BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 114
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          Date of Hearing:   April 29, 2013

                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
                               Steven Bradford, Chair
                     AB 114 (Salas) - As Amended:  April 23, 2013
           
          SUBJECT  :   Proposition 39:  implementation: workforce  
          development

           SUMMARY  :   Establishes the Clean Energy and Jobs Workforce  
          Development Program (Workforce Program) within the Labor and  
          Workforce Development Agency (Labor Agency) to oversee the  
          implementation of the Proposition 39 (Prop 39) goal related to  
          job training and workforce development. Specifically,  this bill  :  
           

          1)Establishes the Workforce Program within the Labor Agency to  
            provide competitive grants to organizations with existing  
            workforce development programs to train and employ  
            disadvantaged youth, veterans, and others on energy efficiency  
            and clean energy projects, including the California  
            Conservation Corps, certified community conservation corps and  
            YouthBuild.

          2)Requires the Labor Agency to establish and implement a  
            procedure to develop training goals, identify performance  
            metrics, institute a data tracking system, including a  
            geographic distribution, and evaluate training outcomes.

          3)Specifies the Labor Agency shall administer grants to eligible  
            entities for the purposes of workforce development and job  
            training on energy efficiency and clean energy projects.

          4)States the Labor Agency shall consult with the Chancellor of  
            the California Community Colleges (Community Colleges), the  
            State Department of Education (Education), the California  
            Energy Commission (CEC), and the California Public Utilities  
            Commission (PUC) to develop a competitive process to award  
            grants to eligible entities, and evaluate and select  
            applications for grants.

          5)Requires funded projects serve low-income or unemployed  
            residents of an economically disadvantaged community.

          6)Prioritizes how grants should be awarded to eligibility  








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            entities.

          7)Requires grantees to submit a report to the Labor Agency  
            detailing the program results.

          8)Specifies annual reporting requirements for the Labor Agency.

          9)Establishes related definitions, findings and declarations.

           EXISTING LAW  :

          1)Establishes the Clean Energy Job Creation Act to create  
            good-paying energy efficiency and clean jobs in California;  
            put California to work repairing and updating schools and  
            public buildings to improve efficiency and make clean energy  
            improvements; promote new private sector job creation through  
            energy efficiency improvements in commercial and residential  
            buildings; achieve maximum job creation and energy benefits;  
            and supplement, complement, and leverage existing energy  
            efficiency and clean energy programs. (Public Resources Code  
            26201)

          2)Allocates up to $550 million to the Job Creation Fund in  
            fiscal years 2013-14, 2014-15, 2015-16, 2016-17, and 2017-18.  
            (Public Resources Code 26205)

          3)Creates the Clean Energy Job Creation Fund to improve energy  
            efficiency and expand clean energy generation, including all  
            of the following:
             a)   Public schools, Universities, and Colleges: Energy  
               efficiency retrofits and clean energy installations, along  
               with related improvements and repairs that contribute to  
               reduced operating costs and improved health and safety  
               conditions
             b)   Other public buildings and facilities: Financial and  
               technical assistance including revolving loan funds,  
               reduced interest loans, or other financial assistance for  
               cost-effective energy efficiency retrofits and clean energy  
               installations on public facilities.
             c)   Job training and workforce development: Funding to the  
               California Conservation Corps, Certified Community  
               Conservation Corps, YouthBuild, and other existing  
               workforce development programs to train and employ  
               disadvantaged youth, veterans, and others on energy  
               efficiency and clean energy projects.








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             d)   Public-private partnerships: Assistance to local  
               governments in establishing and implementing PACE programs  
               or similar financial and technical assistance for  
               cost-effective retrofits that include repayment  
               requirements. Funding shall be prioritized to maximize job  
               creation, energy savings, and geographical and economic  
               equity. Where feasible, repayment revenues shall be used to  
               create revolving loan funds or similar ongoing financial  
               assistance programs to continue job creation benefits.  
               (Public Resources Code 26205)

          4)Establishes criteria for expenditures from the funds:
             a)   Existing state and local government agencies, with  
               expertise in managing energy projects and programs shall  
               provide project selection and oversight.
             b)   All projects awarded funds are to be based on in-state  
               job creation and energy benefits for each project type.
             c)   All projects must be cost effective and may include  
               consideration of non-energy benefits, such as health and  
               safety.
             d)   All project contracts must include project  
               specifications, costs, and projected energy savings.
             e)   All projects shall be subject to audit.
             f)   Program overhead costs shall not exceed 4 percent of  
               total funding.
             g)   Funds can only be appropriated only to agencies with  
               established expertise in managing energy projects and  
               programs.
             h)   All programs must be coordinated with the CEC and the  
               California Public Utilities Commission (PUC) to avoid  
               duplication and maximize leverage of existing energy  
               efficiency and clean energy efforts.
             i)   Eligible expenditures include costs associated with  
               technical assistance, and with reducing project costs and  
               delays, such as development and implementation of processes  
               that reduce the costs of design, permitting or financing,  
               or other barriers to project completion and job creation.  
               (Public Resources Code 26206)

          5)Creates a COB comprised of three members appointed by the  
            Treasurer, three members by the Controller, and three members  
            by the Attorney General. Each appointing office shall appoint  
            one member with expertise in building construction and design,  
            financial transactions and cost-effectiveness, and expertise  
            in energy efficiency and clean energy. The CEC and PUC each  








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            serve as ex office members.

