BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
Ted W. Lieu, Chair
Date of Hearing: March 13, 2013 2013-2014 Regular
Session
Consultant: Alma Perez Fiscal:Yes
Urgency: No
Bill No: SB 118
Author: Lieu
As Introduced/Amended: January 17, 2013
SUBJECT
Unemployment insurance: education and workforce investment
systems
KEY ISSUES
Should the Legislature direct state workforce development
resources towards in-demand and emerging industries that will
have a significant economic impact?
Should the state conduct annual studies that identify
skills-gaps and industries with a competitive economic advantage
- in order to direct training resources towards those
occupations?
Should the Legislature require the establishment of initial and
subsequent eligibility criteria for training providers to
effectively direct training resources towards successful outcome
oriented programs?
ANALYSIS
The federal Workforce Investment Act (WIA) of 1998 provides
funding for job training and employment investment programs in
which states may participate, including work incentive and
employment training outreach programs. Following passage of the
federal WIA, the state established the California Workforce
Investment Board (CWIB) and charged the board with the
responsibility of developing a unified, strategic planning
process to coordinate various education, training, and
employment programs into an integrated workforce development
system that supports economic development. There are 49 Local
Workforce Investment Boards that plan and oversee the workforce
investment system at the local level.
Existing law requires the board, in collaboration with specified
state and local partners, and the local WIBs to develop a
strategic workforce plan, updated at least every 5 years, to
address the state's economic, demographic, and workplace needs.
Among its other responsibilities, the State Board develops
protocols to ensure that policies are developed with full public
input and discussion. The CWIB is also responsible for
establishing criteria for development of 1) the formulae to be
used for allocating funds to the local areas, 2) dissemination
of the Governor's 15% WIA discretionary funding, and 3)
certification and re-certification of local WIBs. The State
Board also provides recommendations to the Governor on policy
and vision for the statewide employment statistics system.
This Bill would additionally require the California Workforce
Investment Board to incorporate specific principles into the
state's strategic plan that align the education and workforce
investment systems of the state to the needs of the 21st century
economy as well as promote and a well-educated and highly
skilled workforce to meet our future workforce needs.
Specifically, this bill would establish six principles to guide
the state's workforce investment system that include:
1. Programs and services must be responsive to the needs of
employers, workers, and students, as specified.
2. Encourage state and local WIBs to collaborate with other
public and private institutions to adopt local and regional
training and education strategies across all delivery
systems.
3. Workforce investment programs and services shall be data
driven and evidence based when setting priorities,
investing resources, and adopting practices.
Hearing Date: March 13, 2013 SB 118
Consultant: Alma Perez Page 2
Senate Committee on Labor and Industrial Relations
4. Develop strong partnerships with the private sector,
ensuring industry involvement in needs assessment,
planning, and program evaluation.
5. Making investments outcome oriented and accountable,
measuring results through program completion, employment,
and earnings.
6. Making programs and services accessible to employers,
workers, and students, including individuals with
employment barriers, such as persons with economic,
physical, or other barriers to employment.
Additionally, this bill would also direct the State WIB to:
1. Target resources towards high-wage competitive and
emerging industry sectors that have a significant economic
impact on the state, have immediate education and workforce
development needs, and have documented career
opportunities.
2. As part of its strategic workforce plan, create a
California Industry Sector Initiative to provide a
framework for state workforce investments and support for
sector strategies.
3. By considering the expertise of local WIBs, annually
identify industry sectors with a competitive economic
advantage and annually conduct skills-gap analyses
enumerating occupational and skills shortages in the
industries identified as having strategic importance to the
state.
4. Establish, with input from local WIBs and other
stakeholders, initial and subsequent eligibility criteria
for the Workforce Investment Act Eligible Training Provider
List (ETPL) that effectively directs training resources
into training programs leading to employment in
high-demand, high-priority, and high-wage occupations, as
specified.
Hearing Date: March 13, 2013 SB 118
Consultant: Alma Perez Page 3
Senate Committee on Labor and Industrial Relations
5. Provide definitions for specific terms used in the bill,
including, "career pathways," "sector strategies,"
"industry sectors" and "economic security," among others.
COMMENTS
1. Background on the CA Workforce Investment Board:
Under federal law, Workforce Investment Act funds are
distributed to the states based on formulas that consider
unemployment rates and other economic and demographic factors.
