BILL ANALYSIS Ó
SB 1219
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SENATE THIRD READING
SB
1219 (Hancock)
As Amended August 15, 2016
Majority vote
SENATE VOTE: 38-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Jobs |8-0 |Eduardo Garcia, Kim, | |
| | |Achadjian, Brown, | |
| | |Chau, Chu, Gipson, | |
| | |Irwin | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |20-0 |Gonzalez, Bigelow, | |
| | |Bloom, Bonilla, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | |Gallagher, Eduardo | |
| | |Garcia, Holden, | |
| | |Jones, Obernolte, | |
| | |Quirk, Santiago, | |
| | |Wagner, Weber, Wood, | |
| | |McCarty | |
| | | | |
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| | | | |
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SUMMARY: Establishes a new procurement preference for
employment social enterprises (ESEs) under the Small Business
Procurement and Contract Act, as specified. In implementing
this new preference, this bill:
1)Defines "ESE" as a social purpose corporation, benefit
corporation, or nonprofit corporation based in California, as
specified. Requires, among other things, that the enterprise
to earn 51% or more of its revenue from the production or
assembly of goods or the provision of services, or a
combination of both and be comprised of at least 80% of
enterprise participants who face multiple barriers to
employment.
2)Requires state agencies to expand procurement goals to include
ESEs and give the same special consideration as currently
provided to small businesses and microbusinesses, including
the reduction of required experience and the level of
inventory normally required for state contracting, among other
potential adjustments.
3)Provides a 5% bid preference to ESEs for state contract bid
packages, including a contract with the California State
University. A single preference may not exceed $50,000 or
when added to other preferences, the total value cannot exceed
$100,000. These are the same provisions as apply to small
businesses and microbusinesses.
4)Expands the duties of the Office of the Small Business and
Disabled Veteran Business Enterprise Services to include
support to RSEs, including, but not limited to: compiling and
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maintaining a comprehensive bidders list of qualified
employment social enterprises; assisting employment social
enterprises to comply with bidding procedures; and making an
effort to develop certification application that can be
adopted by cities, counties, and special districts.
5)Requires Department of General Services (DGS) to certify and
determine eligibility of ESEs, and provide access to a public
list of certified ESEs online for local agencies to confirm
certification. Authorizes DGS to assign certification
requirements, as specified, to another state or local entity.
6)Makes related changes to legislative intent and findings and
declarations.
7)Specifies that the changes to the state procurement process
made by this bill become operative on October 1, 2018.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, the fiscal effect of this bill would be:
1)According to DGS, One-time General Fund costs, in the range of
$5.5 million to $7.5 million, to make programming changes to
FI$Cal to modify system functionality to accommodate the ESEs
in the processing of procurements.
2)DGS indicates they would need 3 positions and $406,000
(special funds) to conduct outreach to ESEs and departments to
make them aware of the new status, assist ESEs through the
certification process, review applications and certify ESEs.
COMMENTS: This bill would establish a new category of
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procurement preference for ESEs modeled after the provisions
provided to small businesses and microbusinesses. This new tool
has the potential to help stabilize local communities and
support job creation that directly benefits individuals who have
historically faced barriers to employment.
Growing Income Inequality: California's overall economic growth
and increase in jobs has outpaced the United States (U.S.) as a
whole, often ranking the state within the top five states in
terms of its economic condition. Most recently, the Department
of Finance has announced that California has the sixth largest
economy in the world among nations. This success, however, has
not been consistent throughout the state with many regions and
certain population groups still experiencing recession-related
poor economic conditions.
According to the U.S. Census Bureau, California's poverty rate
is 16.4% as compared to a national rate of 15.6%. It is
estimated that nearly a quarter of California's children (22.7%)
are living in households with annual incomes below the federal
poverty line. A significant contributing factor to these
poverty rates are the deficit of education and basic skills
among many Californians from rural and inner city areas,
historically underserved population groups, and those who are
more recently encountering employment challenges, including
returning veterans.
