BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 436 (Solorio)
Hearing Date: 7/11/2011 Amended: 5/27/2011
Consultant: Bob Franzoia Policy Vote: L&IR 5-0
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BILL SUMMARY: AB 436 would amend the definition of "public
works" to also mean the construction or maintenance of renewable
energy generation capacity, located on property wholly or
partially owned by a school district or community college
district or on public property specifically to serve a school
district or community college district.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Amendment of definitionUp to $30 Up to $60 Up to $60 Special*
of public works
* Labor Enforcement and Compliance Fund
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STAFF COMMENTS: The prevailing wage rate is the basic hourly
rate paid on public works projects to a majority of workers
engaged in a particular craft, classification or type of work
within the locality and in the nearest labor market area (if a
majority of such workers are paid at a single rate). If there
is no single rate paid to a majority, then the single or modal
rate being paid to the greater number of workers is prevailing.
Prevailing wages must be paid to all workers employed on a
public works project when the public works project is over
$1,000. If an awarding body elects to initiate and enforce a
labor compliance program, that has been approved by the Director
of the Department of Industrial Relations, for every public
works project under the authority of the awarding body,
prevailing wages are not required to be paid for any public
works project of $25,000 or less when the project is for
construction work, or for any public works project of $15,000 or
less when the project is for alteration, demolition, repair, or
AB 436 (Solorio)
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maintenance work. These rates are established and issued by the
Division of Labor Statistics and Research and enforced by the
Division of Labor Standards Enforcement (DSLE) within the
Department of Industrial Relations.
Energy development companies may partner with private investment
companies and secure energy development agreements with school
and community college districts. The school or community
college district permits the partnership to build an energy
project, usually a solar photovoltaic system, and may contract
to purchase the electricity. According to this bill, such
projects would be determined to be public works and require the
payment of prevailing wages to workers on the project.
At this time, there is little information on the potential
workload resulting from an increase in requests for public works
coverage determinations. For purposes of
providing a cost reference, staff notes there are approximately
1,000 school districts and 72 community college districts. If
ten percent of these districts permitted such energy projects
annually, there would be 107 projects that may result in a
prevailing wage enforcement workload increase to the DLSE. This
analysis assumes that if half of the projects required DLSE
coverage determinations, that workload would be require up to
one half time Deputy Labor Commissioner III ($6,107 mid-range
monthly).
Deputy Labor Commissioners I and II have monthly salary ranges
of $4,357 to $5,361 and $5,027 to $6,186 respectively.
As part of the state government trailer bill Chapter 12 /2009
(AB 12x4, Evans), the Director of Industrial Relations would be
authorized to levy a separate surcharge upon all employers, as
defined, for the purposes of deposit in the newly created Labor
Enforcement and Compliance Fund. Chapter 12 requires that the
total amount of the surcharges be allocated between employers in
proportion to payroll respectively paid in the most recent year
for which payroll information is available. The surcharge
levied shall not exceed $37,000,000 in the 2009-10, adjusted for
as appropriate to reconcile any over/under assessments from
previous fiscal years, and shall not be adjusted each year
thereafter by more than the state-local government deflator.
The cap of $37,000,000 represents the amount expended by the
DSLE in 2008-09 for the enforcement of wage and hour violations.
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With this cap, the DLSE will be forced to begin prioritizing
enforcement activities if enforcement duties and costs exceed
the cap as adjusted by the deflator. For 2011-12, the deflator
is projected to be 0.022 percent for an increase of $814,000 in
additional enforcement funding.
There appears to be question whether bill creates a reimbursable
state mandated local program on school districts and community
college districts. In response, staff notes the January 30,
2009, decision of the Commission on State Mandates, In Re Test
Claims on Labor Code Sections 1720, 1720.2, et seq., Grossmont
Union High School District, Tax Claim No. 01-TC-28. The
Grossmont decision found that minor reimbursable costs may
exist, depending on the size of the school district and cost of
the project, due to construction-related Education Code
mandates. That and other cases, however, consistently have held
that when a public agency makes an underlying discretionary
decision that triggers costs under the Labor Code, no state
mandate is imposed. Nothing in this bill mandates the
construction or maintenance of renewable energy facilities on
school property.