BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1402 
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          Date of Hearing:   July 3, 2012 

          ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
                               V. Manuel Pérez, Chair
                     SB 1402 (Lieu) - As Amended:  June 26, 2012

           SENATE VOTE  :   38-0
           
          SUBJECT  :   California Community Colleges Economic and Workforce 
          Development Program

           SUMMARY  :   Recasts and revises the California Community Colleges 
          Economic and Workforce Development Program (EWD Program) to more 
          closely align with economic and workforce best practices and 
          extends the program's sunset date from January 1, 2013 to 
          January 1, 2018.  Specifically,  this bill  :   

          1)Requires the EWD Program to operate according to a new set of 
            principles:
             a)   Be responsive to the needs of employers, workers, and 
               students;
             b)   Collaborate with other public institutions, aligning 
               resources to foster cooperation across workforce education 
               and service delivery systems, and building well-articulated 
               career pathways;
             c)   Make data driven and evidence based decisions, investing 
               resources and adopting practices on the basis of what 
               works;
             d)   Develop strong partnerships with the private sector, 
               ensuring industry involvement in needs assessment, 
               planning, and program evaluation;
             e)   Be outcome oriented and accountable, measuring results 
               for program participants, including students, employers, 
               and workers; and
             f)   Be accessible to employers, workers, and students who 
               may benefit from its operation.

          2)Revises the mission of the EWD Program to:
             a)   Advance California's economic growth and global 
               competitiveness;
             b)   Advance California's economic and jobs recovery and 
               sustain economic growth through labor market-aligned 
               education workforce training services, and sector 
               strategies;
             c)   Use labor market information to advise on the workforce 








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               needs of the state's competitive and emerging industry 
               sectors and industry clusters;
             d)   Provide technical assistance and logistical, technical, 
               and communications infrastructure support that results in 
               alignment between the career technical education programs 
               of the California Community College (CCC) system and the 
               needs of California's competitive and emerging industry 
               sectors and industry clusters;
             e)   Collaborate and coordinate investment with other state, 
               regional, or local agencies involved in education and 
               workforce training;  
             f)   Identify, acquire, and leverage community college and 
               other financial and in-kind public and private resources to 
               support economic and workforce development and career 
               technical education programs; and 
             g)   Work with representatives of business, labor, and 
               professional trade associations on how to assist incumbent 
               workers in the state's competitive and emerging industry 
               sectors.  

            This proposed mission removes the more prescribed set of 
            strategic priority areas (advanced transportation, 
            biotechnology, small business, etc.) and, instead directs the 
            program to remain more current and base its priorities on 
            current labor market analysis and appropriate sector 
            strategies for dominant and emerging industries.   

          3)Continues to authorize the CCC Board of Governors to award 
            project funds and competitive grants to districts for 
            leadership in accomplishing the mission and goals of the 
            program, provided that funds are appropriated for this purpose 
            in the annual Budget Act.  The advisory committee is also 
            retained as a key advisor with an expanded program assessment 
            role.  Funding under AB 1402, however, is required to be more 
            specifically aligned to the ever changing market conditions.

          4)Maintains a similar grant evaluation process, with additional 
            requirements for ensuring that the grant is relevant to the 
            current market needs, relevant to a region's competitive and 
            emerging industry sectors, industry clusters or skills 
            shortages in the state or regional economies.  The bill 
            provides for additional assessment of projected outcomes 
            including the following:

             a)   For grants providing direct services to an employer, a 








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               group of employers, or an industry sector or industry 
               cluster, an assessment of the purported beneficial impacts 
               of the grant on the relevant businesses, measuring such 
               things as, increased profitability, increased labor 
               productivity, reductions in worker injuries, and employer 
               cost savings resulting from improved business processes.

             b)   For grants involving direct education and training 
               services provided to workers and students, an assessment of 
               the educational and training goals of the grant, the 
               projected numbers of students and workers served and the 
               projected rates of course and program completion or 
               transfer-readiness, the projected rate of skills attainment 
               for certificates and degrees, and the projected wages and 
               rate of employment placement for those entering the labor 
               market.

             c)   For technical assistance and logistical support 
               projects, a concrete enumeration of the ways the project 
               will collaborate with the Chancellor's Office to advance 
               sector strategies, regional development, accountability 
               based on performance data, and the adoption of effective 
               workforce and economic development practices.

          5)Maintains the requirement for the Chancellor's Office to 
            provide system-wide oversight and evaluation of the grants and 
            adds a requirement to evaluate whether grantees achieved their 
            stated objectives.  Unsuccessful grantees may be terminated by 
            the Chancellor, pursuant to new direct authority in SB 1402.  

