BILL ANALYSIS Ó
AB 2197
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GOVERNOR'S VETO
AB
2197 (Cristina Garcia)
As Enrolled August 30, 2016
2/3 vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Insurance |9-4 |Daly, Calderon, Chu, |Melendez, Travis |
| | |Cooley, Cooper, |Allen, Bigelow, |
| | |Dababneh, Frazier, |Dahle |
| | |Gatto, Rodriguez | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |14-6 |Gonzalez, Bloom, |Bigelow, Chang, |
| | |Bonilla, Bonta, |Gallagher, Jones, |
| | |Calderon, Daly, |Obernolte, Wagner |
| | |Eggman, Eduardo | |
| | |Garcia, Roger | |
| | |Hernández, Holden, | |
| | |Quirk, Santiago, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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AB 2197
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|ASSEMBLY: |51-27 |(June 2, 2016) |SENATE: |25-13 |(August 22, |
| | | | | |2016) |
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| | | | | | |
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SUMMARY: 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
public school employees as follows:
a) Two weeks effective July 1, 2017
b) Four weeks effective July 1, 2018
c) Six weeks effective July 1, 2019
d) Seven weeks effective July 1, 2020
3)Provides that UI benefits for classified public school
employees will only be provided if funds are appropriated for
that purpose in the annual budget act.
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EXISTING LAW:
1)Provides UI benefits to employees who lose their job through
no fault of their own.
2)Requires employers to pay state and federal taxes to pay the
costs of administering and providing UI benefits.
3)Permits public employers to provide UI benefits to their
employees on a reimbursement basis in lieu of paying payroll
taxes.
4)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.
5)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.
6)Requires employers to provide documentation of the reasonable
assurance when that notice is given.
7)Prohibits, as a matter of federal law, providing UI benefits
to professional employees between academic years.
FISCAL EFFECT: According to the Assembly Appropriations
Committee:
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1)This bill is contingent on a budget appropriation for the
purpose of implementation. A 2015 report by the Economic
Roundtable projects extending UI to classified employees over
summer months would result in $153.1 million of benefit
payments annually, representing an increase in UI expenditures
of 76% for schools, at full implementation in year 2020-21
(School Employees Fund). To the extent a budget appropriation
was made for this purpose, it would have to augment the SEF
commensurate with the increase. Schools are responsible for
funding their own UI costs through the SEF.
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 School Employees Fund (SEF). Employment
Development Department (EDD) does not track which charters
rely on UI Trust Fund versus those that use a different
reimbursement method, but reports that only a quarter of
charters 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.)
COMMENTS:
1)Purpose. According to the sponsor, classified school
employees do the essential work that keeps our public schools
up and running. These workers 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
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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. Unlike other employees who receive UI
benefits during their regular seasonal breaks, classified
school employees are ineligible to receive those same
benefits. 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, a classified
school employee's only real option for summer employment is a
job with a summer school program, but those jobs are scarce.
Being excluded from UI benefits creates a serious financial
hardship for a classified school employee that does not exist
for their fellow education workers.
2)Federal Law. Federal law generally requires equal treatment
for the payment of UI benefits on the basis of service 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 service
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/term. State law must deny UI benefits
to professional school employees between and within the
academic years or terms when a contract or reasonable
assurance exists. State law may deny UI benefits to
nonprofessional school employees between and within the
academic years or terms when a contract or reasonable
assurance exists.
3)Public Agency Costs. This bill would likely have relatively
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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.
Opponents note that the bill would result in significant cost
increases for K-12 school districts and other local
educational agencies. Last year the Assembly Appropriations
Committee provided the following estimate for AB 399
(Ridley-Thomas) of 2015, which was substantially similar to
this bill:
There are approximately 250,000 classified,
non-certificated employees throughout the state. If 60% of
those 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 2019-20 (School Employees Fund). Costs to the
School Employees Fund are funded by school districts,
county offices of education, community college districts,
and some charter schools, whose employees receive UI
benefits through this fund instead of through the UI Trust
Fund.
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4)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
school year, but was not, can collect UI benefits from the end
of the prior school year.
5)Previous Legislation.
In 2015, this committee passed AB 399 (Ridley-Thomas) which is
identical to this bill. AB 399 was held on the Assembly
Appropriations Committee Suspense File.
In 2014, this committee passed AB 1638 (Bocanegra) which was
nearly identical to AB 615. The bill was held on the Assembly
Appropriations Committee Suspense File.
In 2013, this committee passed AB 615 (Bocanegra) which
proposed to extend UI benefits to classified school employees.
The bill was held on the Assembly Appropriations Committee
Suspense File.
GOVERNOR'S VETO MESSAGE:
This bill allows classified school employees to
collect unemployment insurance benefits between school
years.
This bill creates several conformity issues with the
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federal Unemployment Insurance laws, which could
result in sanctions from the federal government,
including the loss of significant tax credits for
California's employers.
Analysis Prepared by:
Paul Riches / INS. / (916) 319-2086 FN: 0005121