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 ****