          6) Updates and adds definitions to reflect current practices 
            including, but not limited to:  
             a)   Adding the definition of "career pathways" and "career 
               ladders" or "career lattices" to mean an identified series 
               of positions, work experiences, or educational benchmarks 
               or credentials that offer occupational and financial 
               advancement within a specific career field or related field 
               over time;  

             b)   Updating the definition of "industry cluster" to mean a 
               group of employers closely linked by a common product or 
               services, workforce needs, similar technologies, and supply 
               chains in a given regional economy or labor market; 

             c)   Removing the definition of "living wage" and adding a 








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               definition of "economic security" to mean that a worker 
               earns a wage sufficient to adequately support a family and 
               to, over time, save money for emergency expenses and 
               adequate retirement income;

             d)   Defining sector strategies to mean prioritizing 
               investments in competitive and emerging industry sectors 
               and industry clusters on the basis of labor market and 
               other economic data that indicate strategic growth 
               potential.  Sector strategies focus workforce investments 
               toward programs that are likely to lead to high-wage jobs 
               or to entry-level jobs with well-articulated career 
               pathways into high-wage jobs.  

               Sector strategies may be implemented using articulated 
               career pathways and a system of stackable credentials. 
               Sector strategies often target underserved communities, 
               disconnected youth, incumbent workers, and recently 
               separated military veterans. 

          7)Retains the California Community Colleges Business Resource 
            Assistance and Innovation Network Trust Fund in the State 
            Treasury.

          8)Updates the role of the Economic and Workforce Development 
            Program Centers to focus on activities that contribute to 
            workforce skill development common to competitive and emerging 
            industry sectors and clusters within a region.   

          9)Adds specificity to the CCC's annual reporting requirements on 
            the EWD Program including, but not limited to, measuring (a) 
            program completion, including certification, degree and 
            program study rates; (b) employment placement or measurable 
            educational progression; and (c) a quantitative assessment of 
            impacts on business receiving services under the program.

          10)Re-establishes the requirement to have an independent 
            evaluation on the effectiveness of the EWD Program.   The new 
            date of the report is set at January 1, 2015 with findings to 
            the Legislature by no later than March 1, 2016.

          11)Repeals the provisions of the bill on January 1, 2018.
           
          EXISTING LAW  : 









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          1)Establishes the EWD Program within the CCC System, for the 
            purpose of advancing California's economic growth and global 
            competitiveness through high quality education and services 
            focusing on continuous workforce improvement, technology 
            deployment, and business development, consistent with the 
            current needs of the state's regional economies.

          2)Establishes the Governor's Office of Business and Economic 
            Development (GO-Biz), which serves as the lead entity for 
            economic strategy and the marketing of California on issues 
            relating to business development, private sector investment, 
            and economic growth.  In this capacity, GO-Biz recommends to 
            the Governor and the Legislature: (a) new state policies, 
            programs, and actions to advance statewide economic goals and 
            respond to emerging economic problems and opportunities, and 
            (b) ensures that all state policies and programs conform to 
            the adopted state economic and business development goals.
           
          FISCAL EFFECT  :   According to the Senate Appropriations 
          Committee analysis, implementation of the measure would result 
          in annual expenditures of $22.9 to $46.7 million.  The bill 
          language specifies that funding is subject to appropriation in 
          the Budget Act, which is consistent with the terms of the 
          current EWD Program.

           COMMENTS  :   

           1)Purpose of the Bill :  According to the author's office, the 
            revised program would improve the functions of the EWD Program 
            in three primary ways: (a) Making the program more nimble and 
            better able to respond to changing economic conditions; (b) 
            Making the program more accountable for investments and 
            performance by strengthening the evaluation framework for EWD 
            grants and programs; and (c) Encouraging better integration 
            and communication of EWD programs with CTE programs.  

           2)The EWD Program  :  The purpose of the EWD Program is to advance 
            California's economic growth and global competitiveness 
            through education and services that contribute to continuous 
            workforce improvement, technology deployment, and business 
            development and are consistent with the current needs of the 
            state's regional economies.  Local colleges and business 
            partners form consortia to identify regional workforce needs 
            and priorities, providing assistance to small businesses in 
            the region through local Economic and Workforce Development 








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            Centers and train workers.  The partnerships enable colleges 
            to develop curricula that address the training needs of local 
            industry.  

          Codified in 1991, the EWD Program formalized earlier efforts to 
            coordinate statewide technical training and programs for small 
            businesses and economic development.  SB 1809 (Polanco, 
            Chapter 1057, Statues of 1996) further clarified the 
            legislative intent of the EWD Program, defined regional 
            planning, priority setting and coordination and added 
            accountability and audit requirements.  The 1996 legislation 
            also made economic development and continuous workforce 
            improvement a primary mission of the CCC.  

