BILL ANALYSIS Ó SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS Senator Tony Mendoza, Chair 2015 - 2016 Regular Bill No: SB 45 Hearing Date: March 25, 2015 ----------------------------------------------------------------- |Author: |Mendoza | |-----------+-----------------------------------------------------| |Version: |March 9, 2015 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Alma Perez-Schwab | | | | ----------------------------------------------------------------- Subject: Workforce development: federal Workforce Innovation and Opportunity Act KEY ISSUES Should the Legislature pass legislation to conform California's workforce development laws to the new federal Workforce Innovation and Opportunity Act requirements in order to be eligible to continue receiving federal workforce services funding? Should the Legislature require that Local Workforce Investment Boards and chief elected officials develop strategic workforce development plans around local regions to promote program alignment and cooperation efforts that meet local needs? ANALYSIS The former federal Workforce Investment Act (WIA) of 1998 provided for activities and programs for job training and employment investment in which states could participate, including work incentive and employment training outreach programs. Following passage of the federal WIA, the state established the California Workforce Investment Board (CWIB) and charged the board with the responsibility of developing a unified, strategic planning process to coordinate various education, training, and employment programs into an integrated workforce development system that supports economic development. SB 45 (Mendoza) Page 2 of ? Existing law requires the local chief elected officials in a local workforce development area to form, pursuant to specified guidelines, a Local Workforce Investment Board (LWIB) to plan and oversee the workforce investment system at the local level. There are currently 49 local WIBs in the state. Each local workforce area also created one or more One-Stop Centers, which provide access to career information, counseling, funding for education, training and supportive services. (Unemployment Insurance §1400 et al) The federal Workforce Innovation and Opportunity Act (WIOA) , signed into law on July 22, 2014, replaces the Workforce Investment Act of 1998 and retains and amends the Adult Education and Family Literacy Act, the Wagner-Peyser Act, and the Rehabilitation Act of 1973. Among other things, the new federal WIOA is designed to help job seekers access employment, education, training, and support services to succeed in the labor market and to match employers with the skilled workers they need to compete in the global economy. This Bill would make necessary changes to existing workforce development statutes in code to conform to the new federal guidelines under the Workforce Innovation and Opportunity Act (WIOA). Specifically, this bill would: Direct the CA Workforce Investment Board to aid the Governor in facilitating system alignment across the core programs of the federal WIOA as well as other educational, social service, rehabilitation, and economic development agencies in the partnership. After consultation with local boards and chief elected officials and in conformity with WIOA, require that the state identify local planning regions. Require that the local boards and chief elected officials in each planning region engage in regional planning process that results in the following (among others): SB 45 (Mendoza) Page 3 of ? o The establishment of regional service strategies, including the use of cooperative service delivery agreements; o The development and implementation of sector initiatives for in-demand industries in the region; o The coordination of services with regional economic development services and providers; o The collection and analysis of regional labor market data; The local boards and chief elected officials in each region would be required to prepare and submit for approval, a regional plan that includes description of the activities described above. Lastly, the bill would incorporate relevant WIOA definitions into CA statutes. COMMENTS 1. Background on the CA Workforce Investment Board and WIA Funding: Under federal law, WIA funds are distributed to the states based on formulas that consider unemployment rates and other economic and demographic factors. California and its 49 Local WIBs receive WIA formula funding from the U.S. Department of Labor through three revenue streams - Adult, Youth, and Dislocated Workers. Under federal law, 85 percent of Adult and Youth formula funds, and 60 percent of Dislocated Worker formula funds are distributed to local WIBs. Fifteen percent of Adult, Youth, and Dislocated Worker formula funds (15% discretionary funds) are allocated to the state for a variety of discretionary uses. This split in funds usage has changed in recent years due to federal budgetary restrictions and reductions so that the state generally gets less than the 15% discretionary funds. California receives between $350 and $400 million in federal WIA dollars annually. The California State WIB is charged with developing a unified, strategic planning process to coordinate various education, training, and employment programs into an integrated workforce development system that supports economic development. As SB 45 (Mendoza) Page 4 of ? such, the State WIB has adopted Sector Strategies as the statewide framework for workforce development, and is working closely with the Economic Strategy Panel, other State Agencies and departments and its 49 local Workforce Investment Boards to support the emergence of effective statewide and regionally driven sector initiatives. 