BILL ANALYSIS Ó SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS Senator Tony Mendoza, Chair 2015 - 2016 Regular Bill No: AB 509 Hearing Date: July 13, 2015 ----------------------------------------------------------------- |Author: |Perea | |-----------+-----------------------------------------------------| |Version: |June 23, 2015 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Alma Perez-Schwab | | | | ----------------------------------------------------------------- Subject: California Private Postsecondary Education Act of 2009: exemptions. KEY ISSUES Should the Legislature exempt pre-apprenticeship programs offered on behalf of one or more Division of Apprenticeship Standards approved labor-management apprenticeship program from oversight by the Bureau of Private Postsecondary Education if they meet specified criteria? Should Local Workforce Investment Boards be able to place these pre-apprenticeship programs on the Eligible Training Provider List - thereby allowing the use of federal workforce investment funds to pay for these training programs and help meet their minimum training requirements? ANALYSIS Existing law establishes the CA Private Postsecondary Education Act (Act) of 2009, and requires the Bureau of Private Postsecondary Education (Bureau) within the Department of Consumer Affairs to, among other things, review, investigate and approve private postsecondary institutions, programs and courses AB 509 (Perea) Page 2 of ? of instruction and authorizes the Bureau to take formal actions against an institution/school to ensure compliance with the Act and even seek closure of an institution/school if determined necessary. (Education Code §94800 et seq.) Existing law exempts the following, among others, from oversight by the Bureau: a) An institution offering educational programs sponsored by a bona fide trade, business, professional, or fraternal organization, solely for that organization's membership. b) A postsecondary educational institution established, operated, and governed by the federal government or by this state or its political subdivisions. c) An institution offering either test preparation for examinations required for admission to a postsecondary educational institution or continuing education or license exam preparation, as specified. d) An institution that does not award degrees and that solely provides educational programs for total charges of two thousand five hundred dollars ($2,500) or less when no part of the total charges is paid from state or federal student financial aid programs. Existing law establishes the California Workforce Investment Board (CWIB) and charges 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. Existing law requires local chief elected officials in a local workforce development area to form, pursuant to specified guidelines, a Local Workforce Investment Board (Local WIB) to plan and oversee the workforce investment system at the local level. (Unemployment Insurance §1400 et al) Existing law requires the CWIB, with input from Local WIBs and other stakeholders, to establish initial and subsequent eligibility criteria for the Eligible Training Provider List (ETPL) that effectively directs training resources into programs leading to employment in high-demand, high-priority, and occupations that provide economic security, particularly those facing a shortage of skilled workers. The subsequent eligibility criteria is required to use performance and outcome measures to determine whether a provider is qualified to remain on the list. AB 509 (Perea) Page 3 of ? This Bill would additionally exempt from the California Private Postsecondary Education Act, preapprenticeship programs offered by a bona fide organization, association or council that offers programs on behalf of one or more Division of Apprenticeship Standards approved labor-management apprenticeship programs, if certain conditions are met. Specifically, this bill: 1) Exempts from oversight by the Bureau of Private Postsecondary Education labor-management preapprenticeship programs that satisfy one of the following conditions: a. It is not on the Eligible Training Provider List (ETPL) established and maintained by the California Workforce Investment Board (CWIB) but has met the requirements for placement on the list. b. It is on the ETPL established and maintained by the CWIB and meets the requirements for continued listing. 2) Provides that if an organization, association, or council has been removed from the ETPL for failure to meet performance standards, it is not exempt under these provisions until it meets all applicable performance standards. COMMENTS 1. The federal Workforce Innovation and Opportunity Act (WIOA): The federal WIOA, passed by a wide bipartisan majority and signed into law by President Barack Obama on July 22, 2014, provides for workforce investment activities, including activities in which states may participate and also contains various programs for job and employment investment, including work incentive programs, as specified. WIOA supersedes the Workforce Investment Act of 1998 and aims to modernize our workforce development system bringing together and enhancing several key employment, education, and training programs. WIOA also seeks to make the workforce system more comprehensive in AB 509 (Perea) Page 4 of ? its approach to service delivery and more responsive to the demands of our economy. WIOA authorizes job training programs that include classroom training, customized training, and on-the-job training. Training funds are often distributed through vouchers to job seekers to enroll in eligible training programs. Local Workforce Investment Boards determine which training programs are eligible to receive the vouchers. Existing law requires that at least 25% of federal WIA funds provided to Local WIBs be spent on workforce training programs. This percentage increases to 30% beginning in 2016. Under federal law, workforce investment 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 - 85 percent going to the Local WIBs, with the remainder allocated for state discretionary purposes. California receives between $350-400 million in federal WIA dollars annually. 