BILL ANALYSIS Ó
AB 2197
Page 1
Date of Hearing: May 11, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2197 (Cristina Garcia) - As Amended April 21, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill 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
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public school employees as follows:
a. 2 weeks effective July 1, 2017.
b. 4 weeks effective July 1, 2018.
c. 6 weeks effective July 1, 2019.
d. 8 weeks effective July 1, 2020.
FISCAL EFFECT:
1)If 150,000 classified, non-certificated 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 year in 2020-21 (School Employees Fund).
The SEF would have to be augmented commensurate with the
increase. Since schools are responsible for funding their own
UI costs through the SEF, this either results in cost pressure
on the GF to backfill the budget hole created by the increased
costs to schools, or a reduction in school resources for other
activities, or a combination.
2)There could also be a direct cost impact to the UI Trust Fund,
if some charter school employees receive benefits through this
fund instead of the SEF. The Employment Development
Department (EDD) does not track which charters rely on UI
Trust Fund versus those that use a different reimbursement
method, but it reports that only a quarter of charters
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participate in SEF, meaning benefits paid to employees of the
remaining three-quarters would potentially impact the UI Trust
Fund (though it is unclear how many schools participate in the
tax-rated methodology that impacts the UI Trust Fund. The
remainder of charters reimburse the UI Trust Fund directly for
costs incurred to provide benefits to their employees.)
Furthermore, EDD has previously noted increased expenditures
from the UI Trust Fund could potentially trigger an increase
in federal UI taxes due to temporary conditions placed on the
state as a result of the insolvency of the UI Trust Fund. If
that were to occur as a result of this legislation now,
however, the increase would be marginal due to the improving
condition of the UI Trust Fund will be greater.
3)Since this bill will result in such a large overall increase
in UI benefits being paid out to school employees, there may
be an indirect effect on UI Trust Fund solvency. Schools that
currently do not use a tax-rated UI Trust Fund methodology may
be financially better off to move to such a methodology, as
the maximum tax rates for UI are capped at 6.2% of the first
$7,000 of wages, a total of $434 per employee. That rate
could be less than what they would end up paying through the
SEF. If more schools choose to move to a tax-rated
methodology under this level of benefit expenditure, the
impact on the UI Trust Fund will be greater.
4)EDD also warns this bill may not conform to federal law, as it
treats public school employees different than employees of
nonprofits. Sanctions for non-conformity include withholding
of a state's grant for administration of the UI program, and
the loss of a federal tax credit for a state's employers.
COMMENTS:
1)Purpose. According to the author, thousands of classified
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school employees find the months between academic years to be
a stressful period financially. Existing law prohibits certain
education employees from receiving benefits during months in
which school is not in session, unless they meet very specific
criteria. 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, the employee's
only real option for summer employment is a job with a summer
school program, but those jobs are scarce. This bill would
relieve financial stress for workers.
2)Federal Law. Federal law generally requires equal treatment
for the payment of UI benefits 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 workers 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 or term.
States must deny UI benefits to professional school employees
between and within the academic years or terms when a contract
or reasonable assurance exists. However, states have the
option of providing UI benefits to nonprofessional school
employees between and within the academic years or terms when
a contract or reasonable assurance exists.
3)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
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school year, but was not, can collect UI benefits from the end
of the prior school year.
4)School Employees Fund (SEF). Public school employers, K-12 and
community colleges may elect to participate in the SEF, which
is a pooled-risk fund administered by EDD that collects
quarterly contributions based upon a percentage of total wages
paid by public schools and community college districts.
Employers who participate in the SEF may also have to pay an
additional quarterly Local Experience charge if they have
higher UI costs charged to their individual accounts.
Contributions deposited in the SEF are used to reimburse the
UI Trust Fund for the cost of UI benefits paid to former
employees.
5)Support. This bill is sponsored by the Service Employees
International Union, California and supported by the
California Federation of Teachers.
6)Opposition. This bill is opposed by the Association of
California School Administrators and the California School
Boards Association.
7)Prior Legislation. AB 399 (Ridley-Thomas) of 2015, AB 1638
(Bocanegra) of 2014, and AB 615 (Bocanegra) of 2013 were
similar to this bill, and were all held on the Suspense File
of this committee.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081
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