BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 118| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 118 Author: Lieu (D), et al. Amended: 8/13/13 Vote: 21 SENATE LABOR & INDUSTRIAL RELATIONS COMMITTEE : 4-0, 3/13/13 AYES: Lieu, Wyland, Leno, Lara NO VOTE RECORDED: Padilla SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 SENATE FLOOR : 35-3, 4/22/13 AYES: Beall, Berryhill, Block, Calderon, Cannella, Corbett, Correa, De León, DeSaulnier, Emmerson, Evans, Gaines, Galgiani, Hancock, Hernandez, Hill, Hueso, Huff, Jackson, Lara, Leno, Lieu, Liu, Monning, Nielsen, Padilla, Pavley, Price, Roth, Steinberg, Walters, Wolk, Wright, Wyland, Yee NOES: Anderson, Fuller, Knight NO VOTE RECORDED: Vacancy, Vacancy ASSEMBLY FLOOR : 76-1, 8/26/13 - See last page for vote SUBJECT : Unemployment insurance: education and workforce investment system SOURCE : Author DIGEST : This bill requires the California Workforce Investment Board (CWIB) to incorporate specific principles into CONTINUED SB 118 Page 2 the state's strategic plan that align the education and workforce investment systems of the state to the needs of the 21st century economy and promotes a well-educated and highly skilled workforce to meet the future workforce needs. Assembly Amendments add coauthors, add language to prevent chaptering out issues with AB 285 (Brown) of the current legislative session, and make technical and clarifying changes. 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 CWIB and charged the CWIB 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 CWIB, in collaboration with specified state and local partners, and the local WIBs to develop a strategic workforce plan, updated at least every five years, to address the state's economic, demographic, and workplace needs. Among its other responsibilities, the CWIB 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 formula 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 CWIB also provides recommendations to the Governor on policy and vision for the statewide employment statistics system. This bill requires the CWIB 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 and promotes a well-educated and highly skilled workforce to meet the future workforce needs. This bill: CONTINUED SB 118 Page 3 1. Establishes six principles to guide the state's workforce investment system that include: A. Programs and services must be responsive to the needs of employers, workers, and students, as specified. B. 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. C. Workforce investment programs and services shall be data driven and evidence based when setting priorities, investing resources, and adopting practices. D. Develop strong partnerships with the private sector, ensuring industry involvement in needs assessment, planning, and program evaluation. E. Making investments outcome oriented and accountable, measuring results through program completion, employment, and earnings. F. Making programs and services accessible to employers, self-employed, workers, and students, including individuals with employment barriers, such as persons with economic, physical, or other barriers to employment. 2. Directs the CWIB to: A. 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. B. 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. C. By considering the expertise of local WIBs, annually identify industry sectors with a competitive economic CONTINUED SB 118 Page 4 advantage and annually conduct skills-gap analyses enumerating occupational and skills shortages in the industries identified as having strategic importance to the state. D. Establish, with input from local WIBs and other stakeholders, initial and subsequent eligibility criteria for the WIA 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. 3. Provide definitions for specific terms used in the bill, including, "career pathways," "sector strategies," "industry sectors" and "economic security," among others. 4. Adds language to prevent chaptering out issues with AB 285 (Brown) of the current legislative session. Comments Eligible Training Provider List : California's ETPL was established in compliance with the WIA. 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 Training Accounts (ITAs) through CWIA 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 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, CONTINUED SB 118 Page 5 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. 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. California State Auditor Report on Federal WIA : 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: 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 partners. Both 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. 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 consider establishing a due CONTINUED SB 118 Page 6 date for the CWIB to develop a strategic workforce plan, and clarify the roles and responsibilities of the CWIB and 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. According to the report, the Labor 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. CWIB has taken several steps to address the concerns raised by the audit, including incorporating some of the requirements included in this bill. Prior Legislation : SB 698 (Lieu, Chapter 497, Statutes of 2011) requires the Governor to establish, through the California WIB, standards for certification of high-performance local WIBs, in accordance with specified criteria. SB 734 (DeSaulnier, Chapter 498, Statutes of 2011) 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, Chapter 312, Statutes of 2007) enacts the California Green Collar Jobs Act of 2008, which creates the Green Collar Jobs Council within the CWIB to perform specified tasks related to addressing the green economy workforce needs of the state. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No According to the Assembly Appropriations Committee, there will be minor, absorbable administrative costs to the Employment Development Department (EDD) to implement this bill. According to EDD, it currently collects the labor market data necessary to implement the bill's requirements. SUPPORT : (Verified 8/26/13) CONTINUED SB 118 Page 7 Association of California Healthcare Districts California Hospital Association California Labor Federation California Manufacturers & Technology Association California State Association of Electrical Workers California State Pipe Trades Council California Workforce Association City of Long Beach Community College League of California Council of California Goodwill Industries EDGE Coalition Jewish Vocational Services of San Francisco National Skills Coalition South Bay Association of Chambers of Commerce State Building and Construction Trades Council of California Torrance Chamber of Commerce Western States Council of Sheet Metal Workers ARGUMENTS IN SUPPORT : According to the author's office, 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's office 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% of jobs in California's labor market are middle-skill, but only 38% 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. ASSEMBLY FLOOR : 76-1, 8/26/13 CONTINUED SB 118 Page 8 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Holden, Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor, Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A. Pérez NOES: Donnelly NO VOTE RECORDED: Jones, Vacancy, Vacancy PQ:d 8/27/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED