BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 734
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          SENATE THIRD READING
          SB 734 (DeSaulnier)
          As Amended  September 2, 2011
          Majority vote 

           SENATE VOTE  :Vote not relevant  
           
           TRANSPORTATION                  ECONOMIC DEVELOPMENT            
               (vote not relevant)           (vote not relevant)
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          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |     |                          |
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           APPROPRIATIONS                  APPROPRIATIONS      12-2        
               (vote not relevant)
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          |     |                          |Ayes:|Fuentes, Blumenfield,     |
          |     |                          |     |Bradford, Charles         |
          |     |                          |     |Calderon, Campos, Davis,  |
          |     |                          |     |Gatto, Hall, Hill, Lara,  |
          |     |                          |     |Mitchell, Nielsen         |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |Nays:|Harkey, Donnelly          |
          |     |                          |     |                          |
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           SUMMARY  :  Imposes requirements related to the expenditure of 
          Workforce Investment Act (WIA) funds on job training programs.  
          Specifically,  this bill  :

          1)Requires (beginning program year 2012) that at least 25% of 
            federal Workforce Investment Act (WIA) funds provided to local 
            workforce investment boards (WIBs) be spent on workforce 
            training programs.

          2)Increases this percentage to 30% beginning in program year 
            2016.

          3)Specifies that the expenditures that shall count towards the 
            above requirement shall include only training services as 
            defined under specified federal law, including specified 
            activities.









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          4)Specifies that local WIBs may receive a credit of up to 10% of 
            their base allocations for public education and training funds 
            and private resources from industry and joint labor-management 
            trusts that are leveraged for training services, as specified. 
             This credit may be applied toward the aforementioned training 
            thresholds.

          5)Specifies that leveraged funds applied toward the credit shall 
            only include the following:

             a)   Federal Pell Grants;

             b)   Programs authorized under WIA;

             c)   Trade adjustment assistance;

             d)   Federal Department of Labor National Emergency Grants;

             e)   Match funds from employers, industry and industry 
               associations;

             f)   Match funds from joint labor-management trusts; and, 

             g)   Employment Training Panel grants.

          6)Specifies that credit for leveraged funds shall only be given 
            if the local WIB keeps records of all training expenditures it 
            chooses to apply towards the credit.  Training expenditures 
            may only be applied to the credit if the relevant training 
            costs can be independently verified by the Employment 
            Development Department (EDD) and training participants must be 
            co-enrolled in the WIA performance monitoring system.

          7)Specifies that the use of leveraged funds to partially meet 
            the training requirements is the prerogative of the local WIB.

          8)Requires EDD to monitor compliance, as specified, and requires 
            a local WIB that does not meet these requirements to submit a 
            corrective action plan to EDD.

           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee, this measure will result in local WIA fund 
          reallocation of $45.5 million to $56.8 million to meet the 
          requirements of the bill.  In addition, to the extent local WIBs 








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          choose to use leveraged funds to meet the minimum training 
          percentages specified in this bill, EDD may incur significant 
          administrative costs, likely in the hundreds of thousands.

           COMMENTS  :  The main question raised by this proposal is whether 
          the Legislature should establish a statutory minimum percentage 
          of WIA funds to be spent on workforce training programs.  
          According to the author, with declining state revenues and 
          pressure on public resources it is crucial that every dollar of 
          federal workforce funds are invested in high quality employment 
          services that connect workers to good jobs. The author argues 
          that despite the need for targeted and effective training, 
          Employment Development Department data has shown that local WIBs 
          spend very little of our local WIA funds on skills training.  
          According to the author, on average, local WIBs in California 
          invest just 20% of their federal funds on training services and 
          a third spend less than 11% on training, while many invest 
          nothing.

          According to the author, federal law provides states with 
          significant latitude to adjust WIA and align it with a broader 
          economic vision, something of which California has failed to 
          take advantage.  Proponents argue that a vast majority of funds 
          are going to support relatively less effective short-term "core" 
          services (such as job search assistance) provided through a 
          costly network of nearly 150 comprehensive One-Stop centers. The 
          author and proponents believe that this bill is the first step 
          in re-evaluating how these dollars are spent and ensuring that 
          more money is invested in training programs that are effective 
          and align with a state plan for economic growth.  In addition, 
          proponents argue that the objective behind this legislation is 
          not to displace anyone that might be currently providing job 
          services through the One-Stop Centers, but instead redirecting 
          our overall efforts toward more effective training programs that 
          result in permanent jobs for all displaced workers.  

          This bill is similar to SB 776 (DeSaulnier).  Opponents of SB 
          776 argued that if passed, it would close career centers 
          throughout the state, return the public workforce system to an 
          antiquated model of funding streams, and limit much needed 
          services to job seekers and businesses during this recession.  
          Opponents argued that SB 776 would interfere with core tenants 
          of the federal legislation, namely, local control and individual 
          empowerment.  SB 776 failed passage in the Assembly 








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          Appropriations Committee.

          According to the sponsors, the language of this bill reflects a 
          compromise reached with community-based workforce partners.  
          This bill differs from SB 776 primarily in that it allows a 
          credit of up to 10% for leveraged funds, as specified.  With the 
          recent amendments, this bill is supported by groups including 
          Jewish Vocational Services of Los Angeles, Chicana Service 
          Action Center, the Southeast L.A.-Watts Worksource Center, the 
          Watts Labor Community Action Committee and the Council of 
          California Goodwill Industries. 


           Analysis Prepared by  :    Ben Ebbink / L. & E. / (916) 319-2091 


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