BILL ANALYSIS Ó Senate Committee on Labor and Industrial Relations Ted W. Lieu, Chair Date of Hearing: April 13, 2011 20011-2012 Regular Session Consultant: Alma Perez Fiscal:Yes Urgency: No Bill No: SB 698 Author: Lieu Version: As amended April 6, 2011 SUBJECT Workforce development: high-performance boards KEY ISSUE Should the Legislature establish "high-performing" standards for Local Workforce Investment Boards (Local WIBs) to meet in order to be re-certified by the state every two years? Should the Legislature specify that local WIBs that are not adhering to the "high-performing" standards will not be eligible to receive a portion of the states 15% discretionary funds? PURPOSE To establish standards for certification of high-performance Local Workforce Investment Boards to ensure accountability and consistency throughout the state's 49 local WIBs. ANALYSIS The federal Workforce Investment Act (WIA) of 1998 provides for activities and programs for job training and employment investment in which states may participate, including work incentive and employment training outreach programs. Following passage of the federal WIA, the state established the California Workforce Investment Board (CWIB) and charged the board with the responsibility of developing a unified, strategic planning process to coordinate various education, training, and employment programs into an integrated workforce development system that supports economic development. Existing law requires the local chief elected officials in a local workforce development area to form, pursuant to specified guidelines, a Local Workforce Investment Board (LWIB) to plan and oversee the workforce investment system at the local level. There are currently 49 local WIBs in the state. Each local workforce area also created one or more One-Stop Centers, which provide access to career information, counseling, funding for education, training and supportive services. Existing law further requires the Governor to certify one local board for each local area in the state once every 2 years. This certification is granted as long as the local WIB meets minimum federal requirements for performance and board composition. Under the federal law , WIA funds are distributed to the states based on formulas that consider unemployment rates and other economic and demographic factors. California and its 49 LWIBs receive WIA formula funding from the U.S. Department of Labor through three revenue streams - Adult, Youth, and Dislocated Workers. Under federal law, 85 percent of Adult and Youth formula funds, and 60 percent of Dislocated Worker formula funds are distributed to LWIBs. Fifteen percent of Adult, Youth, and Dislocated Worker formula funds (15% discretionary funds) are allocated to the state for a variety of discretionary uses. This Bill would require the Governor to establish, through the California Workforce Investment Board, standards for certification of high-performance Local Workforce Investment Boards in accordance with specified criteria. Specifically, this bill would: § Direct the CWIB, in consultation with representatives from local WIBs, to initiate a stakeholder process to determine the appropriate standards for high-performance certification, to occur once every two years. § Require that the standards be implemented on or before January 1, 2012, with the first certification of high-performance boards to occur on or before January 1, Hearing Date: April 13, 2011 SB 698 Consultant: Alma Perez Page 2 Senate Committee on Labor and Industrial Relations 2013. § Provide that in order to meet the standards for certification a local board shall, among other things, do the following: o Meet or exceed negotiated performance goals, as specified; o Develop and implement local policies and a local strategic plan that, among other things, is separate from the local plan required under the federal WIA and is consistent with the CWIB strategic plan. o Demonstrate that the local planning process involves key stakeholders, including the major employers and industry groups in the relevant regional economy and organized labor. o Demonstrate that the local planning process considers the entire workforce training pipeline, including partners in K-12 education, career technical education, the community college system and other postsecondary institutions. o Demonstrate investment in initiatives and training programs that promote skills development and career ladders relevant to the needs of each workforce area. o Establish a business service plan that integrates local business involvement with workforce initiatives. The plan shall include, among other things, efforts to partner with business to identify training and educational barriers to attract jobs, existing skills gaps and potential emerging industries. In addition, the plan shall include an electronic system for both business and job seekers to communicate about job opportunities. § Require the Governor to establish the High-Performance Workforce Investment Board Fund and require the CWIB, in consultation with the Governor, to allocate a portion of the federal WIAs 15% discretionary fund to this fund. o Only a certified high-performance board shall be eligible to receive