BILL ANALYSIS                                                                                                                                                                                                    

                             Senator Tony Mendoza, Chair
                                2015 - 2016  Regular 

          Bill No:               AB 2197      Hearing Date:    June 22,  
          |Author:    |Cristina Garcia                                      |
          |Version:   |May 31, 2016                                         |
          |Urgency:   |No                     |Fiscal:    |Yes              |
          |Consultant:|Gideon L. Baum                                       |
          |           |                                                     |
               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? 

           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.

          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.

          American Federation of State, County and Municipal Employees,  
          California School Employees Association
          California Association of School Business Officials
          Orange County Department of Education
          Riverside County Superintendent of Schools
          Small School Districts' Association

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