California Professional Firefighters California State Employees Association Community College League of California Council of California Goodwill Industries National Association of Workforce Boards Riverside County Workforce Investment Board AB 2058 Page 7 OPPOSITION : (Verified 8/16/10) Department of Finance California Hospital Association ARGUMENTS IN SUPPORT : According to proponents, California is facing a job loss crisis with unemployment at historic highs of 12.6 percent in May 2010, and to make matters worse, job seekers are spending longer periods of time looking for work. Over 34 percent of the unemployed have been looking for work for over 6 months, up 170.5 percent since 2008. The author believes that today's unpredictable economic climate demands that we have a modernized system capable of providing unemployed Californians with the training they need to once again contribute to our economy. In addition, proponents argue that we must break down barriers preventing laid-off workers from participating in training and skill development that makes them competitive for jobs as our economy recovers. Proponents believe that this bill will make it easier for unemployed Californians to access unemployment benefits while enrolled in training programs to upgrade job skills. This bill will also revise the Unemployment Insurance Code to conform to federal guidance. Proponents believe that automatically approving UI recipients for training programs will allow the unemployed to register and attend training without fear of an interruption or possible loss of their benefits. In addition, proponents argue that automatic enrollment into pre-approved training programs will streamline the approval process and save EDD significant resources and staff time. Overall, proponents argue that helping the unemployed access retraining will greatly benefit our local state economy, and will lure more companies to do business in our state and hire skilled and educated California workers. ARGUMENTS IN OPPOSITION : According to opponents, although they support benefits being paid timely to individuals enrolled in training with a connection to employment upon completion, they are opposed to this bill because it would expand and increase the payment of AB 2058 Page 8 training and/or retraining UI benefits. Opponents argue that already current law allows unemployed workers receiving UI benefits to continue their coverage while enrolled in specified training or retraining as approved by the Director of EDD. They feel that by establishing a general broad threshold, this bill could open the door to not only fraud and abuse, but also establishes a very different public policy. Opponents contend that in its October "Unemployment Insurance Fund Forecast," EDD projected that the state's UI Fund balance would have a deficit of $7.4 billion at the end of 2009. They believe that it is inappropriate to expand the payment of UI benefits at a time when the UI Fund is depleted and California is compelled to borrow from the Federal Government in order to pay UI benefits. Opponents argue that this is not the time to incur still higher UI costs by expanding available training benefits. Furthermore, opponents argue that this bill allows individuals that are unemployed to take this opportunity to use their unemployment benefits to make lifestyle changes beyond those required for re-employment, regardless of real employment opportunities. Opponents believe that job training benefits should be targeted to the needs of the job market and the individual, not unilaterally provided without qualification and without specific nexus to employment. ASSEMBLY FLOOR : AYES: Ammiano, Arambula, Bass, Beall, Block, Blumenfield, Bradford, Brownley, Buchanan, Caballero, Charles Calderon, Carter, Chesbro, Cook, Coto, Davis, De La Torre, De Leon, Emmerson, Eng, Evans, Feuer, Fong, Fuentes, Furutani, Galgiani, Gilmore, Hagman, Hall, Hayashi, Hernandez, Hill, Huber, Huffman, Jones, Lieu, Bonnie Lowenthal, Ma, Mendoza, Monning, Nava, Nestande, Niello, Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas, Saldana, Skinner, Solorio, Swanson, Torlakson, Torres, Torrico, Villines, Yamada, John A. Perez NOES: Adams, Anderson, Bill Berryhill, Blakeslee, Conway, DeVore, Fletcher, Fuller, Gaines, Garrick, Harkey, Jeffries, Knight, Logue, Miller, Norby, Silva, Smyth, AB 2058 Page 9 Tran NO VOTE RECORDED: Tom Berryhill, Audra Strickland, Vacancy PQ:nl 8/16/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****