money from the High-Performance Workforce Investment Board Fund or any portion of the state's 15% discretionary fund. Hearing Date: April 13, 2011 SB 698 Consultant: Alma Perez Page 3 Senate Committee on Labor and Industrial Relations COMMENTS 1. Need for this bill? The California Workforce Investment Board is responsible for assisting the Governor in the development, oversight, and continuous improvement of California's workforce investment system. California receives between $400 and $500 million in federal WIA dollars annually. And in 2008/09, the state received an additional $488.6 million from the American Recovery and Reinvestment Act of 2009. The majority of these funds (85%) are formula allocated to the 49 local WIBs which set policy for how funds are invested locally and provide oversight of employment services delivered. The rest of the funds (15%) are disseminated at the Governor's discretion. California's 49 local WIBs set local policies and allocate resources to respond to local markets to help struggling unemployed and underemployed workers get and retain good jobs. Currently, local WIBs are certified by the Governor every two years, but this certification process merely requires them to meet minimum federal requirements. Although many local WIBs provide high quality services, the system does not adhere to any coherent state standards, leaving workers and businesses to face widely varying levels of quality and effectiveness across the state's 49 local WIB jurisdictions. This bill would require the Governor to establish, through the CWIB, standards for certification of high-performance local WIBs, in accordance with specified criteria. In addition, this bill would also require the Governor to establish the High-Performance Workforce Investment Board Fund and would require the CWIB, in consultation with the Governor, to allocate specified federal discretionary funds to high-performance local workforce investment boards. 2. Similar efforts in other states : Hearing Date: April 13, 2011 SB 698 Consultant: Alma Perez Page 4 Senate Committee on Labor and Industrial Relations Federal law provides states significant latitude to adjust WIA and align it with a broader economic vision. This allows Governors the opportunity to hold local WIBs accountable to additional performance requirements and statewide standards consistent with building a high performing and integrated workforce development system. Several States have addressed the need to hold local WIBs to higher standards through a process of a second-tier certification process delineating high-performance WIBs. Those states that have implemented, or are in the process of implementing, this certification process includes Kentucky, Missouri, North Carolina, South Carolina, Michigan, and Pennsylvania. 3. Proponent Arguments : According to the author, workers in California are experiencing a recession like never before that has left us with a shattered job market and a record setting unemployment rate. Nonetheless, proponents argue that employers will soon need a skilled workforce to replace the retiring baby boomer generation and meet the demands of new emerging industries. According to the author and proponents, now more than ever, it is crucial that every dollar of federal workforce funds that our state receives is invested in high quality employment services that connect workers to good paying jobs. According to proponents, federal law provides Governors the authority to certify local WIBs every two years, however, this certification must be granted as long as local WIBs meet minimum federal requirements for performance and board composition. Proponents argue that federal performance measures are largely inadequate for ensuring that local WIA dollars provide quality service that lead workers to good jobs. In addition, proponents argue that the performance of California's local WIBs has been inconsistent throughout the state and lacks a unified goal. Proponent believe that this bill will raise the bar statewide for performance and quality outcomes for California's federally funded workforce investment system by outlining a high performance standard that the local WIBs can strive for in order to be eligible for additional funding. In addition, proponents argue that it is essential that there be a direct Hearing Date: April 13, 2011 SB 698 Consultant: Alma Perez Page 5 Senate Committee on Labor and Industrial Relations correlation between the training workers receive and the jobs available. According to proponents, this bill will create an incentive by which local WIBs can strive to meet a high performance standard which meets federal performance criteria, develops stronger local workforce initiatives, and establishes a business service plan that together can create a unified goal to provide quality services that connect workers to good paying jobs. 4. Opponent Arguments : None received. SUPPORT California Labor Federation - Co-Sponsor California Manufacturers & Technology Association - Co-Sponsor State Building and Constructions Trades Council - Co-Sponsor OPPOSITION None received Hearing Date: April 13, 2011 SB 698 Consultant: Alma Perez Page 6 Senate Committee on Labor and Industrial Relations