BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 285|
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THIRD READING
Bill No: AB 285
Author: Brown (D), et al.
Amended: 7/2/13 in Senate
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEVELOP. COMM. : 10-0, 6/3/13
AYES: Price, Emmerson, Block, Corbett, Galgiani, Hernandez,
Hill, Padilla, Wyland, Yee
SENATE LABOR & INDUSTRIAL RELATIONS COMMITTEE : 4-0, 6/12/13
AYES: Monning, Leno, Padilla, Yee
NO VOTE RECORDED: Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 76-0, 4/25/13 (Consent) - See last page for
vote
SUBJECT : Microenterprises: economic development
SOURCE : California Association for Micro Enterprise
Opportunity
DIGEST : This bill revises the definition of microenterprise,
and adds to, and recasts, provisions requiring the California
Workforce Investment Board (CWIB) to develop guidelines for
targeting resources to high-wage industry sectors and
implementing entrepreneurial and self-employment training
programs.
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Senate Floor Amendments of 7/2/13 (1) double-joint the
overlapping provisions of this bill with SB 118 (Lieu), and (2)
add a coauthor.
ANALYSIS :
Existing law:
1.Defines "microenterprise" as a sole proprietorship,
partnership, or corporation that has fewer than five
employees, including the owner, is part time or full time, and
generally lacks access to conventional loans, equity, or other
banking services.
2.States that microenterprises are distinct from small
businesses or microbusinesses and include, but are not limited
to, businesses that provide child development services,
businesses that provide landscaping services, businesses that
provide building maintenance, businesses that provide personal
and business services, businesses that provide specialty food
products, and home-based businesses; and defines
"microenterprise development provider" as a nonprofit or
public agency that provides self-employment training,
technical assistance, and access to microloans to individuals
seeking to become self-employed or to expand their current
business.
3.States findings and declarations about the importance of a
highly skilled workforce in necessary for California to remain
prosperous and globally competitive.
4.Requires the CWIB to assist the Governor in the following:
A. Promoting the development of a well-educated and highly
skilled workforce.
B. Developing the State Workforce Investment Plan.
C. Developing guidelines for the continuous improvement and
operation of the workforce investment system, including
developing policies to guide the one-stop system, providing
technical assistance for the continuous improvement of the
one-stop system, recommending state investments in the
one-stop system, targeting resources to high-wage industry
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sectors that are either high-growth sectors or critical to
California's economy, or both.
D. Developing and continuously improving the statewide
workforce investment system as delivered via the one-stop
delivery system, including developing linkages in order to
assure coordination and nonduplication among workforce
programs and activities, reviewing local workforce
investment plans, and providing guidance to ensure services
reflect the needs of high-wage industry sectors.
E. Commenting, at least once annually, on the measures
taken pursuant to the Carl D. Perkins Vocational and
Applied Technology Education Act Amendments of 1990.
F. Designating local workforce investment areas (WIAs)
within the state based on information derived from
consultations with the Governor, consultations with the
chief local elected officials, and consideration of
comments received through the public comment process, as
described in Section 112(b)(9) of the federal Workforce
Investment Act of 1998 (WIA).
G. Developing and modifying allocation formulas, as
necessary, for the distribution of funds for adult
employment and training activities, for youth activities to
local WIAs, and dislocated worker employment and training
activities, as permitted by federal law.
H. Coordinating the development and continuous improvement
of comprehensive state performance measures, including
state adjusted levels of performance, to assess the
effectiveness of the workforce investment activities in the
state.
I. Preparing the annual report to the United States
Secretary of Labor.
J. Recommending policy for the development of the statewide
employment statistics system, including workforce and
economic data, as described in Section 15 of Title 29 of
the United States Code, and using, to the fullest extent
possible, the Employment Development Department's existing
labor market information systems.
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AA. Recommending strategies to the Governor for strategic
training investments of the Governor's 15% discretionary
funds.
BB. Developing and recommending waivers, in conjunction with
local workforce investment boards (WIBs), to the Governor
as provided for in the federal WIA.
CC. Recommending policy to the Governor for the use of the
25% rapid response funds, as authorized under the federal
WIA.
DD. Developing an application to the United States
Department of Labor for an incentive grant under Section
9273 of Title 20 of the United States Code.