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 of 1998 for the purpose providing customer-focused employment training for adults and dislocated workers. The qualified training providers on the ETPL offer a wide range of educational programs, including classroom, correspondence, Internet, broadcast, and apprenticeship programs. Training providers who are eligible to receive Individual Training Accounts (ITAs) through WIA Title I-B funds are listed on the ETPL. The Employment Development Department (EDD) is responsible for accepting information on training providers from Local WIBs, compiling a single statewide list of eligible training providers and disseminating the statewide ETPL to local boards for distribution and use. Programs are required to be periodically determined as eligible to continue on the ETPL. This determination is to be made within 18 to 24 months of their initial listing and annually thereafter. Under existing law, at a minimum, initial and subsequent eligibility criteria for placement on the ETPL shall consider the following: AB 509 (Perea) Page 5 of ? a) The relevance of the training program to the workforce needs of the state. b) Needs to plug skills gasps and skills shortages at the state, local and regional levels. c) The likelihood that the training program will lead to job placement in a job providing economic security or job placement in an entry-level job that has a well-articulated career pathway or career ladder to a job providing economic security. d) The need for basic skills and bridge training programs that provides access to occupational skills training for individuals with barriers to employment and those who would otherwise be unable to enter occupational skills training. e) To the extent feasible, utilize criteria that measure training and education provider performance, including, but not limited to, the following: a. Measures of skills or competency attainment and program completion. b. Measures of employment placement and retention. c. Measures for continued training or education. d. For those that have entered the labor market, measures of income. The Local WIBs are responsible for reviewing and verifying applications submitted by training providers, determining if the applicant meets the State's criteria for initial eligibility and forwarding the information to EDD for training providers and programs that meet the criteria. The EDD also has the authority to remove training providers for nonperformance. 3. Background on the CA Private Postsecondary Education Act and Bureau for Private Postsecondary Education: After numerous legislative attempts to remedy the laws and structure governing regulation of private postsecondary institutions in California, AB 48 (Portantino, Chapter 310, Statutes of 2009), established the Act and created the Bureau for the purpose of regulating private postsecondary educational institutions that provide educational services in California. The Act requires all unaccredited colleges in California to be approved by the Bureau, sets timelines for AB 509 (Perea) Page 6 of ? accreditation, and requires all nationally accredited colleges to comply with numerous student protections. It is important to note that not all private institutions are covered by the Act; full and partial exemptions are provided for low-cost programs, recreational schools, schools accredited by regional accrediting agencies, among others. The Bureau is required to actively investigate and combat unlicensed activity and conduct outreach and education activities for private postsecondary educational institutions and students within the state. The Act establishes processes for penalties for non-compliance, providing the Bureau authority to perform site visits and investigations, order fines and student tuition refunds, and ultimately suspend or revoke an institution's approval to operate. Exemptions: Currently, construction trades unions that are registered with the Joint Apprenticeship and Training Committee of the Department of Industrial Relations, Division of Apprenticeship Standards for purposes of their apprentice training, are exempt from the Bureau for purposes of apprenticeship programs. 4. Apprenticeship Programs and the Division of Apprenticeship Standards: According to the Division of Apprenticeship Standards (DAS), apprenticeship is a system of learning while earning, and "learning by doing" which combines training on the job with related and supplemental instruction at school. Each program operates under apprenticeship training standards in accordance with State and Federal laws. In those crafts in which management and labor organizations exist, each selects an equal number of members to serve on the joint apprenticeship committee which determines the standards for training and supervises the training of apprentices. DAS approves and administers apprenticeship law and enforces standards for wages, hours, working conditions and the specific skills required for state certification as a journeyperson in an apprenticeable occupation. Pre-apprenticeship services and programs are designed to prepare individuals to enter and succeed in registered apprenticeship programs. These programs have a documented partnership with at least one registered apprenticeship AB 509 (Perea) Page 7 of ? program sponsor and together, they expand the participant's career pathway opportunities with industry-based training coupled with classroom instruction. 