A review of the most recent unemployment numbers illustrates
this expanding pattern of economic disparity between regions and
population groups in California.
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| California Unemployment June 2016 (not seasonally adjusted) |
| |
| |
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|----------------+------------+---+-----------------+-----------|
| Employment |Unemployment| | Employment |Unemploymen|
| Category | Rate | | Category | t Rate |
| | | | | |
| | | | | |
|----------------+------------+---+-----------------+-----------|
|California | 5.7% | |California | 5.7% |
| | | | | |
| | | | | |
|----------------+------------+---+-----------------+-----------|
|Colusa County | 13.7% | |Blacks | 9.8% |
| | | | | |
| | | | | |
|----------------+------------+---+-----------------+-----------|
|Imperial County | 23.7% | |Hispanics | 7.0% |
| | | | | |
| | | | | |
|----------------+------------+---+-----------------+-----------|
|Los Angeles | 5.2% | |Whites | 5.5% |
|County | | | | |
| | | | | |
| | | | | |
|----------------+------------+---+-----------------+-----------|
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|Orange County | 4.4% | |16 to 19 years | 18.8% |
| | | |olds | |
| | | | | |
| | | | | |
|----------------+------------+---+-----------------+-----------|
|Riverside | 6.7% | |20 to 24 years | 9.6% |
|County | | |olds | |
| | | | | |
| | | | | |
|----------------+------------+---+-----------------+-----------|
|San Bernardino | 6.4% | |Blacks 20 to 24 | 14.9% |
|County | | |years old | |
| | | | | |
| | | | | |
|----------------+------------+---+-----------------+-----------|
|San Mateo | 3.3% | |Hispanics 20 to | 9.8% |
|County | | |24 years olds | |
| | | | | |
| | | | | |
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|Tulare County | 10.8% | |Source: California |
| | | |Employment Development |
| | | |Department |
| | | | |
| | | | |
|----------------+------------+---+-----------------------------|
|Ventura County | 5.4% | | |
| | | | |
| | | | |
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While the state's unemployment rate for June 2016 (not
seasonally adjusted) was 5.7%, some areas of the state had lower
rates, while others were considerably higher. San Mateo County
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recorded the lowest at 3.3% and Imperial County experienced the
highest unemployment rate at 23.7%. Inland areas generally
reported unemployment rates above the statewide average. As the
chart above shows, Tulare County's unemployment rate was 10.8%
and Riverside County was recorded as 6.7%. Coastal areas
overall had lower rates than the state average, with Orange
County at 4.4%, and Ventura County at 5.4%. Even densely
populated and economically diverse areas like Los Angeles County
reported a June 2016 unemployment rate of 5.2%.
Looking more specifically at different population groups, the
chart also shows the great discrepancies between the statewide
rate and key subgroups, including unemployment among Blacks and
Hispanics being 9.8% and 7.0% respectively. For the youngest
members of the workforce obtaining quality jobs remains a
significant issue with unemployment among 16 to 24 year olds
being well above the state average, ranging from 9.5% to 18.8%.
In other words, one-in-five of California's next generation of
workers is unemployed.
Also worth noting is that the unemployment numbers most commonly
reported are based on the total number of unemployed individuals
that are estimated to be actively seeking work within a
specified survey period, also referred to as the U3 definition.
Using a broader U.S. Department of Labor definition of
unemployment (U6), includes all unemployed individuals of the
labor force, in addition to marginally attached workers and
involuntary part time workers; California's unemployment rate
for May 2016 shifts from 5.6% to 11.9%. Given that there are
over 3 million unemployed workers that not counted under the U3
definition, discouraged workers, who are eligible to work but
are not working, have become an increasingly important public
policy issue.
Analysis Prepared by: Toni Symonds /
J., E.D., & E. / (916) 319-2090 FN: 0004049
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