1.Provides that the WIB, in collaboration with state and local
partners, including the Chancellor of the California Community
Colleges, the Department of Education, other appropriate state
agencies, and local WIBs, to develop a strategic workforce
plan to serve as a framework for the development of public
policy, fiscal investment, and operation of all state labor
exchange, workforce education, and training programs to
address the state's economic, demographic, and workforce
needs. States that the strategic workforce plan shall also
serve as the framework for the single state plan required by
the federal WIA, and be updated at least every five years.
This bill:
1.Provides that a limited liability company is one of the types
of entities that can be defined as a "microenterprise."
2.Requires a microenterprise to have five or fewer employees,
including the owner who may be employed part time or full
time.
3.Makes technical and clarifying changes.
4.Provides that information derived from consultations with the
CWIB, instead of the Governor, shall be used when designating
local WIAs within the state.
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5.Requires CWIB to assist the Governor in recommending policy
and providing technical assistance on entrepreneurial training
opportunities that could be made available through programs of
local WIBs.
6.Double-joints the overlapping provisions of this bill with SB
118 (Lieu).
Background
Microenterprises . The term "microenterprise" has come into
common usage in the economic development community over the past
decade to describe the type of self-employment that can become a
principle way to help people exit poverty and accrue wealth.
The federal Small Business Administration's (SBA) definition
generally refers to a business that will have fewer than five
employees, requires less than $35,000 in startup capital and
which does not have access to the traditional commercial banking
sector. Existing California law distinguishes microenterprises
from small businesses in that they include, but are not limited
to, businesses that provide child development services,
landscaping services, building maintenance, personal and
business services, specialty food products, and home-based
businesses. This bill removes that distinction.
Microenterprise development is the process of providing
training, technical assistance and microloans to the smallest
business owners. Microenterprise development programs are
generally operated by nonprofit organizations that target
individuals who experience obstacles to successful business
growth such as a limited access to credit, lack of business
management experience and language barriers. Financial support
for microenterprise development organizations is a complex mix
of funding from federal, state and local government, plus
private dollars from foundations, corporations, and faith-based
organizations.
Many of the non-profit organizations around the state that serve
microbusinesses have a critical need to build their capacity to
serve potential entrepreneurs, particularly in rural areas.
Capacity building generally includes projects such as:
acquisition of computer hardware, software and technology skills
to better assess and track microentrepreneurial activities, and
evaluate and report microenterprise progress and program
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outcomes; professional development of trainers and business
consultants; development of outreach materials to communicate
with special populations; development of websites to facilitate
microentrepreneur access to regional business services; computer
upgrades and software to ensure effective micro loan tracking;
and, staff expansions for program delivery/evaluation,
information management and fund development.
In July 2006, the Assembly Committee on Jobs, Economic
Development, and the Economy (JEDE) held an informational
hearing on microenterprise development: Microenterprise: The
Engine of California Regional Economies. This bill seeks to
implement one of the primary recommendations from that hearing.
According to JEDE, small businesses form the core of
California's $1.7 trillion economy, comprising more than 98% of
all businesses, and are responsible for employing more than 50%
of all workers in the state. Microenterprises, meaning
businesses with less than five employees, represent
approximately 93% of all businesses in the state, or
approximately 3.2 million of all businesses.
Microenterprises create jobs, generate taxes, and revitalize
communities. In 2003, these businesses employed over 19% of all
workers in California and generated $238 billion in taxable
revenues. During the nation's economic downturn from 1999 to
2003, microenterprises created 318,183 new jobs, or 77% of all
employment growth, while larger businesses with more than 50
employees lost over 444,000 jobs. From 2000 to 2001,
microenterprises created 62,731 jobs in the state, accounting
for nearly 64% of all new employment growth. In this most
recent recession the trend continued, with the number of
non-employer firms increasing from 2.6 million firms reporting
$137 billion in revenues for 2008, to 2.8 million firms
reporting $138 billion in revenues for 2010, based on federal
tax returns. In the post-recession economy, these businesses
are expected to become increasingly important due to their
ability to be more flexible and better suited to meet niche
market needs.
Common types of microenterprises include engineering, computer
system design, housekeeping, construction, landscaping and
personnel services. Many microenterprises start as part-time or
home-based businesses. Due to their small size and limited
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business experience, many owners of microenterprises have
difficulty meeting the traditional credit and collateral
requirements of mainstream financial institutions. A typical
microenterprise start-up will be financed through the
entrepreneur's personal assets, including savings accounts, home
equity loans and credit cards.
Microenterprise development is a model for providing services,
technical assistance and financing to new, prospective and
existing owners of microenterprises.
