BILL ANALYSIS Ó
AB 391
Page 1
Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 391 (Pan) - As Introduced: February 14, 2011
Policy Committee: EducationVote:5-1
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill, beginning on or before July 1, 2012, requires the
Employment Development Department (EDD) to provide in-person
unemployment insurance (UI) benefits assistance in at least one
comprehensive one-stop career center in each workforce
investment area (WIA).
Specifically, this bill:
1)Requires EDD to ensure that customer service personnel at the
career centers are fully trained regarding the policy, laws,
and regulations governing eligibility, claims processing, and
procedures for the payment of UI benefits.
2)Requires printed information regarding eligibility and the
process for filing claims for unemployment compensation
benefits to be available at the one-stop career centers.
3)Requires services established in this bill to be funded within
existing EDD resources and requires EDD to reallocate
resources for these purposes, as specified.
4)Sunsets the requirements of this bill on December 31, 2015.
FISCAL EFFECT
1)EDD indicates 250 staff are needed to support the requirements
of the bill in 50 comprehensive one-stop career centers
statewide. This equals five staff at each center. Likewise,
an estimated 20 program managers would be needed to supervise
the staff at the career centers. According to EDD the annual
staff cost is $27 million in federal funding EDD receives.
Additional one-time costs of several million dollars to
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provide training and space in one-stop centers to accommodate
added services.
2)According to EDD, there would be one-time costs of
approximately $1.8 million (federal) for equipment and
operating expenses, such as furniture and computers.
3)This bill requires EDD to use existing resources to implement
the one-stop career centers, as specified. If this measure
were implemented, major resources would be redirected away
from EDD's core workload regarding the timely processing of
electronic claims, responding to inquiries by phone or online,
and performing adjudication work. The time to process claims
electronically is substantially less than in-person processing
of claims. An additional workload backlog and delay in claims
payment would therefore occur, exacerbating current queuing
problems.
4)According to the March 2011 state audit report, in January
2009, the state's UI fund became insolvent. This required the
UI benefits program to rely on federal funds to pay benefits.
Specifically, the report states: "The department projects
that, absent corrective action from the Legislature, the
Unemployment Fund deficit could rise to $13.4 billion by the
end of 2011. If the state fails to pay back these loans by
November 2011, the federal government may incrementally
increase the state's federal unemployment tax rate, which
could potentially cost employers in California $325 million in
additional taxes in 2012. Moreover, if the state does not
repay the loan and fails to pay the interest by September
2011, employers in the state could eventually face $6 billion
in higher federal unemployment taxes annually."
COMMENTS
1)Purpose . According to the March 2011 state audit report,
Employment Development Department:Its Unemployment Program Has
Struggled to Effectively Serve California's Unemployed in the
Face of Significant Workload and Fiscal Challenges, EDD's
initial UI claim workload increased by 148% from July 2007 to
June 2010. The report also details the state's inability to
meet performance goals established by the federal government.
According to the audit, "Although the department showed
improvement in measures related to the quality of its work,
its performance in the timeliness measures for promptly
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issuing initial unemployment payments and making nonmonetary
determinations of eligibility for benefits had dropped far
below the performance levels the federal labor department
considers acceptable (acceptable levels) by performance year
2010 before rebounding in the first reporting quarter of 2011,
which includes April through June 2010 as the department began
to benefit from increased staffing."
This bill, sponsored by SEIU Local 1000, requires EDD to
provide in-person UI benefits assistance in at least one
comprehensive one-stop career center in each workforce
investment area.
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 (approximately 12%) has qualified for the
lengthiest extension of benefits available to states, up to 99
weeks.
3)State Auditor report on UI program . As referenced above, the
state auditor completed a report in March 2011 regarding EDD's
problems in administering the UI program. The report details
EDD's efforts to address these problems by increasing staff
and allowing this staff to work overtime. The audit reveals
these efforts lead to significant more UI benefit claims
processed. Specifically, the report details: "the number of
employment program representatives on staff who process claims
and make eligibility decisions peaked in August 2009 at 2,232,
which was about 1,000 higher than the number in July 2007. In
addition to increasing its staff, the department also
increased the average overtime worked by its program
representatives from 4.5 hours per employee in July 2007 to a
peak of about 36 hours in March 2009. We found that these
efforts substantially increased the volume of initial claims
it was able to process, from about 173,000 in July 2007 to
nearly 429,000 in June 2010..."
The audit also details EDD's effort to develop a new phone
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system (operational in December 2010 in six primary call
centers) to mitigate the consistent complaint that individuals
seeking UI benefit information are not able to get through for
information. The report reveals the new phone system has
added features such as Tele-Cert, which allows claimants to
certify benefits. The state auditor performed a capacity
analysis of the phone system, which "suggests the new system
should be able to handle a substantially higher volume of
calls, allowing most callers to access the voice response
system. However, both our capacity analysis and very early
data from the new phone system suggest that access to agents
may continue to be a challenge."
4)Previous legislation .
a) AB 1827 (Arambula), similar to this measure, was held on
the Senate Appropriations Committee's suspense file in
August 2010.
b) AB 857 (Galgiani), similar to this measure, was held on
the Senate Appropriations Committee's suspense file in
August 2009.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081