California and its 49 Local WIBs receive WIA formula funding
from the U.S. Department of Labor through three revenue
streams - Adult, Youth, and Dislocated Workers.
The State WIB is charged with developing a unified, strategic
planning process to coordinate various education, training,
and employment programs into an integrated workforce
development system that supports economic development. As
such, the State WIB has adopted Sector Strategies as the
statewide framework for workforce development, and is working
closely with the Economic Strategy Panel, other State Agencies
and departments and its 49 local Workforce Investment Boards
to support the emergence of effective statewide and regionally
driven sector initiatives.
All members of the CWIB are appointed by the Governor and
represent the many facets of workforce development - business,
labor, public education, higher education, economic
development, youth activities, employment and training, as
well as the Legislature. Through its broad membership, the
state board encourages collaboration among both state and
local public and private entities.
2. Background on the Eligible Training Provider List (ETPL):
California's Eligible Training Provider List (ETPL) was
established in compliance with the Workforce Investment Act.
The purpose of the ETPL is to provide customer-focused
employment training for adults and dislocated workers.
Training providers who are eligible to receive Individual
Hearing Date: March 13, 2013 SB 118
Consultant: Alma Perez Page 4
Senate Committee on Labor and Industrial Relations
Training Accounts (ITAs) through WIA Title I-B funds are
listed on the ETPL. California's statewide list of qualified
training providers offers a wide range of educational
programs, including classroom, correspondence, Internet,
broadcast, and apprenticeship programs.
Existing law requires the establishment of two separate
procedures for the ETPL: initial eligibility and subsequent
eligibility. California has been granted a waiver of the
requirement for subsequent eligibility specified in WIA
Section 122(c)(5) and Title 20 of the Code of Federal
Regulations (CFR) Section 663.530. This current federal
waiver allows providers and programs to remain on the State
ETPL indefinitely as long as their initial eligibility is
still valid.
According to an Employment Development Department (EDD)
information notice to the workforce development community, it
was notated that the current ETPL contained more than 5,000
program/providers that never had a WIA client referred to
them, nor had the programs been validated for at least two
years. In an effort to meet the terms of the waiver
pertaining to subsequent eligibility, the Workforce Services
Division had to deactivate all existing ETPL programs that
were more than two years old (i.e. initial approval date prior
to January 1, 2010) and did not have a single WIA client
referred to them during their tenure on the ETPL. (WSIN11-45,
March 27, 2012). However, if the local board determines that
an unused program/provider should be reactivated and remain on
the ETPL, a verification must be done at the local level to
ensure that the data on the inactive ETPL is valid and that
this program/provider is a not a duplication of an existing
program/provider on the ETPL.
3. California State Auditor Report on Federal Workforce
Investment Act:
A March 2012 report, "Federal Workforce Investment Act: More
Effective State Planning and Oversight Is Necessary to Better
Help California's Job Seekers Find Employment," evaluated the
state's administration of WIA funding.
Hearing Date: March 13, 2013 SB 118
Consultant: Alma Perez Page 5
Senate Committee on Labor and Industrial Relations
Among its finding, the audit revealed that:
� More than five years after state law required the
State WIB to develop a strategic workforce plan to serve
as a framework for public policy, fiscal investment, and
state labor programs to address workforce needs; it has
failed to do so and thus, has not provided sufficient
guidance to its workforce development partners.
� Both EDD and the state board can do more to assess
the quality of services - neither has a mechanism to
evaluate whether an appropriate match exists between a
participant's skills, education, and experience and the
employment the participant attains.
� Although the state board is building partnerships
with various entities to coordinate workforce investment
planning, it has done little to ensure that the one-stop
delivery system does not duplicate services for program
participants.
The State auditor made several recommendations in the report,
including one that the Legislature consider establishing a due
date for the state board to develop a strategic workforce
plan, and clarify the roles and responsibilities of the state
board and EDD. The State auditor also made recommendations to
the state board aimed at developing, overseeing, and
continuously improving California's workforce investment
system by collaborating with state and local workforce
partners and clearly defining terminology and identifying
state-specific performance measures.