          6)The duties of the board include:
             a)   An annual review of all expenditures
             b)   And annual independent audit of the fund and a selection  
               of projects completed
             c)   A publicly available accounting of expenditures
             d)   An annual evaluation of the program to be provided to  
               the Legislature

          (Public Resources Code 26210)

           FISCAL EFFECT  :   Unknown.

           COMMENTS  :   

           1)Yes on 39  : In November 2012, California voters approved Prop  
            39 to close a corporate tax
          loophole that previously allowed multi-state businesses to  
          select one of two different methods to determine the amount of  
          taxable income associated with California and taxable by the  
          state. Prop 39 now requires these businesses to determine their  
          California taxable income using a single sales factor method  
          which is estimated to increase the state's annual corporate tax  
          revenues by as much as $1.1 billion.

          Prop 39 also specifies how a portion of this new revenue should  
          be spent. Half of the revenue generated from the measure - up to  
          $550 million - will be transferred to a new Clean Energy Job  
          Creation Fund to support projects intended to improve energy  
          efficiency and expand the use of alternative energy at public  
          schools, colleges, universities, and other public buildings, as  
          well as public-private partnerships and workforce training  
          related to energy efficiency.  Prop 39 funding can only be  
          appropriated to agencies with established expertise in managing  
          energy projects. In addition, the programs must be coordinated  
          with the CEC, and PUC in order to avoid duplication among  
          agencies, and leverage existing energy efficiency and  
          alternative energy efforts.  

          However the state's funding obligations under Prop 98 is  
          impacted by Prop 39.  In 1988, the voters passed Proposition 98,  
          modified it in 1990, which requires a minimum level of state and  
          local funding each year for school districts and community  
          colleges. This is commonly known as the Prop 98 minimum  








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          guarantee.  This assures local school districts and community  
          colleges that they will receive at least a minimal level of  
          funding from the state and local governments. The Prop 98  
          guarantee can grow with increases in state General Fund revenues  
          (including those collected from state corporate income taxes).   
          Therefore, revenues generated by Prop 39 can affect the state's  
          Prop 98 funding requirements.

          The Governor's 2013-14 Budget includes a plan to implement the  
          provisions of Prop 39, including funds allocated to energy  
          projects toward the Prop 98 minimum guarantee. The Governor also  
          proposes to designate all energy-related Prop 39 funds to K-12  
          schools ($400.5 million) and the community colleges ($49.5  
          million) for the next five years. The proposal would allocate  
          funds on a per student basis, which averages school districts  
          and community college district to receive $67 and $45 per  
          student, respectively.

          The Legislative Analyst's Office (LAO) has raised serious  
          concerns with the Governor's Prop 39 proposal. In sum, the LAO  
          argues:

                 Governor's treatment of Prop 39 revenue to count toward  
               Prop 98 purposes is questionable and a departure from the  
               state's longstanding view of how revenues are to be treated  
               for the purposes of 98.  In fact, it is contrary to what  
               the voters were told in the official voter guide as to how  
               the revenues would be treated.

                 The Governor's proposed treatment of funds, which is  
               based on the accounts the funds are deposited into, is  
               subject to manipulation.

                 The proposal excludes many eligible projects that could  
               potentially achieve a greater level of energy benefits,  
               fails to account for energy consumption differences, does  
               not sufficiently leverage existing programs and experience,  
               and excludes job training and workforce development funding  
               for disadvantaged youth, and veterans which is a primary  
               component of the Prop 39.

           1)Prop 39 equals more clean energy jobs  : Many special interests  
            tout the promise of clean
          energy jobs when negotiating energy policy. The methodology  
          accounting for clean energy (i.e. green jobs) in this state has  








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          drawn much criticism and skepticism.  Different surveys using  
          various definitions yield different results which make it  
          challenging to determine how many sustainable clean energy jobs  
          exist in the state.  For example, the range of green jobs  
          includes transit operators, farmers, architects, etc.  A 2010  
          report from California's Employment Development Department  
          (EDD), for example, found more than 263,000 people in the state  
          spent at least half of their time at work producing green  
          products or offering green services. In 2012, the U.S. Bureau of  
          Labor Statistics issued a report estimating there were 338,400  
          jobs in California offering green goods or services, accounting  
          for 2.3 percent of employment within the state.  The state's  
          policies to reduce greenhouse gas emissions, increase the  
          procurement of renewable energy, and encourage sales of electric  
          cars have turned California into a leading market for clean  
          technology products and services. 

