BILL ANALYSIS                                                                                                                                                                                                    ”

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          Date of Hearing:   June 12, 2013

                               Roger HernŠndez, Chair
                   SB 118 (Lieu) - As Introduced:  January 17, 2013

           SENATE VOTE  :   35-3
          SUBJECT  :   Unemployment insurance: education and workforce  
          investment systems.

           SUMMARY  :   Requires the California Workforce Investment Board  
          (CWIB) to incorporate specific principles into the state's  
          strategic plan that align the education and workforce investment  
          systems of the state to promote a well-educated and highly  
          skilled workforce to meet our workforce needs.  Specifically,  
           this bill  : 

          1)Defines "sector strategy" as methods of prioritizing  
            investments in competitive and emerging industry sectors and  
            industry clusters on the basis of the labor market and other  
            economic data indicating strategic growth potential,  
            especially with regards to jobs and income, as specified. 

          2)Requires the state to develop a California Industry Sector  
            Initiative to serve as the cornerstone of the CWIB and provide  
            a framework for the state workforce investments and support  
            for sector strategies.  

          3)Defines "industry sector" as those firms that produce similar  
            products or provide similar services using somewhat similar  
            business processes, and are closely linked by workforce needs,  
            within a regional labor market.  

          4)Defines "industry clusters" as a geographic concentration or  
            emerging concentration of independent industries with direct  
            service, supplier, and research relationships, or independent  
            industries that share common resources in a given regional  
            economy or labor market, as specified.  

          5)Requires CWIB to work collaboratively with state and local  
            partners to identify ways to eliminate statewide barriers and  
            better align and leverage federal, state, and local Workforce  
            Investment Act (WIA) funding streams, as specified.  Further  
            requires the California Workforce Investment Act (CWIA) to do  


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            the following to meet this requirement: 

             a)   Annually identify industry sectors and industry clusters  
               that have a competitive economic advantage and demonstrated  
               economic importance to the state and its regional  
               economies, as specified.  

             b)   Annually identify new dynamic emergent industry sectors  
               and industry clusters with substantial potential to  
               generate new jobs and income growth for the state and its  
               regional economies.  

             c)   Provide an annual skills gap analysis enumerating  
               occupational and skills shortages in the industry sectors  
               and clusters identified as having strategic importance to  
               the state's economy and its regional economies. 

             d)   Establish eligibility criteria for the federal WIA  
               eligible training provider list (ETPL) that effectively  
               directs training resources into training programs leading  
               to employment in high-demand, high-priority, and  
               occupations that provide economic security, as specified.   
               Further specifies criteria, to the extent feasible, measure  
               provider performance, including program completion and  
               employment placement and retention.  

          6)Specifies the division of labor for making initial and  
            subsequent eligibility determinations for the ETPL shall be  
            modeled on federal law and include input from local workforce  
            investment boards and other stakeholders, as specified.  Local  
            boards shall have the authority to place and retain training  
            providers on the list, as specified.

          7)Makes other related changes.

           EXISTING LAW  :

          1)Establishes the CWIB, comprised of members appointed by the  
            Governor and the appropriate presiding officers of each house  
            of the Legislature, and specifies that the executive director  
            of the CWIB report to the Secretary of the California Labor  
            and Workforce Development Agency.  The CWIB is responsible for  
            assisting the state in meeting the requirements of the federal  
            Workforce Investment Act of 1998, as well as assisting the  


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            Governor in the development, oversight, and continuous  
            improvement of California's workforce investment system.

          2)Requires each local workforce investment board throughout the  
            state, 49 in all, to establish at least one full service  
            one-stop career center in the local workforce investment area.  
             One-Stop career centers are required to include a specified  
            group of job search related entities and provide jobseekers  
            with integrated employment, education, training, and job  
            search services.  Employers can also be provided with access  
            to career and labor market information, job placement  
            assistance, and other such services as businesses in the  
            community may require.

           FISCAL EFFECT  :   According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.

           COMMENTS  :  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,  


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          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 CWIB has also taken steps to  
          incorporate sector strategies into their State Strategic Plan. 

           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.  

          Among its finding, the audit revealed that: 

          a)More than five years after state law required the CWIB 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  

          b)Both the Employment Development Department (EDD) and the CWIB  
            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. 

          c)Although the CWIB 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 should consider establishing  
          a due date for the CWIB to develop a strategic workforce plan,  
          and clarify the roles and responsibilities of the CWIB and the  
          EDD.  The State auditor also made recommendations to the CWIB  
          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.  


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          According to the Report, the Labor and Workforce Development  
          Agency, the CWIB, and the EDD agreed with the recommendations.   
          In 2012, the CWIB went through many changes, including the  
          introduction of new membership on its board.  The State WIB has  
          taken various steps to address the concerns raised by the audit,  
          including incorporating some of the requirements included in  
          this bill.  

          The author believes it is important to update the  
          responsibilities of the CWIB 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 concerns raised by the State Auditor's office in the 2012  
          audit of the federal WIA.  

          This bill is double-referred to Assembly Jobs and Economic  
          Development Committee upon passage out of this Committee.


          The EDGE Coalition, a coalition of business, labor, education  
          and social justice organizations, believes this bill would  
          better target limited resources and improve the effectiveness of  
          California's workforce investments.

          California Pipe Trades Council and other supporters state this  
          bill will greatly enhance and strengthen our job training  
          infrastructure and also measurably improve job prospects and  
          training outcomes for California's unemployed workers.

          The Jewish Vocational Service of San Francisco argues that with  
          the passage of this bill California's workforce system will be  
          stronger and more effective with the alignment of employer  
          demands and employee skill building.

           Prior Legislation  :

          SB 1401 (Lieu) of 2012 was nearly identical to this bill.  SB  
          1401 was subsequently held under submission in Assembly  
          Appropriations Committee. 


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          SB 698 (Lieu) Chapter 497, Statutes of 2011, required the  
          Governor to establish, through the CWIB, standards for  
          certification of high-performance local WIBs, in accordance with  
          specified criteria. 

          SB 734 (DeSaulnier) Chapter 498, Statutes of 2011, required  
          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.


          Association of California Healthcare Districts
          California Hospital Association
          California Labor Federation, AFL-CIO
          California Manufacturers & Technology Association
          California State Association of Electrical Workers
          California State Pipe Trades Council
          California Workforce Association
          Council of California Goodwill Industries
          EDGE Coalition
             Career Ladders Project for the California Community Colleges
             National Council of La Raza
             Policy Link
          Jewish Vocational Services of San Francisco
          Mayor Bob Foster, City of Long Beach
          National Skills Coalition
          Palos Verdes Peninsula Chamber of Commerce
          South Bay Association of Chambers of Commerce
          State Building and Construction Trades Council
          Torrance Area Chamber of Commerce
          Western States Council of Sheet Metal Workers

          None on file.

           Analysis Prepared by  :    Lorie Alvarez/ L. & E. / (916) 319-2091  


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