BILL ANALYSIS
AB 165
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Date of Hearing: April 21, 2009
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel P?rez, Chair
AB 165 (Carter) - As Introduced: January 28, 2009
SUBJECT : Microenterprise and Workforce Investment Boards
SUMMARY : Requires the California Workforce Investment Board
(CWIB) to make recommendations and provide technical assistance
on entrepreneurial training opportunities that could be made
available through local workforce investment boards. The bill
makes other related changes to the definition of
microenterprise, as well as deleting requirements from the
duties of the CWIB. Specifically, this bill :
1)Updates the definition of microenterprise to more accurately
reflect industry practices.
2)Adds legislative intent relative to the importance of
entrepreneurs and home-based businesses.
3)States that it is state policy, to the extent feasible,
individuals be provided with the opportunity to learn skills
needed to pursue self-employment as it is one means for
providing a stable income for themselves and their families.
4)Deletes the requirement that the CWIB develop guidelines for
targeting resources to high-wage industry sectors. Further,
the bill deletes the requirement that the CWIB provide
guidance on how to ensure services at the One-Stop career
centers reflect the needs of the high-wage industry sectors.
5)Requires the CWIB to recommend policy and provide technical
assistance related to entrepreneurial training opportunities
that could be provided through local workforce investment
board programs.
EXISTING LAW:
1)States that every city, county, and city and county, is
encouraged to access microenterprise development in order to
create new jobs and income opportunities for individuals of
low and moderate income. Further, existing law states that
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public agencies, such as local workforce investment boards,
community colleges, and local economic development agencies,
are encouraged to promote local partnerships that invest in
microenterprise development.
2)Defines "microenterprise" as a sole proprietorship,
partnership, or corporation with fewer than five employees,
including the owner, and generally lacking access to
conventional loans, equity, or other banking services.
3)Defines legislative intent that in order for California to
remain prosperous and globally competitive, it needs to have a
highly skilled workforce. And, that the state must transform
its current job training, job placement, and vocational
education programs into an integrated, accessible, and
accountable workforce investment system that can effectively
serve job seekers, students, and employers.
4)Establishes the CWIB, comprised of members appointed by the
Governor and the appropriate presiding officers of each house
of the Legislature, and specifies that the executive director
of the CWIB report to the Secretary of the California Labor
and Workforce Development Agency. The CWIB is responsible for
assisting the state in meeting the requirements of the federal
Workforce Investment Act of 1998 (WIA), as well as assisting
the Governor in the development, oversight, and continuous
improvement of California's workforce investment system.
5)Requires each local workforce investment board to establish at
least one full service one-stop career center in the local
workforce investment area. One-Stop career centers are
required to include a specified group of job search related
entities and provide jobseekers with integrated employment,
education, training, and job search services. Employers can
also be provided with access to career and labor market
information, job placement assistance, and other such services
as the businesses in the community may require.
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose : AB 165 is a re-introduction of AB 2998 (Carter) from
the 2007-08 legislative session where it was held in the
Senate Appropriations Committee on its Suspense File. The
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author has reintroduced the measure to provide a better
balance to policy and technical assistance activities of the
CWIB by requiring that these services include training related
to entrepreneurship.
2)The role of microenterprise within the California economy :
Microenterprises are an important component of California's
dynamic economy representing approximately 88% of all
businesses in the state, or approximately 2.6 million of all
businesses. Microenterprises create jobs, generate taxes, and
revitalize communities. In 2003, these businesses employed
nearly 19% of all workers in California and generated $238
billion in taxable revenues. Common types of microenterprises
include engineering, computer system design, housekeeping,
construction, landscaping, and personnel services.
Smaller size businesses function as economic engines,
especially in challenging economic times. During the nation's
economic downturn from 1999 to 2003, microenterprises created
318,183 new jobs or 77% of all employment growth, while larger
businesses with more than 50 employees lost over 444,000 jobs.
From 2000 to 2001, microenterprises created 62,731 jobs in
the state, accounting for nearly 64% of all new employment
growth.
However, their small size also results in certain market
challenges, including, but not limited to, having difficulty
in meeting the traditional credit and collateral requirements
of mainstream financial institutions. Specialized technical
assistance, access to microloans, and collaborative marketing
opportunities can help many microenterprises overcome or at
least minimize these difficulties. AB 165 proposes that the
CWIB assist local workforce investment boards better
understand how to meet the sometimes unique needs of
microenterprises and other small size businesses.
3)Local workforce investment board and microenterprise
development : The role of the local workforce investment
board is not necessarily to provide training; rather the local
board is statutorily directed to assist in planning,
oversight, and evaluation of local workforce investment
activities. In carrying out the purposes of this measure, a
local workforce investment board, based on guidance provided
by the CWIB, could enter into partnerships with local
microenterprise development organizations (MDOs) for offering
entrepreneurial and microenterprise development programs.
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These types of services are usually provided by
community-based, non-profit organizations or local agencies,
and are funded through partnerships with government agencies,
foundations, private industry, and individuals. While many of
microenterprise development programs were initially
established as programs to bring people out of poverty,
today's programs are increasingly focused on entrepreneurship
as a goal unto itself.
Based on a sampling of state microenterprise programs by the
California Association for Microenterprise Development these
programs, on average, serve approximately 165 clients a year,
76% of which are women, 45% of which are of ethnic minorities,
and 61% are from low-income households.