          California is still recovering from the recent economic  
          recession. Earlier this month, EDD reported California's  
          unemployment rate decreased to 9.4 percent. AB 114 proposes the  
          Workforce Program which seeks to fulfill the Prop 39 requirement  
          that requires a portion of the funding be dedicated to job  
          training and workforce development for our state's disadvantaged  
          youth, veterans and others with an emphasis on energy efficiency  
          and clean energy projects. It appropriates 10 percent of the  
          Proposition 39 revenue for the Workforce Program for each fiscal  
          year that revenue is deposited into the Job Creation Fund.  The  
          bill targets projects that serve low-income or unemployed  
          residents of an economically disadvantaged community.  The bill  
          specifies that first priority be given to projects providing  
          training on energy efficiency and clean energy projects  
          disadvantaged youth, veterans, or persons currently in the  
          military but is not inclusive of women, pre-apprenticeship or  
          job training programs.   The author and this committee may wish  
          to specify first priority shall be given to projects providing  
          job training or pre-apprenticeship  job training  , or2) women,  
          bridge programs like California Conservation Corps, Certified  
          Community Conservation Corps, Youth-Build and other community  
          based training programs that serve disadvantaged youth, women,  
          veterans, and provide a path to apprenticeships or jobs in the  
          energy efficiency and clean energy sectors  .

          Second priority is given to projects providing upgrade training  
          on energy efficiency and clean energy projects to incumbent  
          workers enrolled in, or graduate from, state-certified  








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          apprenticeship programs. One of the objectives of Prop 39 was to  
          allocate revenues to improve energy efficiency and expand the  
          use alternative energy at public schools.  Therefore, the author  
          and this committee may which to include training projects that  
          provide energy efficiency and clean energy training to incumbent  
          school employees who are responsible for operation of school  
          facilities.   

           2)Accountability and transparency  : Although the bill does not  
            predicate how many jobs will be
          created by this new Workforce Program, it does however, require  
          the Labor Agency to implement a process to establish job goals,  
          identify performance metrics, institute a data tracking system,  
          and evaluate outcomes of the training program.  The author and  
          this committee may consider a technical amendment to revise this  
          section by as follows:  (1)   Establish and implement a procedure  
          to set explicit  job  training goals, identify performance  
          metrics, institute a data tracking system including geographic  
          distribution, and evaluate training outcomes  .

          The bill designates the Labor Agency, as lead, will administer  
          grants to eligible entities and collaborate with the Community  
          Colleges, Education, CEC and PUC for the purposes of workforce  
          development and job training on energy efficiency and clean  
          energy projects. This includes developing a competitive bid  
          process to award grants, evaluating and selecting applications  
          for grants. The bill, however, is silent on requiring the  
          collaborating agencies to design implement a Workforce Program  
          that is not duplicative of other statewide programs with similar  
          goals.  In the spring of 2009, the Energy Commission, the EDD,  
          and the CWIB entered into a collaborative effort to combine  
          American Recovery and Reinvestment Act (ARRA) funding from the  
          State Energy Program and the Workforce Investment Act Governor's  
          Discretionary 15 Percent funds to launch the Clean Energy  
          Workforce Training Program. Coupled with a dollar-for-dollar  
          match leveraged from public-private partnerships, the goal of  
          the initiative was to promote the use of industry sector  
          strategies as the framework for addressing the need for skilled  
          workers in the industries related to energy efficiency, water  
          efficiency, and renewable energy (distributed generation and  
          utility-scale).  Therefore, the author and this committee may  
          wish to amend the bill require the Labor Agency to ensure the  
          Workforce Program is complementary and not duplicative of other  
          similar statewide job training programs  . 









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           This committee may also wish to suggest an amendment that  
          requires the Labor Agency, Community Colleges, Education, PUC  
          and CEC to require an applicant requesting a grant to disclose  
          if the entity is receiving incentives for energy efficiency or  
          clean energy job training projects from other local, state and  
          federal programs  . This would not preclude the entity from  
          receiving a grant nor reduce the amount of the grant. It serves  
          primarily as an information tool for the Labor Agency.  

