BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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                                 THIRD READING


          Bill No:  AB 2058
          Author:   Block (D), et al
          Amended:  8/18/10 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





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          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 are 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.

           Senate Floor Amendments  of 8/18/10 specify that the  
          requirements of this bill shall be effective commencing  
          January 1, 2011, unless the department determines that  
          implementation by the date is not feasible, in which case  
          the department shall implement the requirements of this  
          bill no later than July 1, 2011.

           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  







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          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:

             ?    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  







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          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  
             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  







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             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).  

               ?      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.  

          9. Specifies that the requirements of this bill shall be  
          effective commencing January 1, 2011, unless the department  
          determines that implementation by the date is not feasible,  
          in which case the department shall implement the  
          requirements of this bill no later than July 1, 2011.

           Related Legislation
           







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          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.

           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) (unable to reverify)







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          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 

           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  







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          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  
          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  : 







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          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,  
            Tran
          NO VOTE RECORDED: Tom Berryhill, Audra Strickland, Vacancy


          PQ:nl  8/18/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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