According to the report, the Labor Agency, the state board,
and EDD agreed with the recommendations. In 2012, the State
WIB went through many changes, including the introduction of
new membership on its board. The State WIB has taken several
steps to address the concerns raised by the audit, including
incorporating some of the requirements included in this bill.
4. Sector Strategies and Need for this bill?
Hearing Date: March 13, 2013 SB 118
Consultant: Alma Perez Page 6
Senate Committee on Labor and Industrial Relations
There is broad consensus that better educated and trained
workers are more productive and more successful in labor
markets. However, targeting these efforts towards the jobs
sectors that are best positioned to make gains if investments
are made is essential and requires the use of current economic
and labor market data to determine what those sectors are.
"Sector strategies" are policy initiatives designed to promote
the economic growth and development of a state's competitive
industries using strategic workforce investments to boost
labor productivity. The strategic focus of sectors is on
prioritizing investments where overall economic returns are
likely to be highest, specifically in those sectors that will
generate significant gains in terms of jobs and income or in
industries facing a shortage of skilled workers.
When done successfully, sector strategies can lead to 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) Sector strategies have been adopted in several states,
including Pennsylvania, Michigan, Washington and
Massachusetts.
In California, we have taken initial steps to adopt sector
strategies by directing portion of discretionary funds to job
training programs for nurses and workers in allied health
fields. Additionally, the state board has incorporated sector
strategies into the State Strategic Plan. This bill is a
re-introduction of a bill that died in the Assembly
Appropriations Committee last year (SB 1401). The author
believes it is important to update the responsibilities of the
state board to address our changing economy and encourage a
more strategic approach to training for future workforce
needs. Furthermore, this bill would help address some of the
Hearing Date: March 13, 2013 SB 118
Consultant: Alma Perez Page 7
Senate Committee on Labor and Industrial Relations
concerns raised by the State Auditor's office in the 2012
audit of the federal WIA.
5. Proponent Arguments :
According to the author, workers in California are facing the
toughest jobs crisis in over 50 years and, unfortunately, at a
time when workers, families and communities need more support,
states are facing unprecedented budget challenges. The author
argues that now more than ever, it is crucial that every
dollar of workforce funds is invested in high quality
employment services that connect workers with good paying
jobs.
Proponents argue that despite the state's high unemployment
rate, job openings in key industries are going unfilled
because employers cannot find workers with the necessary
credentials and training for these jobs. They argue that this
workforce shortage has the potential of becoming a full blown
crisis as baby boomers continue to retire in increasingly high
numbers. In addition, many of these openings are
"middle-skill" jobs, which require education and training past
high school. According to proponents, 47 percent of jobs in
California's labor market are middle-skill, but only 38
percent of Californians likely have the credentials and
training for these jobs. This bill takes important steps to
close this skills gap by providing new principles to guide the
work of the State WIB.
6. Opponent Arguments :
None received.
7. Prior Legislation :
SB 1401 (Lieu) of 2012: Died in Assembly Appropriations
Committee
This bill (SB 118) is a re-introduction of last year's SB 1401
which died in the Assembly.
SB 698 (Lieu) of 2011: Chaptered
SB 698 requires the Governor to establish, through the
Hearing Date: March 13, 2013 SB 118
Consultant: Alma Perez Page 8
Senate Committee on Labor and Industrial Relations
California Workforce Investment Board, standards for
certification of high-performance local WIBs, in accordance
with specified criteria.
SB 734 (DeSaulnier) of 2011: Chaptered
SB 734 requires local WIBs to spend a certain percentage of
available WIA funds (25% now and increased to 30% in 2016) on
workforce training programs. A Local WIB that does not meet
the expenditure must provide the EDD with a corrective action
plan.
AB 3018 (Nunez) of 2008: Chaptered
AB 3018 enacted the California Green Collar Jobs Act of 2008,
which created the Green Collar Jobs Council within the State
WIB to perform specified tasks related to addressing the green
economy workforce needs of the state.
SUPPORT
California Hospital Association
California Labor Federation
California Manufacturers & Technology Association (CMTA)
California Workforce Association
City of Long Beach
State Building and construction Trades Council of California
OPPOSITION
None received
Hearing Date: March 13, 2013 SB 118
Consultant: Alma Perez Page 9
Senate Committee on Labor and Industrial Relations