BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:  April 20, 2016


                           ASSEMBLY COMMITTEE ON INSURANCE


                                   Tom Daly, Chair


          AB 2197  
          (Cristina Garcia) - As Amended March 28, 2016


          SUBJECT:  Unemployment insurance:  classified employees


          SUMMARY:  Allows classified school employees to collect  
          unemployment insurance (UI) benefits between school years.   
          Specifically, this bill:  


          1)Exempts classified public school employees from the  
            prohibition on educational employees collecting UI benefits.


          2)Increases the maximum duration of UI benefits for classified  
            public school employees as follows:


               a.     2 weeks effective July 1, 2016


               b.     4 weeks effective July 1, 2017


               c.     6 weeks effective July 1, 2018


               d.     8 weeks effective July 1, 2019








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          EXISTING LAW:  

          1)Provides UI benefits to employees who lose their job through  
            no fault of their own.

          2)Requires employers to pay state and federal taxes to pay the  
            costs of administering and providing UI benefits.

          3)Permits public employers to provide UI benefits to their  
            employees on a reimbursement basis in lieu of paying payroll  
            taxes.

          4)Prohibits employees of public and private non-profit  
            educational institutions from collecting UI benefits between  
            academic years if they have been given reasonable assurance by  
            the employer of being employed in the next academic term.

          5)Permits non-professional employees of public and non-profit  
            educational institutions to collect UI benefits retroactively  
            should they not be employed in the next academic term after  
            receiving reasonable assurance of future employment.

          6)Requires employers to provide documentation of the reasonable  
            assurance when that notice is given.

          7)Prohibits, as a matter of federal law, providing UI benefits  
            to professional employees between academic years.



          FISCAL EFFECT:  Undetermined


          COMMENTS:  


           1)Purpose  .  According to the sponsor, classified school  








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            employees do the essential work that keeps our public schools  
            up and running. These workers keep our campuses safe, clean,  
            and efficient. Most importantly, they strive to improve the  
            daily lives of our students.  Despite the important and hard  
            work of classified school employees, many struggle to support  
            their families with incomes that are often inadequate to pay  
            for food, housing, and health care. And while certified school  
            employees, such as administrators, teachers, librarians, and  
            nurses, earn middle class incomes and benefits that can last  
            through the summer breaks, classified school employees do not.  
             Unlike other employees who receive UI benefits during their  
            regular seasonal breaks, classified school employees are  
            ineligible to receive those same benefits. The only option for  
            classified school employees to support their families during  
            the summer is to find another job.   Yet classified school  
            employees are often unable to find work during the summer  
            because employers are reluctant to hire and invest in a  
            short-term employee. Thus, a classified school employee's only  
            real option for summer employment is a job with a summer  
            school program, but those jobs are scarce.  Being excluded  
            from UI benefits creates a serious financial hardship for a  
            classified school employee that does not exist for their  
            fellow education workers.



           2)Federal Law  .  Federal law generally requires equal treatment  
            for the payment of UI benefits on the basis of service to  
            certain nonprofit organizations, Indian tribes, and state and  
            local government workers in the same amount, on the same  
            terms, and subject to the same conditions, as other service  
            subject to state law.  An exception to the equal treatment  
            requirement pertains to the denial of UI for "professional"  
            and "nonprofessional" employees of educational institutions  
            during a period between or within academic years or terms when  
            there is a contract or reasonable assurance that the employee  
            will go back to work in the same or similar capacity in the  
            ensuing academic year/term.  State law  must  deny UI benefits  
            to professional school employees between and within the  








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            academic years or terms when a contract or reasonable  
            assurance exists.  State law  may  deny UI benefits to  
            nonprofessional school employees between and within the  
            academic years or terms when a contract or reasonable  
            assurance exists.

           3)Public Agency Costs  .  This bill would likely have relatively  
            minor impact to the Unemployment Insurance Trust Fund (trust  
            fund) that pays for most UI benefits because public K-12  
            school districts and community colleges commonly elect to  
            participate in the School Employees Fund (SEF) in lieu of  
            paying payroll taxes.  The SEF is a special reimbursable  
            financing method administered by the Employment Development  
            Department which collects contributions based upon a  
            percentage of total wages paid by public schools and community  
            college districts.  Money deposited in the SEF is used to  
            reimburse the trust fund for the cost of benefits paid to  
            former employees.  All 72 community college districts and  
            1,298 county offices of education, public school districts,  
            and charter schools participate in the SEF.  The SEF had fund  
            balance of over $582 million at the end of the 2014-15 fiscal  
            year.   The costs of paying for these additional benefits from  
            this bill will be borne by the SEF, and the SEF costs will  
            have to be passed on to the participating schools.  
           

            Opponents note that the bill would result in significant cost  
            increases for K-12 school districts and other local  
            educational agencies.  Last year the Assembly Appropriations  
            Committee provided the following estimate for AB 399  
            (Ridley-Thomas), which was substantially similar to this bill:  
             

               "There are approximately 250,000 classified,  
               non-certificated employees throughout the state. If 60% of  
               those employees received the maximum allotment of weeks of  
               UI during summer vacation each year, it would cost an  
               additional $90 million per year, each year for four years,  
               until the cost reached approximately $360 million in fiscal  








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               year in 2019-20 (School Employees Fund).  Costs to the  
               School Employees Fund are funded by school districts,  
               county offices of education, community college districts,  
               and some charter schools, whose employees receive UI  
               benefits through this fund instead of through the UI Trust  
               Fund."

           4)Retroactive Benefits  .  School employees expect to not work at  
            school (and generally not be paid) during the break between  
            academic years.  In recognition of this reality, current law  
            provides a mechanism for classified employees to receive  
            unemployment benefits retroactively should they not be  
            employed at the next school year.  This ensures that a  
            classified employee who expected to be employed in the next  
            school year, but was not, can collect UI benefits from the end  
            of the prior school year.  

           5)Suggested Amendment  .  The bill provides that UI benefits be  
            provided beginning July 1, 2016.  The bill should be amended  
            to begin implementation on July 1, 2017.  The amendments  
            should also defer the repeals of Sections 1451, 1452, and 1453  
            of Unemployment Insurance Code until July 1, 2017 to conform  
            with the later implementation date.  

           6)Previous Legislation  .  

            In 2015, this committee passed AB 399 (Ridley-Thomas) which is  
            identical to this bill.  AB 399 was held on the Assembly  
            Appropriations Committee Suspense File.

            In 2014, this committee passed AB 1638 (Bocanegra) which was  
            nearly identical to AB 615.  The bill was held on the Assembly  
            Appropriations Committee Suspense File. 

            In 2013, this committee passed AB 615 (Bocanegra) which  
            proposed to extend UI benefits to classified school employees.  
             The bill was held on the Assembly Appropriations Committee  
            Suspense File.  
          








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          REGISTERED SUPPORT / OPPOSITION:




          Support


          Service Employees International Union, California (sponsor)


          California Federation of Teachers (CFT)




          Opposition


          Association of California School Administrators


          California School Boards Association 


          Riverside County Superintendent of Schools




          Analysis Prepared by:Paul Riches / INS. / (916) 319-2086














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