WIBs and local WIAs . The WIA is administered by 49 WIBs in
California. WIBs are administered by a variety of agencies,
including county and city governments, non-profits and joint
power authorities. Within county and city government, WIBs are
placed in a variety of organizational structures. Some WIBs are
housed in welfare agencies, economic development departments and
still others are their own agencies or separate non-profit
organizations.
The CWIB provides guidance to local WIBs and development of a
unified, strategic plan to coordinate various education,
training, and employment programs that result in an integrated
workforce development system that supports economic development.
This plan is required to be updated at least every five years
in order to address the state's changing economic, demographic,
and workplace needs.
The designated grant recipient and administrator for WIA funding
is decided by a local partnership between the chief local
elected official (CLEO) and the WIB, whose members the CLEO
appoints. They then select One Stop Career Center operators and
training providers to serve the local community. WIB membership
is comprised of private sector representatives from key local
industries, organized labor, education, economic development,
community based organizations and other community stakeholders.
The majority of members are from the private sector and the
chair is always a business representative. WIA emphasizes that
the local WIB and CLEO have discretion over the strategy and
decision making for their WIA funding so they can best respond
to the needs of business and residents of their community.
WIBs have oversight of local WIAs which roughly correspond to
labor market areas, but also operate from historical precedent.
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The majority of WIAs are single counties. The rest are composed
of large cities, multiple counties that form a consortium under
a joint powers agreement or consortia of multiple cities. There
are seven WIBs in the County of Los Angeles, including the
County of Los Angeles, the City of Los Angeles, and five
consortia of cities. In Northern California, there are two WIBs
that have jurisdiction over 15 counties. In all parts of the
state, WIBs work together as formal or informal regional
collaboratives ensuring that they are addressing regional
workforce issues that may cross geo-political boundaries.
As innovation is key to California's economy, the state engages
in workforce development activities to ensure there are workers
who have the skills to innovate, change and avail themselves of
ongoing training opportunities. No one institution alone is
tasked with this responsibility. In fact, the job of providing
education, training, skills upgrades and support for
California's workers is spread over a vast array of agencies,
organizations and institutions, both public and private. Many
California WIBs have become a significant catalyst for community
conversations and dialogue among these players, adding value in
aligning resources and policy to better respond to changing
workforce needs, and to the skills crisis that exists in almost
every community.
Every WIB has its own charter, organization and unique context,
but they all share a set of central roles. Each WIB provides
oversight for the WIA program and acts as a catalyst to provide
seamless services among various workforce programs and provides
community leadership around workforce issues.
Comments
According to the author's office, there are currently many job
training programs, but limited entrepreneurial training for
established businesses. By requiring CWIB to develop guidelines
to ensure that entrepreneurial training and technical assistance
are available through local WIBs, a currently underserved group
of prospective entrepreneurs, as well as unemployed individuals,
will have better access to quality training and the opportunity
to learn skills needed to pursue self-employment. The author's
office states that changing the definition of a microenterprise
will help these firms gain access to conventional loans, equity,
or other banking services, and states that there are over three
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million microenterprises in California that employ over four
million people and that continuing the growth of California's
smallest businesses is essential to solving the state's
unemployment problem.
According to information provided by the bill's sponsor,
microentrepreneurs who have gone through training programs and
receive business technical assistance and entrepreneurial
training have an 80% success rate and create an average of two
jobs, in addition to their own, over three to five years.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 6/25/13)
California Association for Micro Enterprise Opportunity (source)
3CORE
AnewAmerica Community Corporation
Central Valley Business Incubator - Small Business Development
Center
Coalition of California Welfare Rights Organizations, Inc.
Community Action Partnership
Renaissance Entrepreneurship Center
ARGUMENTS IN SUPPORT : The California Association for Micro
Enterprise Opportunity and Central Valley Business Incubator
note that the U.S. Department of Labor released directives
encouraging WIBs to integrate entrepreneurial training as a
vital workforce development strategy, but that this training has
not been incorporated into the workforce system in any
significant way. Supporters believe that this bill furthers the
goal of small business, particularly microbusinesses, by being
an integral part of economic and workforce strategies.
ASSEMBLY FLOOR : 76-0, 4/25/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Conway,
Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Maienschein, Mansoor,
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Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nestande, Olsen, Pan, Patterson, Perea, V. Manuel P�rez,
Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting,
Torres, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams,
Yamada, John A. P�rez
NO VOTE RECORDED: Cooley, Lowenthal, Nazarian, Vacancy
MW:nl 7/3/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
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