BILL ANALYSIS Ó
SB 698
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Date of Hearing: August 25, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 698 (Lieu) - As Amended: May 31, 2011
Policy Committee: Labor and
Employment Vote: 7-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires the governor, through the California
Workforce Investment Board (CWIB), to establish standards for
certification of high-performance local workforce investment
boards (LWIBs). Specifically, this bill:
1)Requires CWIB, in consultation with LWIBs, to initiate a
stakeholder process to determine the appropriate measurable
metrics and standards for high-performance certification.
Further requires the standards to be implemented on or before
January 1, 2013 and the first certification to occur on or
before July 1, 2013, with recertification occurring at least
once every two years.
2)Requires a high-performance LWIB to meet certain requirements,
including meeting or exceeding performance goals, implementing
a strategic plan, conducting a local planning process, and
establishing a business service plan, as specified.
3)Requires the governor and the Legislature, beginning in the
2013-14 fiscal year (FY), to annually reserve a portion of the
15% discretionary Workforce Investment Act (WIA) fund to
provide incentives to high-performance LWIBs. Specifies only
high-performance LWIBs are eligible to receive this incentive
funding and prohibits any non-certified high-performance LWIB
from receiving any of the state's 15% discretionary WIA funds.
4)Requires CWIB to establish a policy for the allocation of
incentive funds for high-performance LWIBs.
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5)Voids the requirement to set-aside WIA discretionary funds for
high-performance LWIBs in years when the federal government
significantly reduces its allocation of discretionary WIA
funds below 15%, as specified.
FISCAL EFFECT
Federal fund reallocation of approximately $75 million (based on
2009-10 estimates) to provide incentive funds to
high-performance LWIBs, as specified. The amount of 15%
discretionary WIA funds allocated to the state depends on the
state's overall federal grant amount and its economic and
demographic statistics, pursuant to the federal formula. The
state's WIA allocation has declined over the years, from $630
million in 2000-01 to approximately $500 million in 2009-10.
At the federal level, Congress has taken preliminary action to
reduce states' discretionary WIA funds from 15% to 5%. This
action is not final. This bill voids the requirement to
set-aside WIA discretionary funds for high-performance LWIBs in
years when the federal government significantly reduces its
discretionary allocation, as specified.
COMMENTS
1)Background . The WIA was established by federal law in 1998
for purposes of job training and workforce development. It
requires states to form state workforce investment boards, and
requires governors to designate local workforce investment
areas and oversee local workforce investment boards to
coordinate and distribute job training funds.
In California, WIA funds are provided through the state CWIB
and 49 local boards. The state board receives 15% of the
state's WIA allocation, and the remaining 85% is allocated to
the local boards. CWIB works with the governor to provide
policy guidance on how to spend these funds. Likewise, each
board determines how they spend their funds in accordance with
the workforce needs of their areas.
WIA funds are distributed to the states based on formulas that
consider unemployment rates and other economic and demographic
factors. California and its 49 Local LWIA boards formula
funding from the U.S. Department of Labor through three
revenue streams: adult, youth, and dislocated workers. Under
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federal law, 85% of adult and youth formula funds and 60% of
dislocated worker formula funds are distributed to local
boards. Fifteen percent of adult, youth, and dislocated
worker formula funds are allocated to the state for a variety
of discretionary uses.
2)Purpose . CWIB is responsible for assisting the governor in
all the functions specified under WIA. The board encourages
collaboration among both state and local public and private
entities. This collaboration is further enhanced through its
committee structure. CWIB committee members include
representatives from local workforce investment areas
(including LWIBs), business leaders, local and state partner
entities, and key stakeholders that have an interest in
workforce issues.
CWIB is also responsible for developing a state strategic
plan. It is also required to develop criteria for the
certification/recertification of LWIBs (based on federal
statutory requirements) and the dissemination of the 15%
discretionary funding allocated to the governor.
According to the author, "Federal performance measures are
largely inadequate for ensuring that local WIA dollars provide
the quality services that will guide workers towards pathways
that actually lead to a good paying job. In addition, the
federal certification requirements don't hold ÝLWIBs]
accountable to state policy and high state standards for
system performance. It is crucial for our state to ensure
strong and comprehensive workforce investment systems that
provide quality services and effective return on investment in
terms of employment outcomes for workers hardest hit by the
recession. This means placing higher standards on investments
of California's limited federal Workforce Investment Act
dollars to ensure the best measurable outcomes.
"Several States have addressed the need to hold ÝLWIBs] to
higher standards through a process of a second-tier
certification process delineating high-performance LWIBs.
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."
This bill requires the governor, through CWIB, to establish
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standards for certification of high-performance LWIBs.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081