2. The federal Workforce Innovation and Opportunity Act (WIOA): The federal WIOA, passed by a wide bipartisan majority and signed into law by President Barack Obama on July 22, 2014, is the first legislative reform of the public workforce system in more than 15 years. WIOA supersedes the Workforce Investment Act of 1998. WIOA brings together, in strategic coordination, the core programs of Federal investment in skill development, including employment and training services for adults, dislocated workers, youth and individuals with disabilities. WIOA also authorizes programs for specific vulnerable populations including Indian and Native Americans and migrant and seasonal farmworker programs, among others. The following are some highlights of the WIOA reforms: Strategically aligns investments in workforce development programs to ensure that services provided are coordinated and complementary to ensure job seekers acquire skills and credentials that meet employers' needs. Promotes accountability and transparency by ensuring that investments are evidence-based and data-driven, and accountable to participants and tax-payers. Fosters regional collaboration to promote alignment of programs with regional economic development strategies to meet local needs. Improves quality and accessibility of services received by job seekers and employers at their local job centers by, among other things, establishing criteria for certification of the centers that ensures continuous improvements. Improves services to employers and promotes work-based training - matching employers with skilled individuals by promoting the use of industry and sector partnerships. Promotes the use of Registered Apprenticeship programs which has proven successful at providing workers with career pathways and opportunities to earn while they learn. Streamlines and strengthens the roles of Workforce SB 45 (Mendoza) Page 5 of ? Development Boards - both state and local - to ensure programs are coordinated, complementary and consistent across the state. The WIOA provisions take effect on July 1, 2015, the first full program year after enactment. However, the WIOA state unified and local plans and the WIOA performance accountability provisions don't take effect until July 1, 2016. The U.S. Department of Labor will issue further guidance on the timeframes for implementation of WIOA. 3. Need for this bill? The U.S. Department of Labor, in coordination with the U.S. Departments of Education and Health and Human Services, are working to ensure that states and local areas, other grantees, and stakeholders are prepared for implementation of WIOA by providing technical assistance, tools, and resources to its website, webinars, and virtual and in-person discussions. The U.S. Department of Labor has also recommended that state's review their existing laws to identify areas that may conflict with WIOA and develop plans and strategies to resolve these conflicts. When there are conflicts between state and federal laws, federal law takes precedence. Additionally, beyond complying with the new federal requirements, WIOA offers states an opportunity to continue to modernize the workforce system and create a customer-centered system where 1) the needs of business and workers drive solutions; 2) one-stop career centers provide excellent customer service to jobseekers and businesses; and 3) the workforce system supports strong regional economies. State and local workforce boards - in partnership with workforce, economic development, education, and social service organizations at the state, regional and local levels are encouraged to work together in this transition to achieve the vision of WIOA. To this end, WIOA allows states and locals to use up to two percent (2%) of the WIA's 2014 fiscal year Youth, Adult and Dislocated Worker formula funds to transition to WIOA. SB 45 is one of two bills being sponsored by the California Labor and Workforce Development Agency and the California Workforce Investment Board that will make the necessary SB 45 (Mendoza) Page 6 of ? changes to existing law for the implementation of WIOA in our State. Among other things, SB 45 would require the state, in conformity with WIOA and after consultation with local boards and chief elected officials, to identify planning regions and require the locals to prepare regional workforce development plans. 4. Proponent Arguments : According to the author, the recent recession left us with a shattered job market and a record setting unemployment rate - the toughest jobs crisis in over 50 years. Now more than ever, it is crucial that every dollar of federal workforce funds that our state receives is invested in high quality employment services that connect workers with good paying jobs. The recently passed WIOA is designed to help job seekers access employment, education, training, and support services to succeed in the labor market and to match employers with the skilled workers they need to compete in the global economy. The enactment of WIOA provides opportunity for reforms to ensure that our state programs are responding to the needs of employers and preparing workers for jobs that are available now and in the future. Additionally, the new federal law envisions more program coordination among the various workforce development entities. According to the author, this bill is necessary to conform California law to the new federal WIOA requirements. 5. Opponent Arguments : The California Right to Life Committee is concerned about the mandated expansion of regionalizing the workforce as proposed by SB 45. CRLC considers this development as one not in keeping with a Constitutional Republic which provides for its elected representatives at city, county, and state levels and the marketplace to determine the future work needs of the citizens and residents, not to have the prospect of federal funds determine what are the employment needs locally. 6. Prior and Related Legislation : AB 1270 (Garcia) of 2015: Pending referral in the Assembly AB 1270 is the second bill sponsored by the CA Labor and SB 45 (Mendoza) Page 7 of ? Workforce Development Agency and the California Workforce Investment Board that will make the necessary changes to existing law for the implementation of WIOA. Specifically, AB 1270 would update statutory references to the Workforce Investment Act of 1998 to instead refer to the Workforce Innovation and Opportunity Act of 2014 and makes related conforming changes. SB 1401 (Lieu) of 2012: Held in Assembly Appropriations Committee SB 1401 would have required that the State WIB assist the Governor in targeting resources to specified industry clusters that provide economic security and leverage state and federal funds to ensure that resources are invested in activities that meet the needs of specified industry sectors and advance the education and employment of students and workers so they can meet the specified needs of the state, its regional economies, and leading industry sectors. SB 698 (Lieu) of 2011: Chaptered SB 698 requires the Governor to establish, through the California Workforce Investment Board, standards for certification of high-performance local WIBs, in accordance with specified criteria. The bill also requires the Governor and the Legislature, in consultation with the California Workforce Investment Board, to reserve specified federal discretionary funds for high-performing local WIBs. SUPPORT CA Labor and Workforce Development Agency (LWDA) - Sponsor California Workforce Association (CWA) OPPOSITION California Right to Life Committee, Inc. -- END -- SB 45 (Mendoza) Page 8 of ?