          After the first year of implementation of the Workforce Program,  
          the Labor agency is responsible for reviewing and assessing the  
          specified goals of the program and identifying problems and  
          barriers, as well as possible solutions to achieving those  
          goals.  The bill does not specify when or how this report should  
          be published.  The author and this committee may wish to add a  
          technical amendment requiring the report findings to be included  
          in the first annual report due July 1, 2015  .  The Workforce  
          Program also requires grantees to submit to the Labor Agency an  
          annual report, beginning July 1, 2015, on the quantity and  
          quality of jobs created, demographic and geographic profile, the  
          number of workers trained, the costs associated with training  
          the workers, the number and type of credential and certificates  
          awarded, job placement numbers, and other specified criteria.  
          Although it is imperative for the report to include the  
          pertinent figures relating to costs and job creation, it is  
          equally important for the Legislature to know how many eligible  
          projects were denied grants awards and the reasons for the  
          denial.  This will provide the Legislature with a complete view  
          of the Workforce Program's success as well as the lessons  
          learned.   The author and this committee may wish to amend the  
          bill to require the Labor Agency to include the number of grant  
          applications denied as well as the reason for the denial in its  
          annual report to the Legislature and on its Internet Website  .

           1)Job Creation  .  This bill requires grant recipients to provide  
            an annual report to the Labor
          agency on the quantity of jobs created including the wages and  
          benefits, and a number of other items.

          According to an analysis published by the Energy Resources Group  
          at the University of California, Berkeley, of 15 job creation  
          studies, job studies use a variety of ways to calculate job  
          creation. They note that it is important to define employment  
          terms because there is often confusion about types of jobs and  
          job years because referring to 'jobs' created without duration  








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          can be misleading. One-job year is full time employment for one  
          year.

          In addition, is it important to define whether the estimate of  
          jobs created refers to direct jobs, indirect jobs, or induced  
          jobs. For purposes of Clean Jobs Program jobs created is likely  
          to mean direct jobs, including those jobs created in the design,  
          construction/installation, project management, operation and  
          maintenance. Indirect jobs would be those created through  
          suppliers while induced jobs would be those created due to  
          expenditures in the general economy.

           In order to ensure consistent, comparative results, the author  
          may wish to amend the bill to define what is expected in terms  
          of how job creation is to be calculated as follows: For purposes  
          of reporting job creation, the person or entity shall report  
          both the number of direct full-time jobs created and the  
          job-years for each job created.
           
           Related legislation  :

          AB 39 (Skinner), pending in this committee, establishes a  
          program to be administered by the CEC for the distribution of  
          funds to clean energy projects undertaken by public schools,  
          with 75 percent to be awarded as grants and 25 percent to fund  
          revolving loans.

          AB 239 (Hagman) requires the Office of Public School  
          Construction, in consultation with the CEC and the PUC, to  
          expend moneys to fund a zero-interest revolving loan program and  
          a grant program for school districts to perform energy  
          efficiency retrofit or clean energy installation projects at  
          public schools.

          AB 293 (Allen), pending in this committee, requires the CEC to  
          develop a program to award funding on a competitive basis for  
          the purposes of Prop 39.

          SB 39 (De Leon, 2013) establish a competitive grant program to  
          provide assistance to K-12 school districts for the purpose of  
          energy efficiency upgrade projects and a financing program by  
          evaluating the potential to fund energy efficiency projects for  
          K-12 schools, California Community Colleges (CCC) and campuses  
          of the University of California (UC) and the California State  
          University (CSU), through matching funds, low-interest loans, or  








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          other financing methods.

          SB 64 (Corbett) designates the California Energy Commission as  
          the lead agency to establish a grant program to distribute  
          Proposition 39 funds to school districts cities and counties for  
          energy efficiency and clean energy technology in school and  
          municipal facilities.

          SB 729 (Fuller) states the intent of the Legislature to enact  
          legislation to implement the provisions of Proposition 39. 

          AB 1186 (Skinner, 2012) was vetoed by Governor Brown. The  
          Governor stated, in his veto message, "Though well intended, it  
          jumps the gun by establishing a program before we are ready."

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Alliance for Boys and Men of Color
          Briones International LLC
                                                                        California Human Development (CHD)
          California Youthbuild Coalition (CAYB)
          Center for Employment Training (CET)
          City of Antioch
          CRLA Foundation
          El Concilio of San Mateo County 
          Emerald Cities Bay Area Oakland Council
          Green For All
          Individual Letters (53 letters)
          Institute for Sustainable Economic, Educational and  
          Environmental Design (I-SEEED)
          La Cooperativa Campesina de California
          Metropolitan Education District (MetroED)
          Monica E. Wilson, Antioch City Councilmember
          PolicyLink
          Profile Research & Marketing (PRM)
          Proteus, Inc.
          Southern California Watershed Alliance
          The Greenlining Institute
          Urban Habitat
          Valley LEAP, Latino Environmental Advancement and Policy Project

           Opposition 
           








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          None on file.
           
          Analysis Prepared by  :    DaVina Flemings / U. & C. / (916)  
          319-2083