          The 2010-11 EWD Annual Report shows that community colleges play 
            an integral role in helping California build its workforce 
            despite budget cuts and stagnant economic growth.  The report 
            noted that during the reporting period, 929 people received a 
            job through an EWD program, while an additional 9,475 people 
            were able to retain their jobs through EWD services.  A 
            one-time return-on-investment report conducted by Time 
            Structures, Inc. found that from 2002-2009 the EWD Program 
            assisted an average of 41,000 businesses, 107,000 students and 
            trainees, and placed 4,300 individuals in jobs.  The report 
            revealed that it cost the state of California an average of 
            $589 to train each worker in a highly concentrated one-time 
            course.  Each newly trained worker earned a higher wage, 
            subsequently paying an additional $450 in state and local 
            taxes over the next three years.  The report indicated that 
            the workers' higher tax payments returned almost 80% of the 
            state's costs for the training.  

           3)Regional Economies and Sector Strategies  :  California's $1.9 
            trillion economy is not only one of the largest in the world, 
            but it is also one of the most economically diverse.  The 
            state's economy is comprised of a variety of industry 
            clusters.  While many of these clusters are linked through 
            extended economic value chains across the state and world, in 
            general, industry clusters operate within their own regional 
            micro-economies.  

            Economic developers like to use sector strategies to better 
            understand the interconnections between related businesses, 
            workforce capabilities, and available infrastructure.  When 
            done successfully, sector strategies at the regional level 








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            provide mutually beneficial outcomes for business, labor, and 
            the state by increasing competitiveness and growth, improving 
            worker employability and income, and reducing the need for 
            social services while also bolstering government revenues 
            generated by both business and workers.  According to a 2010 
            study of three sector focused training programs in Wisconsin, 
            Massachusetts, and New York, it was found that participants in 
            the relevant training programs earned more and were employed 
            at higher rates than were members of the study's control group 
            (Tuning Into Local Labor Markets: Findings from the Sectoral 
            Employment Impact Study, Public/Private Ventures, 2010).

            SB 1402 and its companion measure, SB 1401 (Lieu), are 
            proposing a significant statutory shift in state workforce and 
            economic development policy by broadly applying a mandate to 
            assess, prioritize and allocate funding based on sector 
            strategies in competitive and emerging industry sectors.  
            While regional and local workforce practices have been 
            transitioning at an uneven pace, these measures, if enacted, 
            could be the catalyst for bringing into alignment federal 
            workforce training dollars, state education funding, and 
            regional economic and workforce development activities.

           4)Strengthening Workforce Linkages  :  As California slowly moves 
            out of the recession, it is clear that the next economy will 
            require new and more agile thinking about resources and 
            deployment of human, physical, and financial capital.  
            Economic researchers have identified several key emerging 
            trends, including that nations and states will become less 
            significant and that regions will be the more dominant drivers 
            of economic growth.  

            Job growth will be driven by smaller size companies that are 
            able to connect and access expanding global markets through 
            the deployment of new technologies that can cost effectively 
            increase productivity and meet changing market demands.  Due 
            to scarcity and rising prices, the emerging economy will also 
            need to be powered by lower carbon fuels.   All these new 
            market realities will need to be accomplished with a workforce 
            that is substantially smaller, more diverse, and historically 
            underinvested.

            This new workplace environment will require integrated, 
            data-driven strategies within well-articulated career pathways 
            between K-12 and the state's higher education systems.  SB 








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            1402 currently specifies several specific operational tools 
            for codifying these linkages including the use of stackable 
            certificate programs within industry sector strategies.  The 
            Committee may wish to add the use of articulation agreements 
            between K-12 and the EWD Program.  

            From the state's perspective, articulation agreements would 
            support many dominant and emerging industry sectors by 
            providing a dependable and qualified workforce pipeline.  High 
            school students also benefit from articulation agreements by 
            ensuring they are receiving relevant and transferable 
            educational experiences.  Further, articulation agreements 
            could possibly increase the number of students who choose to 
            go on to higher education as the next step in their personal 
            career path.  

           5)GO-Biz and EWD Program  :  Existing law specifies GO-Biz as the 
            lead state government entity relative to state policy and 
            actions related to economic development ÝAB 29 (John A. Pérez) 
            Chapter 475, Statutes of 2011].  The decision to make GO-Biz 
            lead was based on the assessment and recommendations from the 
            Little Hoover Commission and Legislative hearings and 
            discussions with stakeholder groups since the previous lead 
            entity, the Technology, Trade and Commerce Agency, was 
            eliminated in 2003.  

            Among its key duties, GO-Biz is tasked with making 
            recommendations to the Governor and the Legislature on state 
            policies, programs, and actions for the purpose of progressing 
            statewide economic goals and responding to emerging economic 
            problems and opportunities.  GO-Biz is also responsible for 
            coordinating the development of federal grants administered or 
            directly expended by state government to ensure that statewide 
            economic goals and objectives are advanced.