5. Need for this bill? In the Employment Training Provider List - Policy and Procedures Directive from April 2014, the Employment Development Department states that private postsecondary education providers must receive approval to operate from the Bureau of Private Postsecondary Education (BPPE) prior to being listed on the ETPL. This approval ensures that the provider satisfies the BPPE statutes and enables the provider to enroll WIA eligible students. As noted above, the Division of Apprenticeship Standards (DAS) has statutory authority over the approval and administration of apprenticeship programs; however, statute doesn't include any reference to pre-apprenticeship programs. According to the author, DAS's legal counsel has opined that they can't regulate pre-apprenticeship programs because statute does not give them authority to do so. Additionally, an institution offering educational programs sponsored by a bona fide trade organization solely for that organization's membership is exempt from oversight by the Bureau of Private Postsecondary Education; this includes apprenticeship programs that are registered with DAS for purposes of apprentice training. According to the author, who represents the Fresno Regional WIB which has multi-craft pre-apprentice training being conducted by the Fresno Madera Tulare Kings Building Trades Council, this oversight in law has created a situation where apprenticeship programs can be registered with DAS (essentially receiving pre-approval under the BPPE) and then added to the ETPL, but pre-apprenticeship programs they work with cannot because DAS doesn't have regulatory authority over them. This bill would exempt a bona fide organization, association, or council that offers pre-apprenticeship training programs, on behalf of one or more DAS approved labor managed apprenticeship from the CA Private Postsecondary Education Act. This would allow these institutions to be placed on the ETPL, and receive WIA funds, without having to obtain approval from the Bureau of Private Postsecondary Education. This will ensure that programs offering pre-apprenticeships in conjunction with their apprenticeship AB 509 (Perea) Page 8 of ? programs are both exempt from BPPE oversight and added to the ETPL. Furthermore, by authorizing these pre-apprenticeship training programs to be listed on the ETPL, it allows Local WIBs to use federal WIA formula funds to pay for pre-apprenticeship training in compliance with SB 734 (2012) which imposes a minimum 25% training expenditure requirement on Local WIBs carrying out WIA funded programs. 6. Double Referral: This bill was previously heard and passed by the Senate Business, Professions and Economic Development Committee. 7. Proponent Arguments : According to the author, the WIA funds cannot be used to conduct pre-apprenticeship programs because they are not on the ETPL. However, the pre-apprenticeship programs are unable to prove eligibility under the BPPE because legal counsel at DAS has opined that pre-apprentice programs are not under their jurisdiction. This leaves pre-apprentice training in "limbo." The author argues that without an avenue for labor managed pre-apprentice training to be eligible for WIA funding, the programs go largely unfunded and Local WIB's cannot use funding for these programs to meet their 25% training expenditure requirement. The California Workforce Association is sponsoring the measure and states that it will create parity between pre-apprenticeship and apprenticeship programs offered by the same institutions, as apprenticeship programs are already exempt from the BPPE process. The CWA asserts that this bill will simply extend the exception to pre-apprenticeship programs operated in conjunction with high-quality apprenticeship programs, ensuring efficiency and continuity in institutions' pre-apprenticeship and apprenticeship offerings. Additionally, proponents state that pre-apprenticeship programs are vital to maintaining a healthy workforce in California since they prepare students for entrance into sate approved apprenticeship programs. California currently has over 500 state approved apprenticeship programs, the vast AB 509 (Perea) Page 9 of ? majority being in the building and construction trades, and they argue that joint labor-management programs make up 90% of these. Proponents contend that these programs must already meet stringent oversight requirements under the auspices of the Division of Apprenticeship Standards, and exempting them from the Private Postsecondary Education Act will help ensure California continues to have a skilled labor workforce. 8. Opponent Arguments : The Associated Builders and Contractors of California are opposed unless amended and argue that the bill strictly limits who is provided an exemption from the CPPEA. The Labor Code §3075(a) establishes who may sponsor an apprenticeship program, including a joint apprenticeship committee, a unilateral management or labor apprenticeship committee, or an individual employer. According to ABC, they had no issue with the bill before the recent amendments which added the restrictive term "labor-management" to the language; they would remove opposition if the author would replace the term or remove the words entirely. ABC argues that without amendments, this bill means that fully qualified and DAS approved unilateral programs will be given a higher barrier to overcome than the exact same program that happens to be a "labor-management" program. Opponents also argue that since a pre-apprenticeship program can partner with more than one DAS approved apprenticeship program, this bill seems to be designed to keep these pre-apprenticeship programs from partnering with all state-approved apprenticeship sponsors. They believe this discriminates against otherwise qualified apprenticeship sponsors (and pre-apprenticeship programs that would collaborate with them) and are seeking amendments. SUPPORT California Workforce Association (Sponsor) Fresno, Madera, Kings & Tulare Building & Construction Trades Council, AFl-CIO Stanislaus, Merced, Tuolumne and Mariposa Counties Building and Construction Trades Council State Building and Construction Trades Council, AFL-CIO AB 509 (Perea) Page 10 of ? OPPOSITION Air Conditioning Trade Association American Fire Sprinkler Association Associated Builders and Contractors of California Associated Builders and Contractors -San Diego Chapter Plumbing-Heating-Cooling Contractors Association of California Western Electrical Contractors Association -- END -