BILL ANALYSIS AB 2188 Page 1 Date of Hearing: April 28, 2010 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 2188 (Bradford) - As Amended: April 13, 2010 Policy Committee: InsuranceVote:9-2 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill requires Employment Development Department contracts with vendors for electronic payments of Unemployment Insurance (UI) and Disability Insurance (DI) benefits to meet several criteria. Requirements established in the bill include prohibitions on specified fees charged to beneficiaries, the availability of customer service, and the assurance of financial privacy. This bill requires the State Auditor to complete an evaluation of the implementation of electronic UI and DI benefit payment and report to the Legislature within 18 months of implementation. FISCAL EFFECT 1)A one-time cost in the range of $200,000 GF to the Bureau of State Audits to complete an evaluation of the implementation of electronic benefit payments. 2)An unknown federal cost pressure to the Employment Development Department (EDD) to modify a process already underway to convert to electronic payment. The EDD recently released an RFP to procure a vendor for the conversion to electronic payments. According to the sponsor of this bill, initial results of the procurement process will be available in May 2010. The current effort is funded with $1.8 million from the federal American Recovery and Reinvestment Act. COMMENTS AB 2188 Page 2 1)Rationale . This bill is sponsored by the California Labor Federation, AFL-CIO to provide specific beneficiary protections to a process already underway at EDD to convert benefits to electronic payment including direct deposit and the use of paycards for UI and DI. This bill is based on direction from the federal Department of Labor for states to modernize payment systems. The bill increases beneficiary protections when California transitions to more modern payment mechanisms and requires evaluation of the transition efficacy. 2)UI Benefits . The UI program is a federal-state program that provides weekly UI payments to eligible workers who lose jobs through no fault of their own. The UI program is financed by unemployment tax contributions paid by employers for each worker. During relatively low rates of unemployment, eligible individuals receive weekly UI payments for up to 26 weeks. Due to current high rates of unemployment the federal government has provided emergency extensions to these benefits. California, a state with one of the highest unemployment rates nationally (now over 12%) has qualified for the lengthiest extension of benefits available to states. Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081