            In approving the reauthorization of the EWD Program, the 
            Committee may want clarify the role of the EWD Program, 
            relative to GO-Biz.  During the current authorization period, 
            there were several situations where the EDW Program appeared 
            to be exerting "independent" authority relative to the state's 
            overall economic development framework.  In one instance, the 
            EWD Program requested the federal Small Business 
            Administration transfer administrative authority for 
            California's portion of the federal Small Business Development 
            Center Program.  In another example, EWD requested an 








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            amendment to AB 1137 (V. Manuel Pérez), relating to an 
            international trade marketing and finance program, that would 
            codify EWDs authority to independently apply for California's 
            share of federal trade funds.

            Language to address this potential issue should clarify that 
            in re-authorizing the EWD Program that the Legislature is not 
            approving a restructuring of the state's economic development 
            hierarchy.  GO-Biz is the state's lead economic development 
            entity and seeking federal funding in instances where there 
            can only be one state applicant, should only be done with the 
            specific approval of the Governor. 

           6)Related Legislation  : Below is a list of related legislation.

              a)   SB 1070 (Steinberg) Career Technical Education Pathways  : 
                This bill extends the sunset date for the Career Technical 
               Education Pathways Initiative component of the current EWD 
               Program.   Status:  The bill is pending in Assembly Higher 
               Education Committee.

              b)   SB 1401 (Lieu) Workforce Investment Boards and Sector 
               Strategies  :  This bill establishes additional requirements 
               of the California Workforce Investment Board (CWIB) by 
               emphasizing the use of sector strategies.  Status:  This 
               bill is pending in the Assembly Committee on Jobs, Economic 
               Development and the Economy.

              c)   SB 1550 (Wright) Career Technical Education  : This bill 
               requires the CCC Chancellor's office to establish a 
               voluntary pilot program involving up to five CCC districts 
               for the purposes of authorizing a district to establish and 
               maintain an extension program offering career and workforce 
               training credit courses, as defined, at fee levels that 
               cover the actual cost of maintaining those courses, and 
               requires the Legislative Analyst's Office (LAO) to report 
               to the Legislature on this pilot program by June 30, 2016.  
               Status:  The bill is pending in Assembly Committee on 
               Higher Education.

           7)Double Referral  : This bill is double referred to the Assembly 
            Committee on Higher Education (HE) and the Assembly Committee 
            on Jobs, Economic Development, and the Economy (JEDE).  The 
            order of the hearings has been switched to accommodate 
            legislative deadlines.  Should SB 1402 pass JEDE, it will be 








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            referred to HE for further policy consideration.

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           

          Aerospace Dynamics International, Inc. 
          Barstow Community College 
          Bayless Engineering & Manufacturing 
          Biotechnology Initiative of the California Community Colleges 
          Board of Governors of the California Community Colleges 
          Boston Scientific 
          Butte-Glenn Community College District 
          California Asian Pacific Chamber of Commerce 
          California Association for Local Economic Development 
          California Chamber of Commerce 
          California Community College Association of Occupational 
                                                    Education 
          California Hospital Association 
          California Manufacturers & Technology Association 
          California State Association of Electrical Workers 
          California Workforce Association 
          Cerritos Community College District 
          Chaffey College Community College District
          City of Santa Clarita 
          Coachella Valley Economic Partnership
          Coast Community College District 
          College of the Canyons 
          College of the Desert
          Community College League of California 
          Council of Goodwill Industries 
          Cuesta College-Business & Entrepreneurship Center
          Envision Education 
          Faculty Association of California Community Colleges 
          John A. Cascamo 
          Los Angeles/Orange County Biotechnology Center 
          Los Rios Community College District 
          Mendocino College Nursing Program 
          Montclair Hospital Medical Center
          Mt. San Antonio College Center for Excellence 
          National Electrical Contractors Association - California 
          Chapters 
          North Orange County Community College District 
          Ohlone Community College District








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          Palomar Pomerado Health 
          Powder Coating Plus 
          Prosperity Research Institute 
          Saddleback College 
          San Bernardino Community College District 
          Santa Clarita Community College District
          Santa Clarita Valley Economic Development Corporation 
          Shasta-Tehama-Trinity Joint Community College District 
          Sierra College
          Silicon Valley Leadership Group
          South Orange County Community College District 
          Southern California Biotechnology Center at San Diego Miramar 
          College 
          Southern California Regional Transit Training Consortium  
          State Building and Construction Trades Council of California 
          State Center Community College District 
          Valley Industry Association of Santa Clarita
          Ventura County Community College District 
          Wright Engineering, Inc. 
          Yosemite Community College District
           
          Opposition 
           
          None received


           Analysis Prepared by  :    Toni Symonds / J., E.D. & E. / (916) 
          319-2090