BILL ANALYSIS
AB 816
Page 1
Date of Hearing: April 22, 2009
ASSEMBLY COMMITTEE ON INSURANCE
Joe Coto, Chair
AB 816 (Hagman) - As Amended: April 15, 2009
SUBJECT : Employment Training Panel and Employment Training
Fund.
SUMMARY : Repeals the express authority of the Legislature to
appropriate funds from the Employment Training Fund (ETF) to
finance the local assistance portion of the welfare-to-work
activities under the CalWORKS Program. Specifically, this bill:
1)Requires that moneys in the ETF be appropriated only to
finance the costs of:
a) employment training,
b) the administrative costs incurred by contractors,
c) the program expenses of administering the Employment
Training Panel (ETP),
d) related services provided by small business development
centers,
e) collecting the 0.1 percent of the specified wages from
employers,
f) training programs for persons eligible for the CalWORKS
Program, and
g) with the approval of the Legislature, paying interest
charged on federal loans to the state Unemployment Fund.
2)Repeals the section of law that authorizes the Legislature to
appropriate from the Employment Training Fund an amount
specified in the annual Budget Act to fund the local
assistance portion of the welfare-to-work activities under the
CalWORKS Program. CalWORKS refers to the California Work
Opportunity and Responsibility to Kids Act.
EXISTING LAW :
1)Establishes the Employment Training Fund (ETF) in the State
Treasury for the deposit of contributions from employers at
the rate of 0.1 percent of the first $7,000 of annual wages of
each employee.
2)Requires that money in the ETF be spent only to finance the
costs of:
AB 816
Page 2
a) employment training,
b) administrative costs incurred by contractors,
c) the program costs of administering the Employment
Training Panel (ETP),
d) related services provided by small business development
centers,
e) collecting the 0.1 percent of the specified wages from
employers,
f) training programs for persons eligible for the CalWORKS
Program,
g) with the approval of the Legislature, paying interest
charged on federal loans to the state Unemployment Fund,
and
h) in the annual Budget Act, funding the local assistance
portion of welfare-to-work activities under the CalWORKS
Program.
3)Specifies that any moneys allocated to the ETP that are not
encumbered in that fiscal year shall revert to the
Unemployment Insurance Fund.
4)Establishes the CalWORKS Program for recipients of public
assistance to move from welfare to work. This program is
administered by the State Department of Social Services. In
this program, individuals of working age are required to take
a series of steps including job search, assessment, and work
activities.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Purpose. According to the author, the purpose of this bill is
to protect the funding of the Employment Training Panel (ETP).
The author states that in recent years there have been
significant transfers of Employment Training Fund (ETF) monies
to non-related programs that have severely reduced the ETP's
ability to serve California business and workers. The author
provides data showing that in the last 10 years, an average of
$39 million from the ETF has been appropriated each year to
the Department of Social Services, while the appropriations to
the ETP have dropped from over $70 million to $57 million per
year.
The author states that 2006 budget trailer language allowed the
AB 816
Page 3
diversion of funds to the Department of Social Services to
fund CalWORKS.
2)Arguments in Support . The California Manufacturers &
Technology Association (CMTA) and the Chamber of Commerce
(Chamber) state that this bill will protect and maximize the
amount of training dollars that stay in the Employment
Training Fund (ETF). They note that this bill will eliminate
the provision that allows ETF dollars to be diverted to the
Department of Social Services.
CMTA and the Chamber state that the Employment Training Panel
(ETP) has provided invaluable training to workers to enhance
their skills, obtain higher wages jobs and help businesses
compete in both the domestic and global markets. The report
that the ETP responds quickly to California's ever-changing
industries such as manufacturing, high-tech, bio-technology,
multimedia, construction, healthcare, clean technology and
others. It also targets the needs of special populations,
such as training for the "working poor" in high unemployment
areas, ex-offenders, at-risk youth, veterans and workers with
barriers to employment, including CalWORKS recipients.
CMTA and the Chamber also state that, unfortunately, in the last
three fiscal years over $100 million of ETP training funds
have been diverted to fund programs for the Department of
Social Services. This is one-half of the total ETP funding.
It is essential that a maximum amount of dollars from the ETF
go to support ETP, because for every $1 spent on training
there is a $5 return on investment. Since July 2005, the ETP
has approved $49 million aimed at business expansion and job
creation. This includes efforts involving firms such as
Genentech, Virgin Air, New United Motor Manufacturing Inc.,
and SYSCO Food Services, resulting in approximately 24,000 new
and saved jobs.
3)Arguments in Opposition . The Service Employees International
Union (SEIU) states that this bill would reduce funding for
the CalWORKS Program by $35 million per year and that these
funds are vital to maintaining a successful program that
increases work and self-sufficiency for parents in low-income
families. SEIU reports that CalWORKS provides temporary
income support, employment services, and child care to more
than 450,000 low-income families. Additionally, SEIU states
that counties are seeing nearly a 30% increase in CalWORKS
AB 816
Page 4
applicants as a result of high unemployment rates. Also,
there has been a $90.6 million cut to the CalWORKS Program in
the budget that has forced the layoff of over 650 CalWORKS
eligibility workers. Local human service agencies are
overwhelmed with work and unable to process applications in a
timely manner to help the most vulnerable parents and
families.
SEIU also states that in 1996 the welfare program in California
drastically changed. The current program (CalWORKS) focuses
on helping public assistance recipients to obtain employment,
and away from cash assistance. There are strict requirements
on recipients to participate in work or work-related
activities for a specified number of hours per week. Failure
to do so disqualifies the recipient from receiving cash
assistance. SEIU notes that CalWORKS is the only welfare
approach proven by research to result in long-lasting
improvements in family earnings, poverty reduction, and child
well-being, including better performance in school. CalWORKS
caseload has declined by 50% since 1995 due in part to the
hundreds of thousands of families receiving supports and
working and the time-limited aid.
REGISTERED SUPPORT / OPPOSITION :
Support
California Business Properties Association
California Chamber of Commerce
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Manufacturers & Technology Association (CMTA)
Coalition of California Welfare Rights Organizations, Inc.
Employment Training Panel (ETP)
Engineers & Scientists of California, IFPTE Local 20, AFL-CIO
International Longshore & Warehouse Union
Professional and Technical Engineers, IFPTE Local 21, AFL-CIO
The Teamsters
United Food & Commercial Workers Western States Council
UNITE-HERE
Western Growers
Opposition
County Welfare Directors Association of California (CWDA)
AB 816
Page 5
Service Employees International Union (SEIU)
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086