BILL ANALYSIS
Senate Committee on Labor and Industrial Relations
Mark DeSaulnier, Chair
Date of Hearing: July 8, 2009 2009-2010 Regular
Session
Consultant: Alma Perez Fiscal:Yes
Urgency: No
Bill No: AB 1320
Author: Fong
Version: July 2, 2009
SUBJECT
Workforce development: Lifelong Learning Accounts Initiative
Program.
KEY ISSUE
Should the Legislature allow the establishment of Lifelong
Learning Accounts (LiLAs), which would provide state matching
grants, to encourage employers and employees to save for
lifelong education and training?
PURPOSE
To establish a grant mechanism to be used for the lifelong
education and training of employees.
ANALYSIS
Under existing law , the California Workforce Investment Act
(WIA) provides for workforce investment activities that increase
the employment, occupational attainment, and retention and
earnings of participants, which will improve the quality of the
workforce, reduce welfare dependency, and enhance the
productivity and competitiveness of the nation's economy. The
California Workforce Investment Act serves to implement a state
agency partnership between the California Department of
Education, the California Workforce Investment Board and the
Employment Development Department to collaboratively implement
the Governor's WIA Strategic Plan.
Existing law authorizes the Employment Development Department
(EDD) to administer a variety of services to Californians under
the Job Service, Unemployment Insurance, Disability Insurance,
Workforce Investment, and Labor Market Information programs.
The Workforce Services Branch, within EDD, administers several
statewide workforce preparation programs and initiatives that
focus on preparing adults and youth for the labor force.
California distributes more than $400 million annually in
federal funds statewide to provide training services for adults,
dislocated workers, and youth. Workforce investment services
are provided through comprehensive one-stop career centers that
provide access to a full range of services pertaining to
educational activities, employer services, and referrals to
other appropriate social services.
This Bill would establish the Lifelong Learning Accounts
Initiative Program, beginning January 1, 2012, for the purpose
of providing grants to employers and employees to be used to
establish individual lifelong learning accounts, as defined, for
the deposit of funds to be used for lifelong education and
training. Specifically, this bill would:
Require the EDD to establish a grant program to provide
matching grants, as specified, to employees and employers,
thereby encouraging them to save for lifelong education and
training. However, matching funds will be available based
upon EDD's determination that sufficient funds to cover
program costs exists.
Allow the EDD to contract with an individual, nonprofit
organization, or other business to administer and implement
the grant program.
Require EDD to make education and other support services
available to employees and provide technical assistance to
employers for the implementation of the grant program.
Grant funds may be used to offset costs of providing
support services and for program administration.
Establish within the State Treasury, a Lifelong Learning
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Senate Committee on Labor and Industrial Relations
Program Fund to receive contributions from individuals,
foundations, nonprofit organizations, businesses, and the
federal government to be used for the program.
Require the EDD to prepare and submit a report to
specified Legislative Committees evaluating the
effectiveness of the program at least 20 days prior to the
date the Legislature reconvenes in 2012.
Require the EDD, after consultation with the Treasurer
and the Scholarshare Investment Board, to adopt rules and
regulations necessary to ensure the implementation and
administration of the program.
Specify that the program shall only be implemented if
the Director of Finance makes a written determination that
there are sufficient funds from sources other than the
General Fund available for the program.
COMMENTS
1. Need for this bill?
Lifelong Learning Accounts (LiLAs) are employer-matched
accounts used to finance education and training. LiLAs help
employees save for additional training and education, as well
as encourage partnerships between workers and employers by
investing in education and training that improves workers
skills while meeting the needs of their employers. This bill
would require the EDD to establish the Lifelong Learning
Accounts Initiative Program to provide grants to employers and
employees to be used to establish individual lifelong learning
accounts. The funds would be employer matched and eligible for
third party contributions. The program would only be
implemented if the Director of Finance determines that there
are sufficient state funds for that purpose.
2. Background on LiLAs :
Numerous pilot projects involving LiLAs grant-matching have
been adopted over the past several years including in states
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Senate Committee on Labor and Industrial Relations
like California, Iowa, Illinois, Kansas, Missouri, Maine,
Illinois and Washington. The CA LiLA project operates out of
San Francisco and includes the participation of four
employers, three in the health care sector and one in the
public sector. According to information provided to
Committee, participants have used their LiLAs for a range of
training from intensive language skills for health personnel
to nursing school. Existing pilot projects are generally for
a limited number of workers and/or industries.
In recent years, similar bills to create Lifelong Learning
Accounts have been introduced - but not passed - at the
federal level. A tax credit bill was introduced by then
Congress member Rahm Emmanuel in 2008 (H.R. 6036), which would
have amended the Internal Revenue Code of 1986 to (1)
establish tax-exempt lifelong learning accounts to pay certain
educational expenses, including tuition, fees, books, supplies
and information technology devices; (2) allow individuals
between age 18 and 71 a tax credit for cash contributions to
their lifelong learning accounts; and (3) allow employers a
tax credit for contributions made to the lifelong learning
accounts of their employees and for administrative costs
associated with small employer lifelong learning accounts. In
the Senate, similar legislation was introduced in 2007 by
Senators Snowe and Cantwell.
3. Proponent Arguments :
According to the author, 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. Proponents
cite a Hudson Institute study, which found that 60% of newly
created jobs require skills that only 20% of the U.S.
workforce possesses. Proponents argue that now, more than
ever, our knowledge-based economy requires up-to-date skills,
recognized credentials and postsecondary degrees that meet
labor market demands. They argue, however, that the high cost
of education and re-training results in limited career
advancement opportunities for millions of frontline workers.
Proponents believe that Lifelong Learning Accounts (LiLAs) are
a way to bridge this funding gap and to assist workers to
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Senate Committee on Labor and Industrial Relations
achieve their career goals. According to proponents, creating
LiLAs in California is an innovative way to help employees
save for additional training and education and represents a
promising strategy to reach out to an array of employees,
especially those in the low income and entry level jobs, and
provide them with education opportunities that are critical to
their success. Lifelong Learning Accounts are
employer-matched worker savings that promote adult learning by
allowing employees to set aside funds for books, tuition,
fees, supplies and materials. Proponents also support the
provision of the bill which allows for the provision of career
and educational advising so that returning adults can make
appropriate career choices using information about educational
and training opportunities.
4. Opponent Arguments :
The Department of Finance is opposed to this bill because the
program it would establish would have no secure source of
dedicated revenue. The Department of Finance believes this
could lead to a pressure to provide General Fund funding.
5. Related Legislation :
SB 1457 (Steinberg) of 2008: Chaptered
This bill established the California Scholarshare Advancement
Vehicle for Education (CalSAVE) program within the
Scholarshare trust to fund educational scholarships for
beneficiaries to be determined by the Scholarshare Investment
Board. Potential beneficiaries of the program includes foster
youth, youth in at-risk categories, individuals with
demonstrated economic need, and former and active members of
the California National Guard, among others.
SUPPORT
Council for Adult and Experiential Learning - Sponsor
Jewish Vocational Services - Sponsor
American Federation of State, County and Municipal Employees
(AFSCME), AFL-CIO
California Teachers Association (CTA)
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Senate Committee on Labor and Industrial Relations
On Lok, Inc.
San Jos?/Evergreen Community College District
OPPOSITION
Department of Finance, State of California
* * *
Hearing Date: July 8, 2009 AB 1320
Consultant: Alma Perez Page 6
Senate Committee on Labor and Industrial Relations