BILL ANALYSIS                                                                                                                                                                                                    Ó






           ----------------------------------------------------------------- 
          |SENATE RULES COMMITTEE            |                       AB 2197|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
           ----------------------------------------------------------------- 


                                   THIRD READING 


          Bill No:  AB 2197
          Author:   Cristina Garcia (D) 
          Amended:  5/31/16 in Assembly
          Vote:     21 

           SENATE LABOR & IND. REL. COMMITTEE:  4-1, 6/22/16
           AYES:  Mendoza, Jackson, Leno, Mitchell
           NOES:  Stone

           SENATE APPROPRIATIONS COMMITTEE:  5-2, 8/11/16
           AYES:  Lara, Beall, Hill, McGuire, Mendoza
           NOES:  Bates, Nielsen

           ASSEMBLY FLOOR:  51-27, 6/2/16 - See last page for vote

           SUBJECT:   Unemployment insurance:  classified employees


          SOURCE:    Service Employees International Union


          DIGEST:  This bill permits 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 UI  








                                                                    AB 2197  
                                                                    Page  2


            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, and 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 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 allows employees of a public school who are not  
          teachers, researchers, or administrators to be eligible for UI  
          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







                                                                    AB 2197  
                                                                    Page  3


          
          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  
            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 addresses 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 UI

            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 UI 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 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)







                                                                    AB 2197  
                                                                    Page  4



            From the Assembly Insurance Committee analysis:

            "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."


          FISCAL EFFECT:   Appropriation:    Yes         Fiscal  
          Com.:YesLocal:   No


          According to the Senate Appropriations Committee, the EDD  
          indicates that their information technology systems would need  
          to be reprogrammed to allow an administrative function to  
          trigger benefit payments on or off depending on the Budget Act  
          appropriation, manage multiple floating claim awards to track  
          disbursement of benefits across multiple claims and fiscal  
          years, and collect new eligibility information when new or  
          additional claims are filed. EDD estimates related one-time  
          costs to be approximately $3.9 million.


          SUPPORT:   (Verified8/23/16)


          Service Employees International Union (source)
          American Federation of State, County and Municipal Employees,  
          AFL-CIO 







                                                                    AB 2197  
                                                                    Page  5


          California School Employees Association
          California School Teachers Association
          California Teachers Association
          LIUNA Local, 777


          OPPOSITION:   (Verified 8/12/16)


          California Association of School Business Officials
          Orange County Department of Education
          Riverside County Superintendent of Schools
          Small School Districts' Association


          ARGUMENTS IN SUPPORT:   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 UI benefits  
          during the summer recess.


          ARGUMENTS IN OPPOSITION:     Opponents argue that, despite its  
          phased-in approach, AB 2197 will 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 UI benefit eligibility, AB 2197 will result in  
          decreased School Employers Fund balances, increased local  
          experience charges, and increases in the unemployment insurance  
          payroll tax rate. Opponents also note that districts are not  
          reimbursed for UI 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  







                                                                    AB 2197  
                                                                    Page  6


          there is no budget appropriation in this year's budget, they  
          must oppose AB 2197.

          ASSEMBLY FLOOR:  51-27, 6/2/16
          AYES:  Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown,  
            Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper,  
            Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia,  
            Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,  
            Roger Hernández, Holden, Irwin, Jones-Sawyer, Levine, Lopez,  
            Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk,  
            Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone,  
            Thurmond, Weber, Williams, Wood, Rendon
          NOES:  Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,  
            Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper,  
            Jones, Kim, Lackey, Maienschein, Mathis, Mayes, Melendez,  
            Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk
          NO VOTE RECORDED:  Linder, Ting

          Prepared by:Gideon L. Baum / L. & I.R. / (916) 651-1556
          8/23/16 9:40:22


                                   ****  END  ****