4)CWIB : Implementation of the federal WIA required significant
reforms to California's job training system. These reforms
emphasized private sector involvement, improved customer
service, better alignment of public sector resources, and the
integration of education, workforce, and economic development
programs in order to help both workers and employers compete
and succeed in the global economy. In 1998, the CWIB was
established to meet the new WIA requirements and provide
guidance and support to local workforce development boards to
meet the new program priorities of WIA.
Along with the reforms came funding targeted to serve three
categories of workers: adult, youth, and dislocated workers.
WIA funding is distributed to states based on a set formula
which includes specified economic and demographic data.
California's share has declined over the years from a high of
$630 million in 2000-01 to an estimated $427 million 2009-10.
Pursuant to federal WIA requirements, 85% of moneys flowing to
the states are reallocated to the local workforce investment
boards. Resources used to carry out CWIB activities are
derived from the Governor's 15% WIA Discretionary funds. The
2009-10 estimated WIA allocation to local workforce investment
boards is $363 million, while the state will receive about $63
million in discretionary moneys. Recent budget actions
redirected portions of state discretionary moneys to offset
General Fund employment and training costs at the California
Department of Corrections and Rehabilitation or the California
Conservation Corp.
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The CWIB has a staff of 22 authorized positions, including an
executive director who is an integral part of the CWIB. The
staff, assist various committees; administration,
high-wage/high growth jobs, advancing workers, and statewide
worker shortages. Legislation passed in 2008 established the
Green Jobs Council, which is facilitated by the CWIB.
5)Federal Stimulus Funding : Under the $787 billion federal
stimulus package, California is expected to receive $480
million in supplemental funding through three WIA funding
streams: Youth formula grants, dislocated worker funding, and
adult services grants. The chart below outlines the expected
WIA funding for California.
-------------------------------------------------------------
| WIA Funding in the 2009 Federal Stimulus Package |
-------------------------------------------------------------
|-------------+----------------------+-----------------------|
| |Funding Available |Funding Available in |
| |Nationally |California |
|-------------+----------------------+-----------------------|
|Youth | $1,188,000,000| $186,622,034|
|Activities | | |
|-------------+----------------------+-----------------------|
|Adult | $495,000,000| $80,117,954|
|Activities | | |
|-------------+----------------------+-----------------------|
|Dislocated | $1,435,500,000|$221,906,888 |
|Worker | | |
------------------------------------------------------------
Of the $480 million in WIA moneys targeted for California, the
CWIB is expected to receive approximately $70 million to carry
out supplemental activities related to the federal stimulus
programs. These moneys are required to fully expended in 24
months.
The LAO, however, is recommending the Legislature take a
similar action to the one approved in the recent budget act.
The LAO recommends the redirection of these additional $70
million in discretionary moneys to offset General Fund
employment and training costs at the California Department of
Corrections and Rehabilitation or the California Conservation
Corp.
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In the absence of a unified vision for the state's economic
and workforce development needs, these types of new training
dollars remain unprotected and ripe for redirection to achieve
short-term budget relief. Given the magnitude the state's
unemployment and miss-match between jobs and skills in the
workforce, the state investment of these resources in workers
may more effectively provide for the state's short- and
longer-term growth and recovery.
6)Technical amendments : Staff understands that the author did
not intend to delete the requirements related to high-wage
jobs, rather it was the author's intent to provide technical
cleanup. Amendments will be provided in committee.
7)Related legislation from previous sessions : Below is a list
of bills from the 2004-05 and 2006-07 sessions relating to
microenterprises development.
a) AB 816 (Carter) : This bill would have established a $5
million grant program to assist microenterprises
development organizations offer capacity building services
to microentrepreneurs. The bill was held in the Senate
Appropriations Committee in 2007.
b) AB 1209 (Yee): This bill would have established a $5
million grant program to assist microenterprise development
organizations offer capacity building services to
microentrepreneurs. The bill was held in the Senate
Appropriations Committee in 2006.
a) AB 2998 (Carter) : This bill required the California
Workforce Investment Board to develop guidelines for
entrepreneurial training by January 1, 2010. The bill also
adds legislative intent on the importance of all
Californians having access to training related to self
employment and entrepreneurship. The bill was held in the
Senate Appropriations Committee in 2008.
a) SB 446 (Yee) : This bill would have established a
$500,000 grant program to assist microenterprise
development organization offer capacity building services
to microentrepreneurs. The bill was held in the Senate in
2008.
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b) SB 293 (Ducheny): This bill replaces the Family
Economic Security Act in the California Unemployment
Insurance Code with provisions that generally implement the
Workforce Investment Act (WIA) of 1998 in California. Even
though a majority of the provisions in the bill are taken
from the federal WIA, there are new California provisions
which will require substantive changes in the workforce
system.
There is also language to conform some of the federal
requirements that will require interpretation and guidance
to Local WIB's, as well as minor adjustments in the way
that the state and Local WIB's conduct business. The first
is the requirement that the California WIB create a
strategic workforce plan for the State. The Plan is
intended to serve as a framework for the Strategic Two-Year
Plan for the WIA. It will also serve as a framework for
the development of workforce policy and fiscal investment,
and for the operation of California's labor exchange,
workforce education, and training programs. Signed by the
Governor on September 29, 2006, Chapter 630, statutes of
2006.
REGISTERED SUPPORT / OPPOSITION :
Support
California Immigrant Policy Center
Opposition
None known
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090