BILL ANALYSIS Ó
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: AB 2197 Hearing Date: June 22,
2016
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|Author: |Cristina Garcia |
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|Version: |May 31, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Gideon L. Baum |
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Subject: Unemployment insurance: classified employees
KEY ISSUE
Should the Legislature permit classified school employees to be
eligible to collect unemployment insurance (UI) benefits between
school years with or without a reasonable assurance of being
employed in the next academic year?
ANALYSIS
Existing law:
1) Vests the Employment Development Department (EDD) with
the responsibility of ensuring employers remit appropriate
Unemployment Insurance (UI) contributions and to collect
the employee wage deductions to the Disability Fund. EDD
uses these funds to finance the Unemployment Insurance and
Disability Insurance (DI) Programs.
(Unemployment Insurance Code §§ 301, 976, 984, 1025-1037,
1555-1562, & 3001-3015)
2) Prohibits employees of public and private non-profit
educational institutions from collecting UI benefits
between academic years if they have been given reasonable
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assurance by the employer of being employed in the next
academic term. (Unemployment Insurance Code §1253.3)
3) 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.
(Unemployment Insurance Code §1253.3)
4) Requires employers to provide documentation of the
reasonable assurance when that notice is given.
(Unemployment Insurance Code §1253.3)
This bill would allow employees of a public school who are not
teachers, researchers, or administrators to be eligible for
unemployment insurance benefits in the period between two
academic years on the following schedule:
1) Two weeks of benefits during 2017, beginning July 1,
provided that funds are appropriated for that purpose in
the annual Budget Act.
2) Four weeks of benefits during 2018, beginning July 1,
provided that funds are appropriated for that purpose in
the annual Budget Act.
3) Six weeks of benefits during 2019, beginning July 1,
provided that funds are appropriated for that purpose in
the annual Budget Act.
4) Eight weeks of benefits during 2020, and each year
thereafter, beginning July 1, provided that funds are
appropriated for that purpose in the annual Budget Act.
COMMENTS
1. Need for this bill?
The sponsor notes that, while classified employees do the
essential work our public schools up and running, classified
employees are not permitted to collect UI benefits during the
summer recess. This places significant hardship on the
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classified employee and his or her family, and it requires the
classified employee finds short-term employment for the summer
recess. However, the sponsor argues that 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. Additionally, the sponsor argues that a
classified school employee's only real option for summer
employment is a job with a summer school program, but those
jobs are scarce.
AB 2197 would address this by allowing classified employees to
collect UI benefits through a stepped schedule that would
begin in 2017 and top out in 2020.
2. "Reasonable Assurance" and Unemployment Insurance:
In Ross v. CUIAB (1981), 178 Cal. Rptr. 421, the Court of
Appeals defined "reasonable assurance" as "an agreement which
contemplated the re-employment of the affected school employee
but which he or she could not enforce." This concept has been
concretized in statute and regulation, and statute also
requires that a notice of reasonable assurance be in writing.
Once an educational district gives a worker a notice of
reasonable assurance, that worker cannot request unemployment
insurance unless they are not employed in the following year
as the notice of reasonable assurance assured.
In the case of a tenured teacher, he or she would likely have
an option through the governing collective bargaining
agreement (CBA) to have his or her wages extended through the
summer recess. In the case of classified employees, however,
this is not the case, as many are paid hourly, rather than on
a salary. Additionally, in some cases such an extension of
wages through the summer recess could push wages below the
minimum wage, violating existing wage and hour law.
3. School Employees Fund (SEF):
From the Assembly Insurance Analysis:
"This bill would likely have relatively minor impact to the
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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."
3. Proponent Arguments :
The proponents argue that classified employees 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. 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. AB 2197 removes this serious financial
hardship by making classified employees eligible for
unemployment insurance benefits during the summer recess.
4. Opponent Arguments :
Opponents argue that, despite its phased-in approach, AB 2197
would result in a significant fiscal impact on school
districts. Specifically, opponents note that district
unemployment accounts are funded through a combination of
payroll taxes and quarterly local experience charges. By
expanding unemployment insurance (UI) benefit eligibility, AB
2197 would result in decreased School Employers Fund balances,
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increased local experience charges, and increases in the
unemployment insurance payroll tax rate. Opponents also note
that districts are not reimbursed for unemployment insurance
expenses as they had been in the past, leaving them to absorb
the increased costs associated with the requirements of AB
2197. Opponents therefore argue that, noting there is no
budget appropriation in this year's budget, they must oppose
AB 2197.
5. Prior Legislation :
AB 399 (Ridley-Thomas) (2015) was nearly identical to this
bill. AB 399 was held on the Assembly Appropriations
Committee Suspense File.
SUPPORT
American Federation of State, County and Municipal Employees,
AFL-CIO
California School Employees Association
OPPOSITION
California Association of School Business Officials
Orange County Department of Education
Riverside County Superintendent of Schools
Small School Districts' Association
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