BILL ANALYSIS
AB 1320
Page 1
Date of Hearing: April 22, 2009
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
William W. Monning, Chair
AB 1320 (Fong) - As Introduced: February 27, 2009
SUBJECT : Workforce development: lifelong learning pilot
program.
SUMMARY : Establishes the Lifelong Learning Accounts Pilot
Program (Program) for the purpose of providing grants to
employers and employees to be used to establish individual
lifelong learning accounts for the deposit of funds to be used
by the employees and employers for lifelong training and
education. Specifically, this bill :
1)Establishes the Program for the purpose of providing grants to
employers and employees for purposes related to lifelong
education and training by January 1, 2012.
2)Requires the California Workforce Investment Board (Board) to
establish a grant program to provide grants to employers and
employers, thereby encouraging them to save for lifelong
education and training, as specified.
3)States that the Board may contract with an individual,
nonprofit organization or other business to administer and
implement the grant program.
4)Specifies the Board shall make education, career advising and
other support services available to employees under the
Program and shall provide technical assistance to employers to
help implement the grant program. The Board may use grant
funds to offset the costs of support services, technical
assistance and program administration.
5)Establishes within the State Treasury, a Lifelong Learning
Program Fund to receive contributions in the form of matching
grant funds from individuals, foundations, nonprofits,
businesses and the federal government to be used for the
program.
6)Requires the Board to prepare and submit a report to specified
Legislative committees at least 20 days prior to the date the
Legislature reconvenes in 2012.
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7)Requires the Board, after consultation with the Treasurer and
Scholarshare Investment Board, to adopt any rules and
administrative regulations necessary to ensure the
implementation and administration of the Program.
8)States that the Program shall only be implemented if the
Director of Finance determines in writing that there are
sufficient state funds available for the Program.
EXISTING FEDERAL LAW:
1)Establishes the federal Workforce Investment Act of 1998,
which provides for workforce investment activities that states
may participate in.
2)Amends the Internal Revenue Code of 1986 to establish LiLA
accounts providing tax incentives to employees and employers
that participate in the accounts.
EXISTING STATE LAW : establishes the California Workforce
Investment Act, requiring the California Workforce Investment
Board (Board) to assist the Governor in performing specified
duties relating to the development, implementation, and
promotion of various workforce development activities, job
training, and employment investment and work incentive programs,
as specified.
FISCAL EFFECT : Unknown
COMMENTS : According to the author's office background
information this bill establishes a pilot project that would
establish Lifelong Learning Accounts (LiLA's) to help employees
save for additional training and education. The funds would be
employer matched and eligible for third party contributions.
Eligible expenses would include tuition, fees, books, and
supplies. Educational and career advising services would be
made available to the participants. The accounts would be held
under the state Treasurers Office and the Scholarshare program
in an effort to encourage employees to save for their own
training and to encourage them to save for the future
educational needs of their children.
California has a lower rate of those completing high school
(80.2%) than the national average (85.9%) and even lower than
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other educated countries (93.5%). Approximately, 15.2 million
or 66% of California's working age adults do not have an
Associate's degree or higher, 4.3 million have not completed
high school, and 2.6 million speak little or no English. While
the percentage of college graduates was on the rise for several
decades, the trend has started to slow at a time when a higher
skill set is being required for many jobs.
Many low income workers are being left behind as tuition costs
increase and there are limited resources available to help with
these costs. The LiLA is an innovative way to address this
problem.
Over the past five years there have been a variety of
demonstration projects in California, Iowa, Illinois, Kansas,
Missouri, Maine, and Washington.
The California LiLA project is operated by San Francisco Jewish
Vocational Service in partnership with the Council for Adult and
Experiential Learning (CAEL). Four employers are sponsoring
LiLAs for their workers, three of which are in the health care
sector and in the public sector. Participants have used their
LiLAs for a range of training from intensive language skills for
health personnel to nursing school. The career advising
component assists older workers in contemplating a career change
or advancement with their current employer. The results have
been positive and form the basis for this bill which would seek
to replicate these pilots in other areas of the state.
This bill differs from others that might be available in that it
will cover a broader array of costs, and requires the employee
and employer to participate in the savings account. The
services provided include the crucial component of advising
employees of their choices so that employees can make informed
decisions about possible career paths. Further, the tie to
Scholarshare would provide a safe place for the funds to grow so
they could be used for upgrading skills for the workforce.
Lifelong Learning Accounts (LiLAs)
Originally conceived and demonstrated by CAEL, LiLAs are
employer-matched employee- owned individual educational accounts
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used to finance workers' education and training. They encourage
a partnership between workers and employers to invest in the
education and training to help workers achieve their own career
goals and meet the needs of business, industry and the nation.
Background
On January 4, 2007, U.S. Senators Maria Cantwell (D-WA) and
Olympia Snowe (R-ME) introduced S. 26 The Lifelong Learning
Accounts Act of 2007. The Act amends the IRS Code of 1986 to
establish a LiLA demonstration program for up to 200,000 workers
in up to ten states. The Department of Treasury will select
participating states in a competitive process.
On June 28, 2007 U.S. Representative Tom Allen (D-ME) introduced
H.R. 2901, which is the companion bill to S. 26. Both bills
include the following features:
a) Allowing employers and employees to earn tax credits of
up to $500 per year for contributions to LiLAs;
b) Tax credits are targeted to lower and middle income
earners;
c) Contributions to LiLAs are voluntary;
d) Employers contributions to workers' LiLA are excluded in
the workers' gross income;
e) All distributions for eligible expenses are excluded
from the taxpayer's gross income;
f) Account funds can be used to pay for tuition, fees,
books, and supplies;
g) Accounts are portable and can be used over a worker's
lifetime.
Representative Rahm Emanuel (D-IL) and Jim Ramstad (R-MN)
introduced H.R. 6036 in 2008 which also amends the IRS Code of
1986 establishing LiLAs, as an incentive to save for education
and training. H.R. 6036 increased the amount individuals may
contribute annually to the LiLA up to $2,500. Under the bill
the account beneficiary would receive a refundable tax credits,
as specified and gives employers the option of matching the LiLA
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contributions. It also allowed employers certain tax credits as
well.
ARGUMENTS IN SUPPORT :
The Council for Adult and Experiential Learning states that
these worker-owned, employer matched accounts put learning
opportunities with reach of adults who have entered the
workforce but may not have the skill to compete in the changing
economy. They also state this bill is especially helpful since
according to a Hudson Institute study, 60% of newly created jobs
require skills that only 20% of the US workforce possesses. Yet
there is little in the way of financial assistance for adults
pursuing education and training.
RELATED LEGISLATION:
SB 1457 (Steinberg) Chapter 474, Statutes of 2008 established
the California Scholarshare Advancement Vehicle for Education
(CalSAVE) program within the Scholarshare trust to fund
scholarships for beneficiaries to be determined by the
Scholarshare Investment Board.
REGISTERED SUPPORT / OPPOSITION :
Support
Council for Adult and Experiential Learning (sponsor)
San Francisco Jewish Vocational Service
California Teachers Association
Opposition
None on file.
Analysis Prepared by : Lorie Erickson / L. & E. / (916)
319-2091